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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported June 12, 1996
NORTHWEST AIRLINES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
95-4205287
(I.R.S. Employer Identification No.)
0-23642
(Commission File Number)
2700 Lone Oak Parkway, Eagan, Minnesota 55121
(Address of principal executive offices)
(612) 726-2111
(Registrant's telephone number)
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2
Item 7 Exhibits. The documents listed below are filed as Exhibits
with reference to the Registration Statement on Form S-3 (Registration No.
333-2516) and the Registration Statement on Form S-3 (Registration No. 33-74772)
(collectively, the "Registration Statements") of Northwest Airlines Corporation
and Northwest Airlines, Inc. The Registration Statements and the Prospectus
Supplement, dated June 3, 1996, to the Prospectus, dated May 3, 1996, relate to
the offering of Northwest Airlines, Inc.'s Pass Through Certificates, Series
1996-1.
4(a)(1) Trust Agreement [NW 1989 B] between the Owner Participant and The
First National Bank of Boston, Owner Trustee
4(a)(2) First Amendment to Trust Agreement [NW 1989 B] between the Owner
Participant, and First Security Bank of Utah, National
Association, Owner Trustee
4(a)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1989 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(a)(4) Amended and Restated Lease Agreement [NW 1989 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(a)(5) Guarantee [NW 1989 B] from Northwest Airlines Corporation
4(a)(6) Participation Agreement [NW 1989 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, The First National Bank of Boston,
Owner Trustee, and Meridian Trust Company, Equipment Trust Trustee
4(a)(7) First Amendment to Participation Agreement [NW 1989 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant and State Street Bank and Trust
Company, National Association, Indenture Trustee
4(a)(8) Refunding Agreement [NW 1989 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent and State Street Bank and Trust Company,
Indenture Trustee
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3
4(b)(1) Trust Agreement [NW 1990 A] between the Owner Participant and The
First National Bank of Boston, Owner Trustee
4(b)(2) First Amendment to Trust Agreement [NW 1990 A] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(b)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1990 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(b)(4) Lease Agreement [NW 1990 A] between The First National Bank of
Boston, Lessor, and Northwest Airlines, Inc., Lessee
4(b)(5) First Amendment to Lease Agreement [NW 1990 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(b)(6) Guarantee [NW 1990 A] from Northwest Airlines Corporation
4(b)(7) Participation Agreement [NW 1990 A] among Northwest Airlines,
Inc., Lessee, the Owner Participants Named Therein the Loan
Participant, The First National Bank of Boston, Owner Trustee,
and The Connecticut Bank and Trust Company, National Association,
Indenture Trustee
4(b)(8) First Amendment to Participation Agreement [NW 1990 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(b)(9) Refunding Agreement [NW 1990 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
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4
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(c)(1) Trust Agreement [NW 1995 A] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(c)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1995 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(c)(3) Lease Agreement [NW 1995 A] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(c)(4) First Amendment to Lease Agreement [NW 1995 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(c)(5) Guarantee [NW 1995 A] from Northwest Airlines Corporation
4(c)(6) Participation Agreement [NW 1995 A] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(c)(7) First Amendment to Participation Agreement [NW 1995 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(c)(8) Refunding Agreement [NW 1995 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
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5
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(d)(1) Trust Agreement [NW 1995 B] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(d)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1995 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(d)(3) Lease Agreement [NW 1995 B] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(d)(4) First Amendment to Lease Agreement [NW 1995 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(d)(5) Guarantee [NW 1995 B] from Northwest Airlines Corporation
4(d)(6) Participation Agreement [NW 1995 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(d)(7) First Amendment to Participation Agreement [NW 1995 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(d)(8) Refunding Agreement [NW 1995 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
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6
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(e)(1) Trust Agreement [NW 1996 A] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(e)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1996 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(e)(3) Lease Agreement [NW 1996 A] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(e)(4) First Amendment to Lease Agreement [NW 1996 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(e)(5) Guarantee [NW 1996 A] from Northwest Airlines Corporation
4(e)(6) Participation Agreement [NW 1996 A] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(e)(7) First Amendment to Participation Agreement [NW 1996 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(e)(8) Refunding Agreement [NW 1996 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
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7
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(f)(1) Trust Agreement [NW 1996 B] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(f)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1996 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(f)(3) Lease Agreement [NW 1996 B] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(f)(4) First Amendment to Lease Agreement [NW 1996 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(f)(5) Guarantee [NW 1996 B] from Northwest Airlines Corporation
4(f)(6) Participation Agreement [NW 1996 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(f)(7) First Amendment to Participation Agreement [NW 1996 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(f)(8) Refunding Agreement [NW 1996 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
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8
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(g)(1) Trust Agreement [NW 1996 C] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(g)(2) First Amendment to Trust Agreement [NW 1996 C] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(g)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 C] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(g)(4) Lease Agreement [NW 1996 C] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(g)(5) First Amendment to Lease Agreement [NW 1996 C] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(g)(6) Guarantee [NW 1996 C] from Northwest Airlines Corporation
4(g)(7) Participation Agreement [NW 1996 C] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(g)(8) First Amendment to Participation Agreement [NW 1996 C] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(g)(9) Refunding Agreement [NW 1996 C] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through
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9
Trustee under each of the Pass Through Trust Agreements, the Owner
Participant, State Street Bank and Trust Company of Connecticut,
National Association, Subordination Agent, and State Street Bank
and Trust Company, Indenture Trustee
4(h)(1) Trust Agreement [NW 1996 D] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(h)(2) First Amendment to Trust Agreement [NW 1996 D] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(h)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 D] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(h)(4) Lease Agreement [NW 1996 D] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(h)(5) First Amendment to Lease Agreement [NW 1996 D] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(h)(6) Guarantee [NW 1996 D] from Northwest Airlines Corporation
4(h)(7) Participation Agreement [NW 1996 D] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(h)(8) First Amendment to Participation Agreement [NW 1996 D] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(h)(9) Refunding Agreement [NW 1996 D] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines
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10
Corporation, Guarantor, First Security Bank of Utah, National
Association, Owner Trustee, State Street Bank and Trust Company,
Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(i)(1) Trust Agreement [NW 1996 E] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(i)(2) First Amendment to Trust Agreement [NW 1996 E] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(i)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 E] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(i)(4) Lease Agreement [NW 1996 E] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(i)(5) First Amendment to Lease Agreement [NW 1996 E] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(i)(6) Guarantee [NW 1996 E] from Northwest Airlines Corporation
4(i)(7) Participation Agreement [NW 1996 E] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(i)(8) First Amendment to Participation Agreement [NW 1996 E] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
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11
4(i)(9) Refunding Agreement [NW 1996 E] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(j)(1) Trust Agreement [NW 1996 F] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(j)(2) First Amendment to Trust Agreement [NW 1996 F] between the Owner
Participant, and First Security Bank of Utah, National
Association, Owner Trustee
4(j)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 F] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(j)(4) Lease Agreement [NW 1996 F] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(j)(5) First Amendment to Lease Agreement [NW 1996 F] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(j)(6) Guarantee [NW 1996 F] from Northwest Airlines Corporation
4(j)(7) Participation Agreement [NW 1996 F] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(j)(8) First Amendment to Participation Agreement [NW 1996 F] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association,
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12
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(j)(9) Refunding Agreement [NW 1996 F] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(k)(1) Trust Agreement [NW 1996 G] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(k)(2) First Amendment to Trust Agreement [NW 1996 G] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(k)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 G] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(k)(4) Lease Agreement [NW 1996 G] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(k)(5) First Amendment to Lease Agreement [NW 1996 G] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(k)(6) Guarantee [NW 1996 G] from Northwest Airlines Corporation
4(k)(7) Participation Agreement [NW 1996 G] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(k)(8) First Amendment to Participation Agreement [NW 1996 G] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the
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13
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(k)(9) Refunding Agreement [NW 1996 G] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
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14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NORTHWEST AIRLINES CORPORATION
Dated: July 3, 1996 By: /s/ THOMAS SCHREIER, JR.
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Thomas Schreier, Jr.
Vice President,
Finance and
Assistant Treasurer
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15
Exhibit Exhibit Index
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4(a)(1) Trust Agreement [NW 1989 B] between the Owner Participant and The
First National Bank of Boston, Owner Trustee
4(a)(2) First Amendment to Trust Agreement [NW 1989 B] between the Owner
Participant, and First Security Bank of Utah, National
Association, Owner Trustee
4(a)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1989 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(a)(4) Amended and Restated Lease Agreement [NW 1989 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(a)(5) Guarantee [NW 1989 B] from Northwest Airlines Corporation
4(a)(6) Participation Agreement [NW 1989 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participant, The First National Bank of Boston,
Owner Trustee, and Meridian Trust Company, Equipment Trust Trustee
4(a)(7) First Amendment to Participation Agreement [NW 1989 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant and State Street Bank and Trust
Company, National Association, Indenture Trustee
4(a)(8) Refunding Agreement [NW 1989 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent and State Street Bank and Trust Company,
Indenture Trustee
<PAGE> 16
16
4(b)(1) Trust Agreement [NW 1990 A] between the Owner Participant and The
First National Bank of Boston, Owner Trustee
4(b)(2) First Amendment to Trust Agreement [NW 1990 A] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(b)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1990 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(b)(4) Lease Agreement [NW 1990 A] between The First National Bank of
Boston, Lessor, and Northwest Airlines, Inc., Lessee
4(b)(5) First Amendment to Lease Agreement [NW 1990 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(b)(6) Guarantee [NW 1990 A] from Northwest Airlines Corporation
4(b)(7) Participation Agreement [NW 1990 A] among Northwest Airlines,
Inc., Lessee, the Owner Participants Named Therein, the Loan
Participant, The First National Bank of Boston, Owner Trustee,
and The Connecticut Bank and Trust Company, National Association,
Indenture Trustee
4(b)(8) First Amendment to Participation Agreement [NW 1990 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(b)(9) Refunding Agreement [NW 1990 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
<PAGE> 17
17
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(c)(1) Trust Agreement [NW 1995 A] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(c)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1995 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(c)(3) Lease Agreement [NW 1995 A] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(c)(4) First Amendment to Lease Agreement [NW 1995 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(c)(5) Guarantee [NW 1995 A] from Northwest Airlines Corporation
4(c)(6) Participation Agreement [NW 1995 A] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(c)(7) First Amendment to Participation Agreement [NW 1995 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(c)(8) Refunding Agreement [NW 1995 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
<PAGE> 18
18
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(d)(1) Trust Agreement [NW 1995 B] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(d)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1995 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(d)(3) Lease Agreement [NW 1995 B] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(d)(4) First Amendment to Lease Agreement [NW 1995 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(d)(5) Guarantee [NW 1995 B] from Northwest Airlines Corporation
4(d)(6) Participation Agreement [NW 1995 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(d)(7) First Amendment to Participation Agreement [NW 1995 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(d)(8) Refunding Agreement [NW 1995 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
<PAGE> 19
19
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(e)(1) Trust Agreement [NW 1996 A] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(e)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1996 A] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(e)(3) Lease Agreement [NW 1996 A] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(e)(4) First Amendment to Lease Agreement [NW 1996 A] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(e)(5) Guarantee [NW 1996 A] from Northwest Airlines Corporation
4(e)(6) Participation Agreement [NW 1996 A] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(e)(7) First Amendment to Participation Agreement [NW 1996 A] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(e)(8) Refunding Agreement [NW 1996 A] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
<PAGE> 20
20
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(f)(1) Trust Agreement [NW 1996 B] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(f)(2) Amended and Restated Trust Indenture and Security Agreement [NW
1996 B] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(f)(3) Lease Agreement [NW 1996 B] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(f)(4) First Amendment to Lease Agreement [NW 1996 B] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(f)(5) Guarantee [NW 1996 B] from Northwest Airlines Corporation
4(f)(6) Participation Agreement [NW 1996 B] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(f)(7) First Amendment to Participation Agreement [NW 1996 B] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(f)(8) Refunding Agreement [NW 1996 B] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National
<PAGE> 21
21
Association, Subordination Agent, and State Street Bank and Trust
Company, Indenture Trustee
4(g)(1) Trust Agreement [NW 1996 C] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(g)(2) First Amendment to Trust Agreement [NW 1996 C] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(g)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 C] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(g)(4) Lease Agreement [NW 1996 C] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(g)(5) First Amendment to Lease Agreement [NW 1996 C] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(g)(6) Guarantee [NW 1996 C] from Northwest Airlines Corporation
4(g)(7) Participation Agreement [NW 1996 C] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(g)(8) First Amendment to Participation Agreement [NW 1996 C] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(g)(9) Refunding Agreement [NW 1996 C] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through
<PAGE> 22
22
Trustee under each of the Pass Through Trust Agreements, the Owner
Participant, State Street Bank and Trust Company of Connecticut,
National Association, Subordination Agent, and State Street Bank
and Trust Company, Indenture Trustee
4(h)(1) Trust Agreement [NW 1996 D] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(h)(2) First Amendment to Trust Agreement [NW 1996 D] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(h)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 D] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(h)(4) Lease Agreement [NW 1996 D] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(h)(5) First Amendment to Lease Agreement [NW 1996 D] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(h)(6) Guarantee [NW 1996 D] from Northwest Airlines Corporation
4(h)(7) Participation Agreement [NW 1996 D] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(h)(8) First Amendment to Participation Agreement [NW 1996 D] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(h)(9) Refunding Agreement [NW 1996 D] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines
<PAGE> 23
23
Corporation, Guarantor, First Security Bank of Utah, National
Association, Owner Trustee, State Street Bank and Trust Company,
Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
4(i)(1) Trust Agreement [NW 1996 E] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(i)(2) First Amendment to Trust Agreement [NW 1996 E] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(i)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 E] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(i)(4) Lease Agreement [NW 1996 E] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(i)(5) First Amendment to Lease Agreement [NW 1996 E] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(i)(6) Guarantee [NW 1996 E] from Northwest Airlines Corporation
4(i)(7) Participation Agreement [NW 1996 E] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(i)(8) First Amendment to Participation Agreement [NW 1996 E] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent,
and State Street Bank and Trust Company, Indenture Trustee
<PAGE> 24
24
4(i)(9) Refunding Agreement [NW 1996 E] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(j)(1) Trust Agreement [NW 1996 F] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(j)(2) First Amendment to Trust Agreement [NW 1996 F] between the Owner
Participant, and First Security Bank of Utah, National
Association, Owner Trustee
4(j)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 F] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(j)(4) Lease Agreement [NW 1996 F] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(j)(5) First Amendment to Lease Agreement [NW 1996 F] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(j)(6) Guarantee [NW 1996 F] from Northwest Airlines Corporation
4(j)(7) Participation Agreement [NW 1996 F] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(j)(8) First Amendment to Participation Agreement [NW 1996 F] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association,
<PAGE> 25
25
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(j)(9) Refunding Agreement [NW 1996 F] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(k)(1) Trust Agreement [NW 1996 G] between the Owner Participant and
First Security Bank of Utah, National Association, Owner Trustee
4(k)(2) First Amendment to Trust Agreement [NW 1996 G] between the Owner
Participant and First Security Bank of Utah, National Association,
Owner Trustee
4(k)(3) Amended and Restated Trust Indenture and Security Agreement [NW
1996 G] between First Security Bank of Utah, National Association,
Owner Trustee, and State Street Bank and Trust Company, Indenture
Trustee
4(k)(4) Lease Agreement [NW 1996 G] between First Security Bank of Utah,
National Association, Lessor, and Northwest Airlines, Inc., Lessee
4(k)(5) First Amendment to Lease Agreement [NW 1996 G] between First
Security Bank of Utah, National Association, Lessor, and Northwest
Airlines, Inc., Lessee
4(k)(6) Guarantee [NW 1996 G] from Northwest Airlines Corporation
4(k)(7) Participation Agreement [NW 1996 G] among Northwest Airlines,
Inc., Lessee, the Owner Participant, the Loan Participants Named
Therein, Loan Participants, First Security Bank of Utah, National
Association, Owner Trustee, and State Street Bank and Trust
Company, Indenture Trustee
4(k)(8) First Amendment to Participation Agreement [NW 1996 G] among
Northwest Airlines, Inc., Lessee, First Security Bank of Utah,
National Association, Owner Trustee, State Street Bank and Trust
Company, Pass Through Trustee under each of the
<PAGE> 26
26
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
4(k)(9) Refunding Agreement [NW 1996 G] among Northwest Airlines, Inc.,
Lessee, Northwest Airlines Corporation, Guarantor, First Security
Bank of Utah, National Association, Owner Trustee, State Street
Bank and Trust Company, Pass Through Trustee under each of the
Pass Through Trust Agreements, the Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association,
Subordination Agent, and State Street Bank and Trust Company,
Indenture Trustee
<PAGE> 1
TRUST AGREEMENT
[NW 1989 B]
This TRUST AGREEMENT [NW 1989 B] dated as of March 15, 1989
between [__________________], a [_____________] corporation (the "Original owner
Participant"), and The First National Bank of Boston, a national banking
association (in its individual capacity, "The First National Bank of Boston")
and otherwise not in its individual capacity but solely as trustee hereunder
(herein in such capacity with its permitted successors and assigns called the
"Owner Trustee");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.1. Certain Definitions. Unless the context shall
otherwise require, the capitalized terms used herein shall have the respective
meanings assigned in Annex A to this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.1. Authority to Execute Documents. The Original
Owner Participant hereby authorizes and directs the Owner Trustee to execute and
deliver the Operative Documents and any other agreements, instruments or
documents to which the Owner Trustee is a party in the respective forms thereof
in which delivered from time to time by the Owner Participant to the Owner
Trustee for execution and delivery and, subject to the terms hereof, to exercise
its rights and perform its duties under said Operative Documents in accordance
with the terms thereof.
SECTION 2.2. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participants, subject, however, to
the provisions of and the Lien created by the Equipment Trust Agreement and to
the provisions of the Lease and the Participation Agreement.
ARTICLE III
PURCHASE OF AIRCRAFT;
ISSUANCE OF CERTIFICATES
SECTION 3.1. Purchase of Aircraft. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the benefit of the Owner
<PAGE> 2
Participants that it will, on the Delivery Date, subject to due compliance with
the terms of Section 3.2 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and
the FAA Bill of Sale;
(c) execute and deliver a Lease Supplement covering the
Aircraft;
(d) execute and deliver a Trust Supplement covering the
Aircraft;
(e) execute and deliver the Guaranties of the Certificates as
provided in Section 2.11 of the Equipment Trust Agreement; and
(f) execute and deliver the financing statements referred to
in Section 4(a)(vi) of the Participation Agreement; and
(g) effect the registration of the Aircraft in the name of
the Owner Trustee by filing or causing to be filed with the FAA:
(i) the FAA Bill of Sale; (ii) an application for registration of
the Aircraft in the name of the Owner Trustee (including without
limitation, an affidavit from the Owner Trustee in compliance with
the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and
(iii) the Trust Agreement.
SECTION 3.2. Conditions Precedent. The right and obligation
of the Owner Trustee to take the action required by Section 3.1 hereof with
respect to the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full
amount of the Owner Participant's Commitment set forth in Schedule
I of the Participation Agreement available to the Owner Trustee,
in immediately available funds, in accordance with Section
1(a)(ii) of the Participation Agreement; and
(b) the terms and conditions of Section 4(a) of the
Participation Agreement, insofar as they relate to the Aircraft,
shall have been complied with in a manner satisfactory to the
original Owner Participant and the Owner Trustee.
SECTION 3.3. Authorization in Respect of Assumption of the
Guaranties. The Owner Participant hereby authorizes and directs the Owner
Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, take the actions specified to be taken by the Owner
Trustee in Section
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<PAGE> 3
8(x) of the Participation Agreement upon Lessee's assuming the Guaranties in
accordance with the provisions of such Section 8(x).
SECTION 3.4. Performance by Owner Participant. The Owner
Participant shall furnish or shall cause to be furnished to the Owner Trustee
all such affidavits and certificates respecting the citizenship or status of the
Owner Participant as the Owner Trustee may require in order to discharge its
duties under the Operative Documents, including without limitation, the FAA
reporting requirements described in Section 8(h) of the Participation Agreement.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.1. Distribution of Payments. (a) Payments to
Equipment Trust Trustee. Until the Equipment Trust Agreement shall have been
discharged pursuant to Section 10.1 thereof, all Basic Rent, Supplemental Rent,
insurance proceeds and requisition or other payments of any kind included in the
Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall
be payable directly to the Equipment Trust Trustee (and if any of the same are
received by the Owner Trustee shall upon receipt be paid over to the Equipment
Trust Trustee without deduction, set-off or adjustment of any kind) for
distribution in accordance with the provisions of Article 3 of the Equipment
Trust Agreement.
(b) Payments to Owner Trustee; Other Parties. After the
Equipment Trust Agreement shall have been discharged pursuant to
Section 1.1 thereof, any payment of the type referred to in
Section 4.1(a) hereof (other than Excluded Payments) received by
the Owner Trustee, any payments received from the Equipment Trust
Trustee other than as specified in Section 4.1(d) hereof and any
other amount received as part of the Trust Estate and for the
application or distribution of which no provision is made herein,
shall be distributed forthwith upon receipt by the Owner Trustee
in the following order of priority: first, so much of such payment
as shall be required to reimburse the Owner Trustee for any
expenses not otherwise reimbursed as to which the Owner Trustee is
entitled to be so reimbursed pursuant to the provisions hereof
shall be retained by the Owner Trustee; second, so much of the
remainder for which provision as to the application thereof is
contained in the Lease or any of the other Operative Documents
shall be applied and distributed in accordance with the terms of
the Lease or such other Operative Document; and third, the
balance, if any, shall be paid ratably to each Owner Participant
in proportion to such Owner Participant's Ownership Interest.
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<PAGE> 4
(c) Certain Distributions to Owner Participant. All amounts
from time to time distributable by the Equipment Trust Trustee to the Owner
Participants pursuant to the Equipment Trust Agreement shall, if paid to the
Owner Trustee, be distributed by the Owner Trustee to each Owner Participant in
proportion to such Owner Participant's Ownership Interest and in accordance with
the provisions of Article 3 of the Equipment Trust Agreement.
(d) Excluded Payments. Any Excluded Payments received by the
Owner Trustee shall be paid by the Owner Trustee to the person to whom such
Excluded Payments are payable under the provisions of the Participation
Agreement, the Tax Indemnity Agreement or the Lease.
SECTION 4.2. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to each Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of such Owner Participant as such Owner
Participant may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will, if so requested by such
Owner Participant in writing, pay any or all amounts payable to such Owner
Participant pursuant to this Article IV either (i) by crediting such amount or
amounts to an account or accounts maintained by such Owner Participant with the
Owner Trustee in its individual capacity in immediately available funds, (ii) by
payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to such Owner Participant at. such address as such Owner
Participant shall have designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1. Notice of Event of Default. If the Owner Trustee
shall have knowledge of an Event of Default or Event of Acceleration (or an
event which with the passage of time or the giving of notice or both would
constitute an Event of Default or an Event of Acceleration) the Owner Trustee
shall give to each Owner Participant prompt telephonic or telex notice thereof
followed by prompt confirmation thereof by certified mail, postage prepaid,
provided that (i) in the case of an event which with the passage of time would
constitute an Event of Acceleration referred to in paragraph (c) of Section 8.1
of the Equipment Trust Agreement, such notice shall in no event be furnished
later than ten days after the Owner Trustee shall first have knowledge of such
event and (ii) in the case of a misrepresentation by the Owner Trustee which
with the passage of time would constitute an Event of Acceleration referred to
in paragraph (d) of Section 8.1 of the Equipment Trust Agreement, such notice
shall in no event be furnished later than ten days
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<PAGE> 5
after the Owner Trustee shall first have knowledge of such event. Subject to the
terms of Section 5.3 hereof, the Owner Trustee shall take such action or shall
refrain from taking such action, not inconsistent with the provisions of the
Equipment Trust Agreement, with respect to such Event of Default, Event of
Acceleration or other event as the Owner Trustee shall be directed in writing by
a Majority in Interest of Owner Participants. If the Owner Trustee shall not
have received instructions as above provided within 20 days after the mailing of
such notice to the Owner Participants, the Owner Trustee until instructed
otherwise in accordance with the preceding sentence may, but shall be under no
duty to, take or refrain from taking such action with respect to such Event of
Default, Event of Acceleration or other event, not inconsistent with the
provisions of the Equipment Trust Agreement, as it shall deem advisable in the
best interests of the Owner Participants. For all purposes of this Trust
Agreement, the Lease and the other Operative Documents, in the absence of actual
knowledge by a responsible officer or responsible employee of the Corporate
Trust Division of the Owner Trustee in his or her capacity as such, the Owner
Trustee shall not be deemed to have knowledge of an Event of Default, Event of
Acceleration or other event referred to in this Section 5.1 unless notified in
writing by the Equipment Trust Trustee, one or more of the Owner Participants or
Lessee.
SECTION 5.2. Action Upon Instructions. Subject to the terms
of Sections 5.1 and 5.3 hereof, upon the written instructions at any time and
from time to time of a Majority in Interest of Owner Participants, the Owner
Trustee will take such of the following actions, not inconsistent with the
provisions of the Equipment Trust Agreement, as may be specified in such
instructions: (i) give such notice or direction or exercise such right, remedy
or power hereunder or under any of the Operative Documents to which the Owner
Trustee is a party or in respect of all or any part of the Trust Estate, or take
such other action, as shall be specified in such instructions (including
entering into agreements referred to in clause (i) of the definition of
"Subsequent Owner Participant"); (ii) take such action to preserve or protect
the Trust Estate (including the discharge of Liens) as may be specified in such
instructions; (iii) approve as satisfactory to it all matters required by the
terms of the Lease or the other Operative Documents to be satisfactory to the
Owner Trustee, it being understood that without written instructions of a
Majority in Interest of Owner Participants, the Owner Trustee shall not approve
any such matter as satisfactory to it; and (iv) subject to the rights of Lessee
under the Operative Documents, after the expiration or earlier termination of
the Lease, convey all of the Owner Trustee's right, title and interest in and to
the Aircraft for such amount, on such terms and to such purchaser or purchasers
as shall be designated in such instructions, or retain, lease or otherwise
dispose of, or from time to time take such other action with respect to, the
Aircraft on such terms as shall be designated in such instructions.
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<PAGE> 6
SECTION 5.3. Indemnification. The Owner Trustee shall not be
required to take any action under Section 5.1 or 5.2 hereof unless the Owner
Trustee shall have been indemnified by the Owner Participants, in manner and
form satisfactory to the Owner Trustee, against any liability, cost or expense
(including reasonable counsel fees and disbursements) which may be incurred in
connection therewith; and, if a Majority in Interest of Owner Participants shall
have directed the Owner Trustee to take any such action or refrain from taking
any action, each Owner Participant agrees to furnish such indemnity as shall be
required (severally and ratably according to their respective Ownership
Interests) and, in addition, to the extent not otherwise paid pursuant to the
provisions of the Lease or of the Participation Agreement, to pay (severally and
ratably according to their respective Ownership Interests) the reasonable
compensation of the Owner Trustee for the services performed or to be performed
by it pursuant to such direction and any fees and disbursements of counsel or
agents employed by the Owner Trustee in connection therewith. The Owner Trustee
shall not be required to take any action under Section 5.1 or 5.2 hereof if the
Owner Trustee shall reasonably determine, or shall have been advised by counsel,
that such action is contrary to the terms of any of the Operative Documents to
which the Owner Trustee is a party, or is otherwise contrary to law.
SECTION 5.4. No Duties Except as Specified in Trust Agreement
or Instructions. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
extent not inconsistent with the provisions of the Equipment Trust Agreement) as
expressly provided by the terms hereof or in written instructions from a
Majority in Interest of Owner Participants received pursuant to the terms of
Section 5.1 or 5.2, and no implied duties or obligations shall be read into this
Trust Agreement against the Owner Trustee. The First National Bank of Boston
agrees that it will, in its individual capacity and at its own cost or expense
(but without any right of indemnity in respect of any such cost or expense under
Section 7.1 hereof) promptly take such action as may be necessary to duly
discharge and satisfy in full all Lessor Liens which it is required to discharge
pursuant to Section 8(h) of the Participation Agreement and otherwise comply
with the terms of said Section binding on it.
SECTION 5.5. Satisfaction of Conditions Precedent. Anything
herein to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.1 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent
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<PAGE> 7
specified in Section 3.2 hereof and in Section 4(a) of the Participation
Agreement.
SECTION 5.6. No Action Except Under Specified Documents or
Instructions. The Owner Trustee agrees that it will not manage, control, use,
sell, dispose of or otherwise deal with the Aircraft or any other part of the
Trust Estate except (i) as expressly required by the terms of any of the
Operative Documents to which the Owner Trustee is a party, (ii) as expressly
provided by the terms hereof, or (iii) as expressly provided in written
instructions from a Majority in Interest of Owner Participants pursuant to
Section 5.1 or 5.2 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1. Acceptance of Trusts and Duties. The First
National Bank of Boston accepts the trusts hereby created and agrees to perform
the same but only upon the terms hereof applicable to it. The Owner Trustee also
agrees to receive and disburse all monies received by it constituting part of
the Trust Estate upon the terms hereof. The First National Bank of Boston shall
not be answerable or accountable under any circumstances, except (a) for its own
willful misconduct or gross negligence, (b) for performance of the terms of the
last sentence of Section 5.4 hereof, (c) for its or the Owner Trustee's failure
to use ordinary care to disburse funds, (d) for liabilities that may result from
the inaccuracy of any representation or warranty of it (or from the failure by
it to perform any covenant) in Section 6.3 hereof, in Section 2.10 of the
Equipment Trust Agreement, in Section 4 of the Lease or in Section 8(c) and 8(d)
of the Participation Agreement and (e) for Taxes on, based on or measured by
fees, commissions or compensation received by the Owner Trustee for acting as
trustee in connection with any of the transactions contemplated by the Operative
Documents.
SECTION 6.2. Absence of Certain Duties. Except in accordance
with written instructions furnished pursuant to Section 5.2 hereof and except as
provided in, and without limiting the generality of, Section 5.4 hereof and the
last sentence of Section 9.1(b) hereof, neither the Owner Trustee nor The First
National Bank of Boston shall have any duty (i) to see to any recording or
filing of any Operative Document or of any supplement to any thereof or to see
to the Maintenance of any such recording or filing or any other filing of
reports with the Federal Aviation Administration or other governmental agencies,
except that the Owner Trustee shall, to the extent that information for that
purpose is supplied by Lessee pursuant to any of the Operative Documents,
complete and timely submit (and furnish each Owner Participant with a copy of)
any and all reports relating to the Aircraft which may from time to time be
required by the Federal Aviation Administration or any government
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or governmental authority having jurisdiction, (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance, whether or not Lessee
shall be in default with respect thereto, other than to forward to the Owner
Participant copies of all reports and other written information which the Owner
Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to
see to the payment or discharge of any tax, assessment or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed or
levied against any part of the Estate or the Trust Estate, except as provided in
Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and
records with respect to the Aircraft at any time permitted pursuant to the
Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the
Equipment Trust Trustee and each of the Owner Participants, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Owner Trustee under the Lease or any other Operative Document.
SECTION 6.3. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR THE FIRST NATIONAL BANK OF BOSTON MAKES
OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF TEE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that
The First National Bank of Boston in its individual capacity represents and
warrants that on the Delivery Date the Owner Trustee shall have received
whatever title was conveyed to it by Lessee and that the Aircraft shall during
the Lease Term be free of Lessor Liens attributable to it, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any Operative Document to which the Owner Trustee is a
party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof except to the extent that any such statement
is expressly made herein or therein as a representation by The First National
Bank of Boston in its individual capacity or by the Owner Trustee and except
that The First National Bank of Boston in its individual capacity hereby
represents and warrants that this Trust Agreement has been, and (assuming due
authorization, execution and delivery by the Original Owner Participant of this
Trust Agreement) the Operative Documents to which it or the Owner Trustee is a
party have been (or at the time of execution and delivery of any such instrument
by it or the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself or the
Owner Trustee, as the case may be.
SECTION 6.4. No Segregation of Monies Required; No Interest.
Except as otherwise provided herein or in any of the
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Operative Documents, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
SECTION 6.5. Reliance Upon Certificates, Counsel and Agents.
The Owner Trustee shall incur no liability to anyone in acting in reliance upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of the
Owner Participants or Lessee mentioned herein or in any of the Operative
Documents to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be the Chairman of the
Board, the President or any Vice President or a managing director and in the
name of any such Owner Participant or Lessee, as the case may be. The Owner
Trustee may accept a copy of a resolution of the Board of Directors or Executive
Committee of Lessee, certified by the Secretary of Lessee as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been duly
adopted by said Board or Committee and that the same is in full force and
effect. As to any fact or matter the manner of ascertainment of which is not
specifically described herein, the Owner Trustee may for all purposes hereof
rely on a certificate signed by a person purporting to be the Chairman of the
Board, the President or any Vice President or a managing director of Lessee, as
to such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. In the administration of trusts hereunder, the Owner
Trustee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and may, at the
expense of the Trust Estate, consult with counsel, accountants and other skilled
persons to be selected and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel, accountants or other skilled persons
and the Owner Trustee shall not be liable for the negligence of any such agent,
attorney, counsel, accountant or other skilled person appointed by it with due
care hereunder.
SECTION 6.6. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Equipment Trust Agreement, all
persons, other than the Owner Participant, as provided herein, having any claim
against the Owner Trustee by reason of the transactions
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contemplated hereby shall look only to the Trust Estate for payment or
satisfaction thereof.
SECTION 6.7. Fees; Compensation. Except as provided in
Section 5.3 or 7.1 hereof, the Owner Trustee agrees that it shall have no right
against the Owner Participants or (subject to the provisions of the Equipment
Trust Agreement) the Trust Estate for any fee as compensation for its services
hereunder; provided, however, that the Owner Trustee shall have a lien upon the
Trust Estate (subject, however, to the Lien of the Equipment Trust Agreement)
for any such fee not paid by Lessee as contemplated by the last paragraph of
Section 7(c) of the Participation Agreement.
SECTION 6.8. Tax Returns. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to the
receipt and disbursement of all moneys under this Trust Agreement or any
agreement contemplated hereby. The Owner Participants shall be responsible for
causing to be prepared and filed all income tax returns required to be filed by
the Owner Participants. The Owner Trustee shall be responsible for causing to be
prepared, at the request of the Owner Participant, all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns. Each Owner Participant, upon request, will furnish the
Owner Trustee with all such information as may be reasonably required from any
such Owner Participant in connection with the preparation of such income tax
returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANTS
SECTION 7.1. Owner Participants to Indemnify Owner Trustee.
The Owner Participants hereby severally agree, each in proportion to its
Ownership Interest, whether or not any of the transactions contemplated hereby
shall be consummated, to assume liability for, and hereby indemnify, protect,
save and keep harmless The First National Bank of Boston in its individual
capacity and its successors, assigns, legal representatives, agents and
servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by The First National
Bank of Boston in its individual capacity on or measured by any compensation
received by The First National Bank of Boston in its individual capacity for its
services hereunder), claims, actions, suits, costs, expenses or disbursements
(including, without limitation, reasonable ongoing fees of the Owner Trustee,
reasonable legal fees and expenses, and including without limitation any
liability of an Owner, any strict liability and any liability without fault) of
any kind and nature whatsoever which may be imposed on, incurred by or asserted
against The First National Bank of Boston in its individual capacity (whether or
not also indemnified against by
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Lessee under the Lease or under the Participation Agreement or also indemnified
against by any other person) in any way relating to or arising out of this Trust
Agreement or any of the Operative Documents or the enforcement of any of the
terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, Ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark or
copyright infringement), or in any way relating to or arising out of the
administration of the Trust Estate or the action or inaction of the Owner
Trustee or The First National Bank of Boston in its individual capacity
hereunder, except (a) in the case of willful misconduct or gross negligence on
the part of the Owner Trustee or The First National Bank of Boston in its
individual capacity in the performance or non-performance of its duties
hereunder or (b) those resulting from the inaccuracy of any representation or
warranty of the Owner Trustee or The First National Bank of Boston in its
individual capacity (or from the failure of the Owner Trustee or The First
National Bank of Boston in its individual capacity to perform any covenant) in
Section 6.3 hereof, in Section 2.10 of the Equipment Trust Agreement or, with
respect to representations or warranties of The First National Bank of Boston in
its individual capacity only, in Section 4 of the Lease, in Section 8(c) or
Section 8(d) of the Participation Agreement or in any of the other Operative
Documents or (c) as may result from a breach by the Owner Trustee or The First
National Bank of Boston in its individual capacity of their respective covenants
in the last sentence of Section 5.4 hereof or (d) in the case of failure to use
ordinary care on the part of the Owner Trustee or The First National Bank of
Boston in its individual capacity in the disbursement of funds. The indemnities
contained in this Section 7.1 extend to The First National Bank of Boston only
in its individual capacity and shall not be construed as indemnities of the
Estate or the Trust Estate (except to the extent, if any, that The First
National Bank of Boston in its individual capacity has been reimbursed by the
Estate or the Trust Estate for amounts covered by the indemnities contained in
this Section 7.1). The indemnities contained in this Section 7.1 shall survive
the termination of this Trust Agreement. In addition, if necessary, The First
National Bank of Boston in its individual capacity shall be entitled to
indemnification from the Trust Estate, subject to the Lien of the Equipment
Trust Agreement, for any liability, obligation, loss, damage, penalty, tax,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.1 to the extent not reimbursed by Lessee, the Owner
Participants or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same The First National Bank of
Boston in its individual capacity shall have a Lien on the Trust Estate, subject
to the Lien of the Equipment Trust Agreement, which shall be prior to any
interest therein of the Owner Participants. The payor of any indemnity under
this
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Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF AN OWNER PARTICIPANT'S INTEREST
SECTION 8.1. Transfer of Interests. All provisions of Section
8(n) of the Participation Agreement shall (with the same force and effect as if
set forth in full, mutatis mutandis, in this Section 8.1) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of any of its
right, title or interest in and to this Trust Agreement or any of the operative
Documents to which the Owner Trustee is a party.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
SECTION 9.1. Resignation of Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least 60 days' prior written notice to each Owner Participant, the Equipment
Trust Trustee and Lessee, such resignation to be effective upon the acceptance
of appointment by the successor Owner Trustee under Section 9.1(b) hereof. In
addition, a Majority in Interest of Owner Participants may at any time remove
the Owner Trustee without cause by a notice in writing delivered to the Owner
Trustee, all other Owner Participants, the Equipment Trust Trustee and Lessee,
such removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.1(b) hereof. In the case of the resignation or
removal of the Owner Trustee, a Majority in Interest of Owner Participants may
appoint a successor Owner Trustee by an instrument signed by such Owner
Participants. If a successor Owner Trustee shall not have been appointed within
30 days after such notice of resignation or removal, the Owner Trustee, any
Owner Participant, Lessee or the Equipment Trust Trustee may apply to any court
of competent jurisdiction to appoint a successor Owner Trustee to act until such
time, if any, as a successor shall have been appointed as above provided. Any
successor Owner Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Owner Trustee appointed as above
provided.
(b) Execution and Delivery of Documents, etc. Any successor
Owner Trustee, however appointed, shall execute and deliver to the predecessor
Owner Trustee an instrument accepting such appointment, and thereupon such
successor Owner Trustee,
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without further act, shall become vested with all the estates, properties,
rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts
hereunder with like effect as if originally named the Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee will execute such documents as are provided to it by such successor
Owner Trustee and will take such further actions as are requested of it by such
successor Owner Trustee as are reasonably required to cause registration of the
Aircraft included in the Trust Estate to be transferred upon the records of the
Federal Aviation Administration, or other governmental authority having
jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a "citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation Act and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $50,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.1(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.2. Co-Trustees and Separate Trustees. If at any
time it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which all or any part of the Trust Estate is located, or the
Owner Trustee being advised by counsel shall determine that it is so necessary
or prudent in the interest of the Owner Participants or the Owner Trustee, or
the Owner Trustee shall have been directed to do so by a Majority in Interest of
Owner Participants, the Owner Trustee and each Owner Participant shall execute
and deliver an agreement supplemental hereto and all other instruments and
agreements necessary or proper to constitute another bank or trust company or
one or more persons (any and all of which shall be a "citizen of the United
States" as defined in Section 101(16) of the Federal Aviation
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Act) approved by the Owner Trustee and a Majority in Interest of Owner
Participants, either to act as co-trustee, jointly with the Owner Trustee, or to
act as separate trustee hereunder (any such co-trustee or separate trustee being
herein sometimes referred to as an "additional trustee"), and to vest in such
persons, in such capacity, such title to the Trust Estate or any part thereof,
and such rights or duties as may be necessary or desirable, all for such period
and under such terms and conditions as are satisfactory to the Owner Trustee and
the Owner Participant. In case any co-trustee or separate trustee shall die,
become incapable of acting, resign or be removed, the title to the Trust Estate
and all rights and duties of such co-trustee or separate trustee shall, so far
as permitted by law, vest in and be exercised by the Owner Trustee, without the
appointment of a successor to such co-trustee or separate trustee. In the event
the Owner Participants shall not have joined in the execution of such agreements
supplemental hereto within ten days after the receipt of a written request from
the Owner Trustee so to do, or in case a Lease Event of Default or Event of
Acceleration shall occur and be continuing, the Owner Trustee may act under the
foregoing provisions of this Section 9.2 without the concurrence of the Owner
Participants; and the Owner Participants hereby appoint the Owner Trustee their
agent and attorney-in-fact to act for them under the foregoing provisions of
this Section 9.2 in either of such contingencies.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its successors
shall act, subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and
management of monies, the Aircraft or documents authorized to be
delivered hereunder or under the Participation Agreement shall be
exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred or
imposed upon and exercised or performed by the Owner Trustee and
such additional trustee jointly, except to the extent that under
any law of any jurisdiction in which any particular act or acts
are to be performed (including the holding of title to the Trust
Estate) the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised
hereunder by such additional trustee, except
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jointly with, or with the consent in writing of, the Owner
Trustee;
(D) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder;
(E) a Majority in Interest of Owner Participants, at any
time, by an instrument in writing may remove any such additional
trustee. In the event that the Owner Participants shall not have
joined in the execution of any such instrument within ten days
after the receipt of a written request from the Owner Trustee so
to do, the Owner Trustee shall have the power to remove any such
additional trustee without the concurrence of the Owner
Participants; and the Owner Participants hereby appoint the Owner
Trustee their agent and attorney-in-fact for them in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee
will relieve the Owner Trustee of any of its obligations under, or
otherwise affect any of the terms of, the Equipment Trust
Agreement or affect the interests of the Equipment Trust Trustee
or the Holders of the Certificates in the Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.1. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and a
Majority in Interest of Owner Participants. Subject to Section 10.2 hereof and
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other modification of this Trust Agreement or of any
other Operative Document to which the Owner Trustee is a party which it is
requested to execute by a Majority in Interest of Owner Participants, except
that the Owner Trustee shall not execute any such amendment, supplement or other
modification which, by the express provisions of any of the above documents,
requires the consent of any other party unless such consent shall have been
obtained; and provided that, without the prior written consent of each Owner
Participant: (i) no such supplement, amendment or modification shall (A) modify
any of the provisions of this Section 10.1, the definition of "Majority in
Interest of Owner Participants" or Article IV hereof, (B) reduce, modify or
amend any indemnities in favor of any Owner Participant as set forth in Section
7 of the Participation Agreement or in the Tax Indemnity Agreement, (C) reduce
the amount or extend the time of payment of
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Basic Rent, Supplemental Rent, Termination Value or Stipulated Loss Value for
the Aircraft as set forth in the Lease and (ii) no such supplement, amendment or
modification shall require any Owner Participant to invest or advance funds or
shall entail any additional personal liability or the surrender of any
indemnification, claim or individual right on the part of any Owner Participant
with respect to any agreement or obligation.
(b) Delivery of Amendments and Supplements to Certain
Parties. A signed copy of each amendment or supplement referred to in Section
10.1(a) hereof shall be delivered by the Owner Trustee to the Equipment Trust
Trustee.
(c) Limitation on Amendments. The provisions of Section 10.1
notwithstanding, the Owner Trustee shall not be required to execute any
amendment which might result in the trusts created hereunder being terminated
prior to the release of the Lien of the Equipment Trust Agreement on the Estate
or prior to the payment in full of the principal of, premium (if any) and
interest on the Certificates.
SECTION 10.2. Discretion as to Execution of Documents. Prior
to executing any document required to be executed by it pursuant to the terms of
Section 10.1 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.3. Absence of Requirements as to Form. It shall
not be necessary for any written request furnished pursuant to Section 10.1
hereof to specify the particular form of the proposed documents to be executed
pursuant to such Section, but it shall be sufficient if such request shall
indicate the substance thereof.
SECTION 10.4. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.1 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to each Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.5. No Request Needed as to Lease Supplement and
Trust Supplement. No written request pursuant to Section 10.1 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.1
hereof and the
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Trust Supplement pursuant to the terms of the Equipment Trust Agreement and
Section 3.1 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Termination of Trust Agreement. This Trust
Agreement and the trusts created hereby shall be of no further force or effect
upon the earlier of (a) both the final discharge of the Equipment Trust
Agreement pursuant to Section 10.1 thereof and the sale or other final
disposition by the Owner Trustee of all property constituting part of the Trust
Estate and the final distribution by the Owner Trustee of all monies or other
property or proceeds constituting part of the Trust Estate in accordance with
Article IV hereof, provided that at such time Lessee shall have fully complied
with all of the terms of the Lease and the Participation Agreement or (b)
twenty-one years less one day after the death of the last survivor of all of the
descendants of the grandparents of David Rockefeller living on the date of the
earliest execution of this Trust Agreement by any party hereto (or, without
limiting the generality of the foregoing, if legislation shall become effective
providing for the ability or permitting the effective grant of such rights,
privileges and options for a period in gross exceeding the period for which such
rights, privileges and options are hereinabove stated to extend and be valid,
then such rights, privileges or options shall not terminate as aforesaid but
shall extend to and continue in effect, but only if such nontermination and
extension shall then be valid under Applicable Law, until such time as the same
shall, under Applicable Law, cease to be valid); otherwise this Trust Agreement
and the trusts created hereby shall continue in full force and effect in
accordance with the terms hereof.
SECTION 11.2. Owner Participants Have No Legal Title in Trust
Estate. The Owner Participants shall not have legal title to any part of the
Trust Estate. No transfer, by operation of law or otherwise, of any right, title
and interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participants to an accounting or to the
transfer of legal title to any part of the Trust Estate.
SECTION 11.3. Assignment, Sale, etc. of Aircraft. Any
assignment, sale, transfer or other conveyance of the Aircraft or an Engine or
any Part thereof by the Owner Trustee made pursuant to the terms hereof or of
the Lease or the Participation Agreement shall bind the Owner Participants and
shall be effective to transfer or convey all right, title and interest of the
Owner Trustee and the Owner Participants in and to the Aircraft or any Engine or
any Part thereof. No purchaser or other grantee shall be required to inquire as
to the
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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 the Owner Trustee
SECTION 11.4. Trust Agreement for Benefit of Certain Parties
Only. Except for the terms of Section 8(n) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in Article
IX and Section 10.1 hereof, nothing herein, whether expressed or implied, shall
be construed to give any person other than the Owner Trustee and the Owner
Participants any legal or equitable right, remedy or claim under or in respect
of this Trust Agreement; but this Trust Agreement shall be held to be for the
sole and exclusive benefit of the Owner Trustee and the Owner Participants.
SECTION 11.5. Notices; Consent to Jurisdiction. (a) All
notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be in writing and shall be
personally delivered or sent by registered or certified mail, postage prepaid,
or by prepaid Telex, TWX or telegram (with messenger delivery specified in the
case of a telegram) , or by telecopier, or by prepaid courier service, and shall
be deemed to be given for purposes of this Agreement on the day that such
writing is delivered or sent to the intended recipient thereof in accordance
with the provisions of this Section 11.5(a). Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this
Section 11.5(a), notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective Telex, TWX or telecopier numbers)
as follows: (A) if to Lessee, the Owner Trustee, the Equipment Trust Trustee or
the Owner Participant, to the respective addresses set forth below the
signatures of such parties at the foot of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such Subsequent Owner
Participant at such address as such Subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any Holder, addressed to
such Holder at its address set forth in the certificate register maintained
pursuant to Section 2.4 of the Equipment Trust Agreement.
(b) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court for
the Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to
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assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, to the extent permitted by applicable law, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that the Participation Agreement, the
Lease, the Tax Indemnity Agreement or any other Operative Document or the
subject matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts.
SECTION 11.6. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. Waivers, etc. No term or provision hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing entered into in compliance with the terms of Article X hereof; and
any waiver of the terms hereof shall be effective only in the specific instance
and for the specific purpose given.
SECTION 11.8. Counterparts. This Trust 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.
SECTION 11.9. Binding Effect, etc. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Owner Trustee and its successors and assigns, and the Owner Participants,
their successors and, to the extent permitted by Article VIII hereof, their
assigns. Any request, notice, direction, consent, waiver or other instrument or
action by an Owner Participant shall bind its successors and assigns. Any Owner
Participant which shall cease to have any Ownership Interest shall thereupon
cease to be a party hereto or an Owner Participant for any reason and shall have
no further obligations hereunder.
SECTION 11.10. Headings; References. The headings of the
various Articles and Sections herein are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Trust Agreement shall in
all respects be governed by, and construed in accordance with, the laws of the
State of New York, including all matters of construction, validity and
performance. This Trust Agreement has been delivered in the State of New York.
-19-
<PAGE> 20
TRUST AGREEMENT NW 1989 B SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[_______________________]
By:_______________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:_______________________________
Title:
By:_______________________________
Title:
-20-
<PAGE> 21
ANNEX A
-------
NORTHWEST AIRLINES, INC.
LEASE OF ONE BOEING 747-451 AIRCRAFT
DEFINITIONS RELATING TO THE PARTICIPATION
AGREEMENT, LEASE AGREEMENT, TRUST AGREEMENT,
PURCHASE AGREEMENT ASSIGNMENT, EQUIPMENT TRUST AGREEMENT
AND TAX INDEMNITY AGREEMENT, DATED AS OF MARCH 15, 1989
RELATING TO [NW 1989 B]
The definitions stated herein shall apply equally to both the
singular and plural forms of the terms defined. Reference herein to any
Operative Document shall be deemed to refer to the document referring on the
first or cover page thereof to [NW 1989 B].
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Equipment Trust Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Equipment Trust Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a Senior vice president or
other higher officer of the Owner Participant; provided that each of the Owner
Trustee, the Equipment Trust Trustee and the Owner Participant shall be deemed
to have "Actual Knowledge" of any matter as to which it has been given notice by
any of Lessee, the Owner Participant, any Holder, the Owner Trustee or the
Equipment Trust Trustee, such notice having been given in accordance with
Section 13(b) of the Participation Agreement.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under common control
with such person. For the purposes of this definition, "control" when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the Ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" means any Paying Agent or Registrar.
"Agreement," "this Agreement," "herein," "hereby," or other
like terms shall mean the Operative Document in which such term is used.
"Aircraft" means the Airframe to be delivered and leased
under the Lease (or any airframe from time to time substituted for such Airframe
pursuant to Section 10(a) of the
<PAGE> 22
Lease) together with the four Engines initially leased under the Lease (or any
engine substituted for any of such Engines pursuant to the terms of the Lease),
whether or not any of such initial or substituted Engines may from time to time
be installed on such initial or substituted Airframe or may be installed on any
other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 747-451 aircraft (except
Engines or engines from time to time installed thereon) specified in the initial
Lease Supplement, manufactured by the Manufacturer and transferred by Lessee to
Lessor pursuant to the Bill of Sale, which aircraft shall be leased by Lessor to
Lessee under the Lease and under such Lease Supplement, and any aircraft (except
Engines or engines from time to time installed thereon) which may from time to
time be substituted for such aircraft (except Engines or engines from time to
time installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a) of the Lease Agreement; and (ii) any and all Parts (A) so long as
the same shall be incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed thereon), or (B) so long
as title thereto shall remain vested in Lessor in accordance with the terms of
Section 8 of the Lease Agreement after removal from such aircraft (except
Engines or engines from time to time installed thereon); provided, however, that
at such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased under the Lease
in substitution for the Airframe pursuant to the applicable provisions of the
Lease, the replaced Airframe shall cease to be an Airframe under the Lease.
"Applicable Law" means all applicable laws, treaties,
judgments, decrees, injunctions, writs and orders of any court, governmental
agency or authority and rules, regulations, orders, directives, licenses and
permits of any governmental body, instrumentality, agency or authority.
"Applicable Rate" means, as of any date, the weighted average
of the interest rates borne by the Certificates then Outstanding.
"Appraiser" means a Person appointed by the Company engaged
in the business of making appraisals and familiar with aviation equipment or a
Person employed by the Company and sufficiently familiar with aviation equipment
to make determinations as to the value thereof.
"Assumed Interest Rate" has the meaning set forth in Section
3(c) of the Lease Agreement.
"Base Rate" means the rate of interest announced from time to
time by Chase Manhattan Bank N.A. at its principal office in New York, New York
as its "base rate" or its equivalent successor rate if the base rate is no
longer used.
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<PAGE> 23
"Basic Rent" means, for the Basic Term, the rent payable for
the Aircraft pursuant to Section 3(c) of the Lease Agreement as adjusted as
provided in Section 3(d) of the Lease Agreement and, for. any Renewal Term,
Basic Rent determined pursuant to Section 19 of the Lease Agreement.
"Basic Term" means the term for which the Aircraft is leased
under the Lease pursuant to Section 3(a) of the Lease Agreement commencing on
the Commencement Date and ending on September 15, 2014.
"Bill of Sale" means a full warranty bill of sale covering
the Aircraft, executed by Lessee in favor of the Owner Trustee, dated the
'Delivery Date, specifically referring to the Airframe and each Engine, which
Bill of Sale and warranty shall contain, among other things, a statement that
such Bill of Sale thereby conveys to the Owner Trustee good and marketable title
to the Airframe and each Engine described in such Bill of Sale, free and clear
of all liens, encumbrances and rights of others except Permitted Liens.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in the
City of New York, New York; Boston, Massachusetts; Minneapolis, Minnesota; or
the city in which the Corporate Trust Office of the Equipment Trust Trustee (as
long as the Equipment Trust Agreement has not been discharged) is located.
"Certificate" means any certificate of any Series issued by
the Equipment Trust Trustee under the Equipment Trust Agreement, substantially
in the form annexed as an exhibit thereto, as such form may be varied pursuant
to the terms thereof, and includes any certificates issued thereunder in
exchange for or replacement of any thereof or upon any redemption of a series of
certificates as provided in the Equipment Trust Agreement.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government pursuant
to Executive Order No. 11490, as amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as amended
through the Delivery Date.
"Commencement Date" means September 15, 1989.
"Company" means Northwest Airlines, Inc., a Minnesota
corporation, and its permitted successors and assigns, and when used in the
Equipment Trust Agreement, shall also include any other "obligor", within the
meaning of the Trust Indenture Act.
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<PAGE> 24
"Company Request" means a request by the Company setting
forth the subject matter of the request accompanied by an Officer's Certificate
and an opinion of Counsel if required by Section 14.04 of the Equipment Trust
Agreement.
"Consent and Agreement" means the Consent and Agreement [NW
1989 B], dated as of March 15, 1989, executed by the Manufacturer, as the same
may be amended, modified or supplemented from time to time in accordance with
the applicable provisions thereof.
"Co-Registrar" has the meaning given in Section 2.4 of the
Equipment Trust Agreement.
"Corporate Trust Office" shall mean the principal office of
the Equipment Trust Trustee located at 35 North Sixth Street, Reading,
Pennsylvania 19601, Attention: Corporate Trust Department, or such other office
at which the Equipment Trust Trustee's corporate trust business shall be
administered which the Equipment Trust Trustee shall have specified by notice in
writing to Lessee, the Owner Trustee and each Holder.
"Debt Rate" has the meaning given in Exhibit A to the
Equipment Trust Agreement.
"Defaulted Interest" has the meaning given in Section 2.9 of
the Equipment Trust Agreement.
"Delivery Date" means the date of the Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee.
"Deposited Cash" means the aggregate of (i) cash deposited
with the Equipment Trust Trustee as provided by Section 3.1 of the Equipment
Trust Agreement, (ii) all sums restored to the account containing the Deposited
Cash pursuant to Section 7.1 of the Equipment Trust Agreement and on deposit
with the Equipment Trust Trustee and (iii) when required or indicated by the
context, any Permitted Investment purchased by the use of such cash pursuant to
Section 9.4(b) of the Equipment Trust Agreement.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of four Pratt & Whitney Model PW4056
engines listed by manufacturer's serial number in the initial Lease Supplement,
whether or not from time to time thereafter installed on the Airframe or
installed on any other airframe or on any other aircraft; and (ii) any engine
which may from time to time be substituted, pursuant to the terms of the Lease,
for any of such four engines, together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title
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<PAGE> 25
thereto shall remain vested in Lessor in accordance with the terms of Section 8
of the Lease Agreement after removal from such Engine; provided, however, that
at such time as an engine shall be deemed part of the property leased under the
Lease in substitution for an Engine pursuant to the applicable provisions of the
Lease, the replaced Engine shall cease to be an Engine under the Lease. The term
"Engines" means, as of any date of determination, all Engines then leased under
the Lease.
"Equipment Trust Agreement" means the Equipment Trust
Agreement [NW 1989 B], dated as of March 15, 1989 among the Owner Trustee,
Lessee and the Equipment Trust Trustee, as the same may be modified or
supplemented from time to time. The term "Equipment Trust Agreement" shall also
include each Trust Supplement entered into pursuant to the terms of the
Equipment Trust Agreement.
"Equipment Trust Trustee" means the Equipment Trust Trustee
under the Equipment Trust Agreement, and any entity which may from time to time
be acting as Equipment Trust Trustee under the Equipment Trust Agreement.
"Estate" has the meaning specified in Section 4.3 of the
Equipment Trust Agreement, but excludes the Excluded Payments.
"ETA Default" means any event which is or after notice or
passage of time, or both, would be an Event of Acceleration.
"ETA Lease Term" has the meaning specified in Section 5.2 of
the Equipment Trust Agreement.
"ETA Rent" has the meaning specified in Section 5.3 of the
Equipment Trust Agreement.
"Event of Acceleration" has the meaning specified in Section
8.1 of the Equipment Trust Agreement.
"Event of Default" has the meaning specified in Section 14 of
the Lease.
"Event of Loss" with respect to the Aircraft, Airframe or any
Engine means any of the following events with respect to such property: (i) the
loss of such property or the use thereof due to the destruction of or damage to
such property which renders repair uneconomic or which renders such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss, or a constructive or compromised
total loss; (iii) the theft or disappearance of such property, or the
confiscation, condemnation, or seizure of, or requisition of title to, or use
of, such property by any governmental or purported governmental authority (other
than a requisition for
A-5
<PAGE> 26
use by the United States Government or any other government of registry of the
Aircraft, or any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) shall have resulted in the loss of
possession of such property by Lessee for a period in excess of 180 consecutive
days or on the last day of the Term, whichever first occurs; (iv) as a result of
any law, rule, regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of registry of the
Aircraft having jurisdiction, the use of such property in the normal course of
the business of air transportation shall have been prohibited for a period of
180 consecutive days, unless Lessee, prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such property by
Lessee or, if such prohibition is continuing, on the last day of the Term; (v)
the requisition for use by the United States Government or any other government
of registry of the Aircraft or any instrumentality or agency of any thereof,
which shall have occurred during the Basic Term (or any Renewal Term) and shall
have continued for 30 days beyond the Term, provided, however, that no Event of
Loss pursuant to this clause (v) shall exist if Lessor shall have furnished to
Lessee the written notice specified in Section 10(d) of the Lease and (vi) any
divestiture of title to an Engine treated as an Event of Loss pursuant to
Section 7(b) of the Lease. 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
Airframe.
"Excess Amount" for the Commencement Date means an amount
equal to the amount determined by multiplying Lessor's Cost by the percentage
set forth in column 3 of Exhibit B of the Lease Agreement opposite the
Commencement Date; provided, however, to the extent that the aggregate amount of
interest due and payable on the Commencement Date on the Certificates for the
period from the date of issuance of such Certificates to but excluding the
Commencement Date is less than the aggregate amount of interest on the
Certificates that would have been due and payable on the Commencement Date if
such Certificates had borne interest at the Assumed Interest Rate for such
period, such percentage shall be decreased to compensate for such differential.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant, the Owner Trustee
in its individual capacity or the Equipment Trust Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Sections
7(b) and 7(c) of the Participation Agreement, (ii) proceeds of public liability
insurance in respect of the Aircraft payable as a result of insurance claims
made, or losses suffered, by the Owner Trustee or the Equipment Trust Trustee in
their respective individual capacities or by the Owner Participant,
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<PAGE> 27
(iii) proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or by any Affiliate
of the Owner Participant and not required under Section 11 of the Lease, (iv)
all payments required to be made under the Tax Indemnity Agreement by Lessee and
all payments of Supplemental Rent by Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) fees payable to the Owner Trustee or the
Equipment Trust Trustee pursuant to Section 7(c) of the Participation Agreement,
(vi) provided that the Guaranties shall have been duly assumed by Lessee
pursuant to Section 11.1(6) of the Equipment Trust Agreement, the amounts
payable to the Owner Trustee pursuant to clauses 2(B)(Y) and 2(B)(Z) of Section
9(b) of the Lease or the amounts payable to the Owner Trustee pursuant to the
third sentence of Section 19(d) of the Lease plus all reasonable expenses
incurred by Lessor and the Owner Participant in connection with such assumption,
as applicable, and (vii) any right to enforce the payment of any amount
described in clauses (i) through (vi) above.
"Expenses" has the meaning given in section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on
AC Form 8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means the Federal Aviation Act of
1958, as amended.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any successor agency or agencies
thereto.
"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, Airframe and/or any Engine or engine to standards
which are approved by, or which are substantially equivalent to those required
by, the Federal Aviation Administration, the Civil Aviation Authority of the
United Kingdom, the Direction Generale de 1'Aviation Civile of the French
Republic or the Luftfahrt Bundesamt of the Federal Republic of Germany.
"Funding Loss Amount" means, for each Series BB Certificate,
an amount equal to the net loss or additional expense which the Holder
reasonably expects to sustain or incur as a direct result of the redemption of
the Series BB Certificates on a date other than the last day of an Interest
Period (as reasonably determined by the Holder and set forth in a certificate of
the Holder which includes in reasonable detail the basis for the calculations of
the amount being claimed). Such
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<PAGE> 28
amount shall constitute a premium and shall be deemed such for all places in the
Operative Documents which refer to a "premium" payable with respect to any
Certificate.
"Guaranties" means the guaranty of the Owner Trustee endorsed
on each Certificate, contained in the form of the applicable exhibit to the
Equipment Trust Agreement for each series of Certificates.
"Holder," "Holder of a Certificate" or "Holders of
Certificates" means a person in whose name a Certificate is registered on the
Registrar's books as of any date of determination.
"Holder's Commitment" has the meaning given in Section
1(a)(i) of the Participation Agreement.
"Indemnified Person" has the meaning given in Section 7(c) of
the Participation Agreement.
"Indemnitee" has the meaning given in Section 7(b) of the
Participation Agreement.
"Independent" when used with respect to an engineer,
Appraiser or other expert, means an engineer, Appraiser or other expert who (i)
is in fact independent, (ii) does not have any direct financial interest, or any
material, indirect financial interest in the Company or any Affiliate of the
Company, and (iii) is not connected with the Company or any Affiliate of the
Company as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
"Independent Investment Banker" means an Independent
investment banking institution of national standing appointed by the Company on
behalf of the Owner Trustee; provided, that if the Equipment Trust Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Redemption Date or if an Event of Default shall have occurred and be
continuing, "Independent Investment Banker" means such an institution appointed
by the Equipment Trust Trustee.
"Interest Payment Date" means each March 15 and September 15,
commencing September 15, 1989, so long as any Certificate remains Outstanding.
"Interest Period" has the meaning given in Exhibit A to the
Equipment Trust Agreement.
"Interim Term" means the period commencing on the Delivery
Date and ending on and including the day immediately preceding the Commencement
Date unless earlier terminated in accordance with the provisions of the Lease.
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<PAGE> 29
"Lease" or "Lease Agreement" means that certain Lease
Agreement [NW 1989 B], dated as of March 15, 1989 and entered into by the Owner
Trustee and Lessee as said Lease Agreement may from time to time be supplemented
or amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of the Trust Agreement. The term "Lease" shall
also include each Lease Supplement from time to time entered into pursuant to
the terms of the Lease.
"Lease Period" means each of the consecutive semiannual
periods throughout the Basic Term and any Renewal Term and ending on a Lease
Period Date, the first such period commencing on and including the Commencement
Date.
"Lease Period Date" means March 15, 1990 and each succeeding
September 15 and March 15, to and including the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A of the Lease Agreement, to be entered into between Lessor
and Lessee on the Delivery Date for the purpose of leasing the Aircraft under
and pursuant to the terms of the Lease Agreement, and any subsequent Lease
Supplement entered into in accordance with the terms of the Lease Agreement.
"Lessee" means Northwest Airlines, Inc., a Minnesota
corporation, and its permitted successors and assigns.
"Lessor" means the Owner Trustee and its successors and
permitted assigns.
"Lessor Liens" means any Lien or disposition of title arising
as a result of (i) claims against Lessor, The First National Bank of Boston, in
its individual capacity, or the Owner Participant not related to the
transactions contemplated by the Operative Documents, (ii) any act or omission
of the Owner Participant, Lessor, or The First National Bank of Boston, in its
individual capacity, which is not related to the transactions contemplated by
the Operative Documents or is in violation of any of the terms of the Operative
Documents, (iii) claims against the Owner Participant, Lessor, or The First
National Bank of Boston, in its individual capacity, with respect to Taxes or
Expenses against which Lessee is not required to indemnify the Owner
Participant, Lessor or The First National Bank of Boston, in its individual
capacity, pursuant to Section 7 of the Participation Agreement or (iv) claims
against Lessor or the Owner Participant arising out of any transfer by Lessor or
the Owner Participant of all or any portion of the respective interests of
Lessor or the Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of the Aircraft by
Lessor pursuant to the Lease Agreement, the transfer pursuant to the Equipment
Trust Agreement or a transfer of the Aircraft pursuant to Sections 9, 10 or 19
of the Lease Agreement or pursuant to the exercise of the remedies set forth in
Section
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<PAGE> 30
15 of the Lease Agreement; provided, however, that any Lien which is
attributable solely to The First National Bank of Boston or the Owner
Participant, as applicable, and would otherwise constitute a Lessor Lien under
the Lease shall not constitute a Lessor Lien under the Lease so long as (1) the
existence of such Lien poses no material risk of seizure of the Aircraft, (2)
the existence of such Lien does not interfere in any way with the use or
operation of the Aircraft by Lessee (or any Sublessee), (3) the existence of
such Lien does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Equipment Trust Agreement, (4) The First National
Bank of Boston or the Owner Participant, as the case may be, is diligently
contesting such Lien and (5) the existence of such Lien does not result in
threatened or actual interruption in the payment of Rent assigned to the
Equipment Trust Trustee for the benefit of the Holders of the Certificates.
"Lessor's Cost" for the Aircraft means $125,000,000.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease, sub-sublease or security interest.
"Majority in Interest of Owner Participants" at any time
means the Owner Participant or Owner Participants which then hold more than 50%
of the Ownership Interests of all Owner Participants, except that if there shall
then be two Owner Participants, "Majority in Interest of Owner Participants"
shall mean both such Owner Participants.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer's Bill of Sale" means the bills of sale for the
Aircraft on AC Form 8050-2 or such other form as may be then approved by the
Federal Aviation Administration for the Aircraft, one executed by the
Manufacturer in favor of Boeing Sales Corporation, a subsidiary of the
Manufacturer, and one executed by Boeing Sales Corporation in favor of Lessee.
"Net Economic Return" means the Owner Participant's net
after-tax yield and aggregate after-tax cash flow utilizing the multiple
investment sinking fund method of analysis, computed on the basis of the same
methodology and assumptions as were utilized by the Owner Participant in
determining Basic Rent, Stipulated Loss Values and Termination Values as of the
Delivery Date.
"Net Present Value of Rents" means the net present value, as
of the Commencement Date, of Basic Rent set forth in Exhibit B of the Lease
Agreement, discounted at a rate per Lease Period equal to (a) 10.50% divided by
(b) the number of Lease Periods per year.
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<PAGE> 31
"Officer's Certificate" means a certificate signed by the
Chairman of the Board, the President or any Vice President and by the Treasurer,
Assistant Treasurer, the Secretary or an Assistant Secretary of the Person on
whose behalf such certificate is delivered.
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Lease, the Equipment Trust Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Lease Supplement covering the
Aircraft, the Trust Supplement covering the Aircraft, the Series BB
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement,
the Purchase Agreement Assignment, the Consent and Agreement, the Owner
Trustee's Bills of Sale, the Acceptance Certificate and the Parent Letter.
"Opinion of Counsel" means a written opinion of legal
counsel, who in the case of legal counsel for the Company may be (i) any
attorney employed by the Company, (ii) Cadwalader, Wickersham & Taft or a
successor firm, or (iii) other counsel designated by the Company and reasonably
satisfactory to the Equipment Trust Trustee or, in the case of legal counsel for
the Owner Trustee, may be (x) Csaplar & Bok or (y) other counsel designated by
the Owner Trustee and reasonably satisfactory to the Equipment Trust Trustee.
"Original Holder" means each institution listed and
identified in Schedule I to the Participation Agreement as an Original Holder,
and its successors and registered assigns of the Series BB Certificates.
"Original Holder Liens" means Liens which arise from acts of
or claims against any Original Holder not related to the transactions
contemplated by the Operative Documents.
"Original Owner Participant" means [_______________________],
a [_______________] corporation.
"Outstanding" when used with respect to Certificates means,
as of the date of determination, all Certificates theretofore executed and
delivered under this Agreement, with the exception of the following:
(i) Certificates theretofore cancelled by the Equipment
Trust Trustee or delivered to the Equipment Trust Trustee for
cancellation pursuant to Section 2.8 of the Equipment Trust
Agreement or otherwise;
(ii) Certificates for whose payment or redemption money
in the necessary amount has been theretofore deposited with the
Equipment Trust Trustee in trust for the Holders; provided, that
if such Certificates are to be redeemed, notice of such redemption
has been duly given pursuant to the Equipment Trust Agreement or
provision therefor
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<PAGE> 32
satisfactory to the Equipment Trust Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to the
Equipment Trust Agreement;
provided, however, that in determining whether the Certificate Holders of the
requisite principal amount of Certificates outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by or pledged to the Company or any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Equipment Trust Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates which the Equipment Trust Trustee
knows to be so owned or so pledged shall be disregarded. Certificates owned by
the Company which have been pledged in good faith may be regarded as Outstanding
if the Company establishes to the satisfaction of the Equipment Trust Trustee
the pledgee's right to act with respect to the Certificates and that the pledgee
is not the Company or a Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company.
"Overdue Rate" or "Past Due Rate" means (i) with respect to
any amount which is or will be distributable to Holders pursuant to the terms of
the Equipment Trust Agreement, the rate of interest per annum borne by the
Certificates held by such Holders, and (ii) with respect to any other amount, a
rate per annum equal to 1% over the Base Rate.
"Owner Participant" means the corporation executing the
Participation Agreement as the Owner Participant (as therein defined) and any
person to which such corporation transfers all or any portion of its right,
title and interest in and to the Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.1 of the Trust
Agreement and Section 8 of the Participation Agreement.
Owner Participant's Commitment" has the meaning given in
Section i(a)(ii) of the Participation Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.1 of the Trust Agreement.
"Owner Trustee's Bill of Sale" means a bill of sale for the
Aircraft from the Owner Trustee to the Equipment Trust Trustee.
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<PAGE> 33
"Owner Trustee's FAA Bill of Sale" means a bill of sale for
the Aircraft on AC Form 8050-2 or such other form as may be approved by the
Federal Aviation Administration on the Delivery Date for the Aircraft, executed
by the Owner Trustee in favor of the Equipment Trust Trustee and dated the
Delivery Date.
"Owner Trustee's Bills of Sale" means, collectively, the
Owner Trustee's Bill of Sale and the Owner Trustee's FAA Bill of Sale for the
Aircraft.
"Ownership Interest" means, in the case of each Owner
Participant, the percentage of its undivided beneficial interest in the Trust
Estate created by the Trust Agreement, which percentage shall be: (i) in the
case of the Original Owner Participant (A) so long as it shall be the sole Owner
Participant, 100% and (B) if it shall no longer be the sole Owner Participant,
the percentage of such undivided interest in the Trust Estate which it shall not
have transferred to any Subsequent Owner Participant; and (ii) in the case of
any Subsequent Owner Participant, the percentage of such undivided interest in
the Trust Estate specified in the agreement pursuant to which such Subsequent
Owner Participant becomes an Owner Participant as provided in the definition of
"subsequent Owner Participant".
"Parent" means Imperial Corporation of America, a Delaware
corporation.
"Parent Letter" means that certain letter agreement [NW 1989
B], dated as of March 15, 1989, from the Parent to the parties specified in
Schedule A attached thereto.
"Participation Agreement" means that certain Participation
Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, the Equipment
Trust Trustee, the Owner Participant, the Original Holder and Lessor, as such
Participation Agreement may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by Lessee from
a third party (other than Lessor) title to which is not required to be vested in
Lessor pursuant to Section 8 of the Lease and (c) cargo containers) which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in Lessor in
accordance with Section 8 of the Lease Agreement after removal therefrom.
"Paying Agent" has the meaning given in Section 2.4 of the
Equipment Trust Agreement.
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<PAGE> 34
"Payment Date" shall mean each March 15 and September 15,
commencing on September 15, 1989 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Certificates have been paid in
full.
"Permitted Investment" means (i) direct obligations of the
United States of America and agencies guaranteed by the United States government
having a final maturity of one year or less from date of purchase thereof; (ii)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
with any bank, trust company or national banking association incorporated or
doing business under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings as of
its last report of condition of at least $100,000,000 and having a short term
debt rating of B or better by Keefe, Bruyette & Woods, Inc. or 3 or better by
McCarthy, Crisanti & Maffie, Inc. (including the Owner Trustee or the Equipment
Trust Trustee if such conditions are met) and having a final maturity of one
year or less from date of purchase thereof; (iii) commercial paper of any
holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
(including the Owner Participant if it satisfies the conditions hereof)
incorporated or doing business under the laws of the United States of America or
any state thereof having a rating assigned to such commercial paper of Al by
Standard & Poor's Corporation or P1 by Moody's Investors Service, Inc. (or, if
neither such organization shall rate such commercial paper at any time, a rating
equal to the highest ratings assigned by any nationally recognized rating
organization in the United States of America) and having a final maturity of 270
days or less from the date of purchase thereof; (iv) U.S. dollar-denominated
certificates of deposit issued by the European subsidiaries of any bank, trust
company or national banking association described in (ii) and having a final
maturity of 90 days or less from the date of purchase thereof; (v) U.S.-issued
Yankee certificates of deposit issued by or bankers' acceptances of any bank
having total deposits as of its last report of condition exceeding an amount
equivalent to U.S. $10,000,000,000, a Peer Group and Dollar Risk ratings by
Keefe, Bruyette & Woods, Inc. of II or better and headquartered in Canada,
Japan, the United Kingdom, West Germany, Switzerland or the Netherlands and
having a final maturity of one year or less from the date of purchase thereof;
or (vi) repurchase agreements with any financial institution having combined
capital and surplus and retained earnings as of its last report of condition of
at least $100,000,000 (including the Owner Trustee and the Equipment Trust
Trustee if such conditions are met) when subject to an executed Master
Repurchase Agreement and which are fully collateralized by obligations described
in clause (i) above where delivery must be taken, and having a final maturity of
90 days or less from the date of purchase thereof; provided that except for
investments described in clauses (i) and (vi) above, no more than the greater of
$10,000,000 or 50% of the principal amount may be invested as
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<PAGE> 35
"Permitted Investments" issued by any one corporation, bank holding company,
bank, trust company or national banking association at any given time. If any of
the above investments are unavailable, the entire amount to be invested may be
used to purchase Federal Funds overnight from an entity described in (ii) above.
"Permitted Lien" means any Lien referred to in clauses (i)
through (vii) of Section 6 of the Lease Agreement.
"Permitted Sublessee" means any entity listed in Exhibit E of
the Lease Agreement and such other entities to which Lessor shall consent, such
consent not to be unreasonably withheld.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
"Potential Default" means any event which is or after notice
or passage of time, or both, would be an Event of Default pursuant to Section
14(a), (b), (e), (f) or (g) of the Lease.
"Purchase Agreement" means the Purchase Agreement No. 1267,
dated December 13, 1985, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft, as originally executed or as modified,
amended or supplemented in accordance with the terms thereof, but only insofar
as the foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1989 B], dated as of March 15, 1989, between Lessee and Lessor,
as the same may be amended, supplemented or modified from time to time, with a
form of Consent and Agreement to be executed by the Manufacturer attached
thereto.
"Record Date" for the interest payable on any Interest
Payment Date, means (i) in the case of an Interest Payment Date which is March
15, the preceding March 1, and (ii) in the case of an Interest Payment Date
which is September 15, the preceding September 1.
"Redemption Amount" shall mean with respect to each
Outstanding Certificate to be redeemed pursuant to Section 6.1 of the Equipment
Trust Agreement an amount which an Independent Investment Banker determines to
be equal to the greater of (i) the unpaid principal amount of such Certificate
or (ii) (x) the present value on the Redemption Date (computed in accordance
with generally accepted financial practices on a semiannual basis at a discount
rate equal to the Treasury Yield) of (A) the payments of scheduled interest due
on such Certificate after the Redemption Date including accrued interest to but
excluding the Redemption
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<PAGE> 36
Date as required by the terms thereof and of the Equipment Trust Agreement and
(B) the principal payable on such Certificate at the maturity thereof less (y)
the amount of accrued interest on such Certificate to but excluding the
Redemption Date (the excess, if any, of the amount referred to in clause (ii) of
this definition over the amount referred to in clause (i) constituting a
premium).
"Redemption Date" shall mean (i) in the case of a redemption
of the Certificates pursuant to clause (A) of Section 6.1 of the Equipment Trust
Agreement, a Business Day not later than the Business Day next succeeding the
120th day following the occurrence of the Event of Loss specified by the Company
on behalf of the Owner Trustee by written notice to the Equipment Trust Trustee,
or if no such Business Day is so specified, then the Business Day next
succeeding the 120th day following the occurrence of the Event of Loss (or if
such day is not a Business Day, the next Business Day) as determined by the
Equipment Trust Trustee; (ii) in the case of a redemption of the Certificates
pursuant to clause (B) or (D) of said Section 6.1, the 30th day after the
Equipment Trust Trustee shall have received from or on behalf of the Owner
Trustee the applicable Redemption Price (or if such day is not a Business Day,
the next Business Day); (iii) in the case of a redemption of the Certificates
pursuant to clause (C) of said Section 6.1, a Business Day specified by the
Company on behalf of the Owner Trustee; and (iv) in the case of a redemption of
the Certificates pursuant to clause (E) of said Section 6.1, the Termination
Date under Section 9(b) of the Lease or the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease, as applicable.
"Redemption Price" means the price at which the Certificates
are redeemable on the Redemption Date pursuant to Section 6.1 of the Equipment
Trust Agreement, provided, that in the case of a redemption of the Series B
Certificates pursuant to clause (B) or (D) of said Section 6.1, references to
the "Redemption Price" on any date prior to the final determination of the
Redemption Amount shall mean an amount equal to the aggregate unpaid principal
amount of the Certificates plus interest thereon accrued to but excluding the
Redemption Date plus the amount, if any, that the Independent Investment Banker,
on the first Business Day immediately preceding the date on which notice of
redemption is mailed to the Holders pursuant to Section 6.2 of the Equipment
Trust Agreement estimates may be necessary to pay the portion of the Redemption
Amount constituting a premium using the same procedure for estimating the
Redemption Amount as would be used for calculating the Redemption Amount.
"Refinancing" means any borrowing, in accordance with the
terms of Section 17 of the Participation Agreement, pursuant to which borrowing,
among other things, notes or other instruments of indebtedness evidencing such
borrowing would be issued or guaranteed by the Owner Trustee.
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"Register" has the meaning given in Section 2.4 of the
Equipment Trust Agreement.
"Registrar" has the meaning given in Section 2.4 of the
Equipment Trust Agreement.
"Reimbursement Amount" has the meaning set forth in Section
3(g) of the Lease Agreement.
"Renewal Term" shall mean any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19(a) of the Lease
Agreement.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Differential Amount" has the meaning set forth in
Section 3(c) of the Lease Agreement.
"Replacement Aircraft" shall mean any aircraft of which a
Replacement Airframe is part.
"Replacement Airframe" means a Boeing 747-400 series aircraft
(except Engines or engines from time to time installed thereon) which shall have
been leased pursuant to Section 10(a) of the Lease.
"Replacement Engine" means a Pratt & Whitney PW4056 engine
(or engine of the same or another manufacturer of the same, an equivalent or an
improved model and suitable for installation and use on the Airframe) which
shall have been leased pursuant to Section 10(b) of the Lease.
"Responsible Officer" means with respect to the Owner
Trustee, a responsible officer in the Trust Office of the Owner Trustee
(including, without limitation, any Product Manager, Senior Manager, Senior
Account Manager, Account Manager or authorized officer in the Trust Office of
the Owner Trustee), and with respect to the Equipment Trust Trustee, a
responsible officer in the Corporate Trust Office of the Equipment Trust
Trustee.
"SEC" means the Securities and Exchange Commission.
"Series B Certificate" means any certificate issued by the
Equipment Trust Trustee under the Equipment Trust Agreement, substantially in
the form of Exhibit E annexed thereto.
"Series BB Certificate" means any certificate issued by the
Equipment Trust Trustee under the Equipment Trust Agreement, substantially in
the form of Exhibit A annexed thereto.
"Stipulated Loss Value" with respect to the Aircraft as of
any date through and including September 15, 2014, means, but
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<PAGE> 38
subject always to the provisions of Section 3(d)(v) of the Lease Agreement, (i)
the amount determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit C of the Lease Agreement opposite the Stipulated
Loss Value Date with respect to which the amount of Stipulated Loss Value is
determined (as such Exhibit C may be adjusted from time to time as provided in
Section 3(d) of the Lease Agreement and in Section 8 of the Tax Indemnity
Agreement), plus (ii) the amount of the premium, if any, due pursuant to Section
6.1(B), (C) or (E) of the Equipment Trust Agreement. To the extent that the
actual amount of interest paid and to be paid on the Certificates during the
Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs
up to and including such Stipulated Loss Value Date is greater or less than the
amount included in calculating the percentage set forth in Exhibit C of the
Lease Agreement with respect to such Stipulated Loss Value Date on account of
such interest, such percentage shall be adjusted appropriately to compensate for
such differential. "Stipulated Loss Value" as of any date after September 15,
2014 shall be the amount determined as provided in Section 19(a) of the Lease
Agreement.
"Stipulated Loss Value Date" means the fifteenth calendar day
of each calendar month during the Interim Term, Basic Term and any Renewal Term.
"Sublease" means any sublease permitted by the terms of
Section 7(b)(x) of the Lease Agreement.
"Sublessee" means any person for so long, but only so long,
as such person is in possession of the Airframe and/or any Engine pursuant to
the terms of a Sublease which is then in effect pursuant to Section 7(b)(x) of
the Lease Agreement.
"Subsequent Owner Participant" means any corporation or
partnership to which the Original Owner Participant or any transferee from the
Original Owner Participant or any subsequent Owner Participant shall have
transferred at any time after the Delivery Date all or any part of the undivided
right, title and interest originally held by the Original Owner Participant in
the Trust Estate, provided that any such transfer: (i) shall be effected by a
written agreement, in form and substance reasonably satisfactory to the Owner
Trustee in its individual capacity, among such transferee, its transferor and
the Owner Trustee, which shall (A) specify the percentage of the Ownership
Interest of such transferee so transferred to it and (B) provide that such
transferee thereby becomes a party to, and beneficiary of, the Trust Agreement
and an Owner Participant for all purposes of the Trust Agreement and that such
transferee assumes all of the obligations of its transferor under the Trust
Agreement to the extent of such transferee's Ownership Interest; and (ii) so
long as the Lease shall be in effect or the Certificates remain unpaid, such
transferee and its transferor shall have complied
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<PAGE> 39
with all of the terms of Section 8(n) of the Participation Agreement.
"Subsidiary" means a Person controlled by another Person.
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Basic Rent) which Lessee assumes or agrees to pay to
Lessor or others under the Lease (including payments of Stipulated Loss Value,
Termination Value and amounts calculated by reference thereto), under the
Participation Agreement, under the Tax Indemnity Agreement or under any of the
other Operative Documents. The parties acknowledge that Supplemental Rent is a
general category and, accordingly, agree that any provision of any Operative
Document which calls for the payment of Supplemental Rent and also calls for the
payment of specific items which are includable in Supplemental Rent is not to be
interpreted as requiring any double payment.
"Tax" means any and all fees (including, without limitation,
license, documentation and registration fees), taxes (including without
limitation, income, gross receipts, sales, rental, use, turnover, value added,
property (tangible and intangible), excise, franchise, capital, doing business
and stamp taxes) levies, impost, duties, charges, assessments, or withholdings
of any nature whatsoever, together with any and all penalties, fines, additions
to tax and interest thereon (each, individually a "Tax").
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1989 B], dated as of March 15, 1989, between the Owner Participant
and Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Temporary Certificates" refers to Certificates issued to
Certificate Holders pursuant to Section 2.3 of the Equipment Trust Agreement.
"Term" means the Interim Term, Basic Term and, if actually
entered into, any Renewal Term.
"Termination Value" with respect to the Aircraft as of any
date through and including September 15, 2014, means, but subject always to the
provisions of Section 3(d)(v) of the Lease Agreement, (i) the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D of the Lease Agreement opposite the Termination Date with respect to
which the amount of Termination Value is determined (as such Exhibit D of the
Lease Agreement may be adjusted from time to time as provided in Section 3(d) of
the Lease Agreement and in Section 8 of the Tax Indemnity Agreement), plus (ii)
the amount of the premium, if any, due pursuant to Section 6.1(B), (C) or (E) of
the Equipment Trust Agreement. To the extent that the
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<PAGE> 40
actual amount of interest paid and to be paid on the Certificates during the
Lease Period in which such Termination Date occurs up to and including such
Termination Date is greater or less than the amount included in calculating the
percentage set forth in Exhibit D of the Lease Agreement with respect to such
Termination Date on account of such interest, such percentages shall be adjusted
appropriately to compensate for such differential.
"Termination Date" means the fifteenth calendar day of each
calendar month during the Interim Term, Basic Term and any Renewal Term.
"Transaction Expenses" means: (i) the reasonable and actual
fees, expenses and disbursements of (1) Messrs. Whitman & Ransom, special
counsel for the Equipment Trust Trustee, and Stevens & Lee, Pennsylvania counsel
for the Equipment Trust Trustee, such information to be furnished by the
Equipment Trust Trustee, (2) Messrs. Csaplar & Bok, counsel for Owner Trustee
under the Trust Agreement, such information to be furnished by the Owner
Trustee, (3) Messrs. Shearman & Sterling, special counsel to the Original
Holder, such information to be furnished by the Original Holder, and (4) Messrs.
Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such
information to be furnished by Lessee, (ii) all fees, taxes and other charges
payable in connection with the recording or filing of instruments and financing
statements, such information to be furnished by Lessee, (iii) the initial fee
and reasonable and actual disbursements of the Owner Trustee under the Trust
Agreement, such information to be furnished by the Owner Trustee, (iv) the
initial fee and reasonable and actual disbursements of the Equipment Trust
Trustee under the Equipment Trust Agreement, such information to be furnished by
the Equipment Trust Trustee, (v) the fee of Avmark Inc. (or of such other
appraiser as shall be acceptable to Lessee and the Owner Participant) with
respect to the appraisal of the Aircraft pursuant to Section 4(a)(xx) of the
Participation Agreement, such information to be furnished by the Owner
Participant, and (vi) the reasonable and actual fees, expenses and disbursements
of [ ], special counsel to the Owner
Participant and the Parent, in connection with the preparation, execution and
delivery of the Operative Documents and the closings of the transactions
contemplated thereby in an aggregate amount not to exceed $190,000, such
information to be furnished by the Owner Participant.
"Treasury Yield" shall mean with respect to the Redemption
Amount of an Outstanding Certificate to be redeemed pursuant to Section 6.1 of
the Equipment Trust Agreement (i) in the case of a Certificate having a maturity
within one year after the Redemption Date, the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of the maturity of such Certificate and (ii) in the case of a
Certificate having a maturity one year or more after the Redemption Date, the
average yield of the most
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<PAGE> 41
actively traded United States Treasury Note (as reported by Cantor Fitzgerald
Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service,
or if such report is not available, a source deemed comparable by the
Independent Investment Banker selected to determine the Redemption Amount)
corresponding in maturity to such Certificate (or if there is no corresponding
maturity, an interpolation of maturities by such Independent Investment Banker),
in each case determined by the Independent Investment Banker selected to
determine the Redemption Amount based on the bid price as of 10:00 a.m. and 2:00
p.m., New York time, on the second Business Day preceding the Redemption Date.
"Trust Agreement" means that certain Trust Agreement [NW 1989
B], dated as of March 15, 1989, between the Owner Participant and The First
National Bank of Boston, in its individual capacity, as originally executed or
as modified, amended or supplemented pursuant to the applicable provisions
thereof, including, without limitation, supplementation thereof by one or more
Trust Supplements entered into pursuant to the applicable provisions thereof.
"Trust Estate" means all estate, right, title and interest of
the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participants or the
Equipment Trust Trustee) and requisition, indemnity or other payments of any
kind for or with respect to the Aircraft (except amounts owing to the Owner
Participants, to the Equipment Trust Trustee, to the Owner Trustee, in its
individual capacity or any Holder of a Certificate pursuant to Section 7 of the
Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall
not include any Excluded Payments.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, or any subsequent legislation that amends, supplements or supersedes
such Act.
"Trust Office" shall mean the principal corporate trust
office of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110
Attention: Corporate Trust Division, or the principal corporate trust office of
any successor Owner Trustee.
"Trust Supplement" shall mean (a) the Equipment Trust
Agreement and Trust Agreement Supplement No. 1, in substantially the form of
Exhibit C to the Equipment Trust Agreement, which shall particularly describe
the Aircraft included in the property of the Owner Trustee covered by the Trust
Agreement by reference to the Lease Supplement and which, pursuant to Section
4.3 of the
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<PAGE> 42
Equipment Trust Agreement, shall create a first mortgage on such Aircraft and
the Engines which are part of such Aircraft and shall assign and pledge such
Lease Supplement to the Equipment Trust Trustee as part of the Estate and (b)
any other supplement to the Equipment Trust Agreement and the Trust Agreement
from time to time executed and delivered.
"Trustee's Liens" means any Liens arising as a result of (i)
claims against or affecting the Equipment Trust Trustee or any Affiliate thereof
not arising solely from participation in the transactions contemplated by the
Operative Documents or (ii) any act or omission of the Equipment Trust Trustee
or any Affiliate thereof not required or permitted by the Operative Documents.
"U.S. Air Carrier" means any United States air carrier as to
which there is in force a certificate issued pursuant to Section 401 of the
Federal Aviation Act and as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations under such Act, 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 Obligations" means securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged which are not callable or redeemable, and shall
also include a depository receipt issued by a bank or a trust company as
custodian with respect to any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt so long as such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"Wet Lease" shall mean any arrangement whereby the Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or engines installed
thereon to a third party pursuant to which such Airframe and Engines or engines
(i) shall be operated solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be required under
the Federal Aviation Act for the performance by such employees of similar
functions within the United States of America (it is understood that cabin
attendants need not be regular employees of Lessee (or any Sublessee)) and (ii)
shall be maintained by Lessee (or any Sublessee) in accordance with its normal
maintenance practices.
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<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1989 B]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1989 B] (this
"AMENDMENT") dated as of June 12, 1996 between [_____________________] (the
"OWNER PARTICIPANT"), as successor to [_____________________] (the "ORIGINAL
OWNER PARTICIPANT") and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity but solely as Owner
Trustee (the "OWNER TRUSTEE"), as successor to The First National Bank of Boston
(the "ORIGINAL OWNER TRUSTEE").
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the respective meanings attributed thereto
in or pursuant to the Trust Agreement defined below.
W I T N E S S E T H:
WHEREAS, the Original Owner Participant and the Original Owner
Trustee entered into a Trust Agreement [NW 1989 B] dated as of March 15, 1989,
supplemented by an Equipment Trust Agreement and Trust Agreement Supplement No.
1 [NW 1989 B] dated March 16, 1989 covering the Aircraft (the "ORIGINAL TRUST
AGREEMENT" and, as so supplemented and as amended hereby and from time to time,
the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate for the use and benefit of the Owner
Participant;
WHEREAS, pursuant to the Lease Agreement [NW 1989 B] dated as
of March 15, 1989 between the Original Owner Trustee and Northwest Airlines,
Inc., a Minnesota corporation (the "LESSEE"), as supplemented by the Lease
Supplement No. 1 [NW 1989 B] dated March 16, 1989 (as so supplemented, the
"ORIGINAL LEASE"), the Lessee has leased the Aircraft from the Owner Trustee;
WHEREAS, pursuant to an Assignment and Assumption Agreement
dated as of December 19, 1991 by and among the Original Owner Participant, the
Owner Participant and [_________________________________], as parent of the
Owner Participant (the "ASSIGNMENT AGREEMENT"), the Original Owner Participant
transferred to the Owner Participant all of its right, title and interest in the
Trust Estate, the Aircraft and the Operative Documents, including without
limitation the Trust Agreement and the Lease; and the Owner Participant thereby
succeeded to all of the rights, privileges and obligations of the Original Owner
Participant under the Trust Agreement and the other Operative Documents;
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance dated May 16, 1996 among the Owner
Participant, the Original
<PAGE> 2
Owner Trustee and the Owner Trustee (the "INSTRUMENT OF TRANSFER"), the Owner
Trustee succeeded to all the estates, properties, rights, powers and trusts of
the Original Owner Trustee as Owner Trustee under the Trust Agreement, including
without limitation all right, title and interest of the Owner Trustee in and to
the Aircraft and in, to and under the Original Lease and the other Operative
Documents;
WHEREAS, the Lessee, Northwest Airlines Corporation, a Delaware
corporation, as guarantor, the Owner Trustee, the Owner Participant and certain
other parties have entered into a Refunding Agreement [NW 1989 B] dated as of
June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing as
contemplated by Section 17 of the Original Participation Agreement (as such term
is defined in the Refunding Agreement);
WHEREAS, in connection with such refinancing all of the
Original Certificates (as such term is defined in the Refunding Agreement) have
been redeemed and, concurrently with the execution and delivery of this
Amendment, there has been executed and delivered an instrument of termination
dated as of the Refinancing Date evidencing and effecting the satisfaction,
discharge and termination of the Equipment Trust Agreement and transfer of title
to the Aircraft;
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have entered into the
Trust Indenture and Security Agreement [NW 1989 B] dated as of the Refinancing
Date, under which the Owner Trustee will issue new secured certificates in four
series substantially in the form set forth in Section 2.01 thereof;
WHEREAS, on June 3, 1996, the Lessee and the Owner Trustee
entered into the Amended and Restated Lease Agreement [NW 1989 B] (the "LEASE")
amending and restating the Original Lease and containing amendments,
modifications and additions thereto necessary to give effect to the transactions
described in the Refunding Agreement; and
WHEREAS, the Owner Participant and the Owner Trustee wish to
amend the Original Trust Agreement as set forth herein so as more fully to give
effect to the transactions contemplated by the Refunding Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENT OF SECTION 1.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 1.01 of the Original Trust Agreement is hereby amended (a) by
adding the words "and except as contained in this Section 1.01" immediately
after the word "require" and (b) by deleting the words "Annex A to this Trust
Agreement" and substituting therefor the following:
that certain Amended and Restated Lease Agreement [NW 1989 B]
dated as of June 3, 1996 between the Owner
2
<PAGE> 3
Trustee and Northwest Airlines, Inc. All definitions contained
in this Section 1.01 shall be equally applicable to both the
singular and plural forms of the terms defined. For all
purposes of this Trust Agreement the following terms shall have
the following meanings:
"Original Owner Participant" means
[_______________________________].
"Ownership Interest" means, in the case of
each Owner Participant, the percentage of its undivided
beneficial interest in the Trust Estate created by the Trust
Agreement, which percentage shall be: (i) in the case of the
Original Owner Participant (A) so long as it shall be the sole
Owner Participant, 100% and (B) if it shall no longer be the
sole Owner Participant, the percentage of such undivided
interest in the Trust Estate which it shall not have
transferred to any Subsequent Owner Participant; and (ii) in
the case of any Subsequent Owner Participant, the percentage of
such undivided interest in the Trust Estate specified in the
agreement pursuant to which such Subsequent Owner Participant
becomes an Owner Participant as provided in the definition of
"Subsequent Owner Participant".
"Subsequent Owner Participant" means any
corporation or partnership to which the Original Owner
Participant or any transferee from the Original Owner
Participant or any subsequent Owner Participant shall have
transferred at any time after the Delivery Date all or any part
of the undivided right, title and interest originally held by
the Original Owner Participant in the Trust Estate, provided
that any such transfer: (i) shall be effected by a written
agreement, in form and substance reasonably satisfactory to the
Owner Trustee in its individual capacity, among such
transferee, its transferor and the Owner Trustee, which shall
(A) specify the percentage of the Ownership Interest of such
transferee so transferred to it and (B) provide that such
transferee thereby becomes a party to, and beneficiary of, the
Trust Agreement and an Owner Participant for all purposes of
the Trust Agreement and that such transferee assumes all of the
obligations of its transferor under the Trust Agreement to the
extent of such transferee's Ownership Interest; and (ii) so
long as the Lease shall be in effect or the Secured
Certificates remain unpaid, such transferee and its transferor
shall have complied with all of the terms of Section 8(n) of
the Participation Agreement.
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<PAGE> 4
"Trust Estate" means all estate, right, title
and interest of the Owner Trustee in and to the Aircraft, the
Lease, any Lease Supplement, the Purchase Agreement, the
Purchase Agreement Assignment, the Bill of Sale and the FAA
Bill of Sale, including, without limitation, all amounts of
Basic Rent and Supplemental Rent including without limitation
insurance proceeds (other than insurance proceeds payable to or
for the benefit of the Owner Trustee, for its own account or in
its individual capacity, the Owner Participants or the
Indenture Trustee) and requisition, indemnity or other payments
of any kind for or with respect to the Aircraft (except amounts
owing to the Owner Participants, to the Indenture Trustee, to
the Owner Trustee in its individual capacity or any
Certificateholder pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall
not include any Excluded Payments.
"Trust Office" means the principal corporate
trust office of the Owner Trustee at 79 South Main Street, Salt
Lake City, Utah 84111 Attention: Corporate Trust Division, or
the principal corporate trust office of any successor Owner
Trustee.
SECTION 2. AMENDMENT OF SECTION 2.02 OF THE ORIGINAL TRUST
AGREEMENT. Section 2.02 of the Original Trust Agreement is hereby amended by
adding the words "or the Trust Indenture" immediately after the words "Equipment
Trust Agreement".
SECTION 3. AMENDMENT OF SECTION 3.03 OF THE ORIGINAL TRUST
AGREEMENT. Section 3.03 of the Original Trust Agreement is hereby amended by
deleting the words "assuming the Guaranties" and substituting therefor the words
"assuming the obligations of the Owner Trustee under the Trust Indenture".
SECTION 4. AMENDMENT OF SECTION 4.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 4.01 of the Original Trust Agreement is hereby amended by
adding the following immediately after subsection (d) thereof:
(e) Payments to Indenture Trustee. After the Equipment
Trust Agreement shall have been discharged pursuant to Section 10.01
thereof and until the Trust Indenture shall have been discharged
pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent,
insurance proceeds and requisition or other payments of any kind
included in the Trust Estate (other than Excluded Payments) payable to
the Owner Trustee shall be payable directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee the same
shall upon receipt be paid over to the
4
<PAGE> 5
Indenture Trustee without deduction, set-off or adjustment of any kind)
for distribution in accordance with the provisions of Article III of
the Trust Indenture.
SECTION 5. AMENDMENT OF SECTION 4.01(b) OF THE ORIGINAL TRUST
AGREEMENT. Section 4.01(b) of the Original Trust Agreement is hereby amended by
adding immediately before the first comma therein the words "and after the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof" and by
adding the words "or the Indenture Trustee" immediately after the words "the
Equipment Trust Trustee".
SECTION 6. AMENDMENT OF SECTION 4.01(c) OF THE ORIGINAL TRUST
AGREEMENT. Section 4.01(c) of the Original Trust Agreement is hereby amended by
adding the words "or the Indenture Trustee" immediately after the words "the
Equipment Trust Trustee", by adding the words and punctuation "or the Trust
Indenture, as the case may be," immediately after the words "the Equipment Trust
Agreement" the first time such words appear and by adding the words and
punctuation "or Article III of the Trust Indenture, as the case may be"
immediately before the period ending such Section.
SECTION 7. AMENDMENT OF SECTION 5.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 5.01 of the Original Trust Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 5.01. Notice of Event of Default. If the Owner
Trustee shall have knowledge of an Event of Default or an event
of default under the Trust Indenture (an "Indenture Default")
(or an event which with the passage of time or the giving of
notice or both would constitute an Event of Default or an
Indenture Default) the Owner Trustee shall give to each Owner
Participant prompt telephonic or telex notice thereof followed
by prompt confirmation thereof by certified mail, postage
prepaid, provided that (i) in the case of an event which with
the passage of time would constitute an Indenture Default
referred to in paragraph (c) or (e) of Section 4.02 of the
Trust Indenture, such notice shall in no event be furnished
later than ten days after the Owner Trustee shall first have
knowledge of such event and (ii) in the case of a
misrepresentation by the Owner Trustee which with the passage
of time would constitute an Indenture Default referred to in
paragraph (d) of Section 4.02 of the Trust Indenture, such
notice shall in no event be furnished later than ten days after
the Owner Trustee shall first have knowledge of such
misrepresentation. Subject to the terms of Section 5.03 hereof,
the Owner Trustee shall take such action or shall refrain from
taking such action, not inconsistent with the provisions of the
Trust Indenture, with respect to such Event of Default,
Indenture Default or other event as the Owner Trustee shall be
directed in writing by a Majority in Interest of Owner
Participants. If the Owner Trustee shall not have received
instructions as above provided within 20 days after the mailing
of such notice to the Owner Participants, the Owner Trustee
until instructed otherwise in accordance with the preceding
sentence
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<PAGE> 6
may, but shall be under no duty to, take or refrain from taking
such action with respect to such Event of Default, Indenture
Default or other event, not inconsistent with the provisions of
the Trust Indenture, as it shall deem advisable in the best
interests of the Owner Participants. For all purposes of this
Trust Agreement, the Lease and the other Operative Documents,
in the absence of actual knowledge by a responsible officer or
responsible employee of the Corporate Trust Division of the
Owner Trustee in his or her capacity as such, the Owner Trustee
shall not be deemed to have knowledge of an Event of Default,
Indenture Default or other event referred to in this Section
5.01 unless notified in writing by the Indenture Trustee, one
or more of the Owner Participants or Lessee.
SECTION 8. AMENDMENT OF SECTION 5.04 OF THE ORIGINAL TRUST
AGREEMENT. Section 5.04 of the Original Trust Agreement is hereby amended by
adding the words and punctuation "or the Trust Indenture, as the case may be"
immediately after the words "the Equipment Trust Agreement" and by deleting the
words "The First National Bank of Boston" and substituting therefor the words
and punctuation "First Security Bank of Utah, National Association".
SECTION 9. AMENDMENT OF SECTION 6.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.01 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" each time such words
appear and substituting therefor the words and punctuation "First Security Bank
of Utah, National Association" and by deleting the words "Section 2.10 of the
Equipment Trust Agreement" and substituting therefor the words "Section 2.03(a)
of the Trust Indenture".
SECTION 10. AMENDMENT OF SECTION 6.02 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.02 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" each time such words
appear and substituting therefor the words and punctuation "First Security Bank
of Utah, National Association" and by deleting the words "Equipment Trust
Trustee" and substituting therefor the words "Indenture Trustee".
SECTION 11. AMENDMENT OF SECTION 6.03 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.03 of the Original Trust Agreement is hereby amended by
deleting the words "THE FIRST NATIONAL BANK OF BOSTON" and substituting therefor
the words and punctuation "FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION"
and by deleting the words "The First National Bank of Boston" each time such
words appear and substituting therefor the words and punctuation "First Security
Bank of Utah, National Association".
SECTION 12. AMENDMENT OF SECTION 6.06 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.06 of the Original Trust Agreement is hereby amended by
inserting the
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<PAGE> 7
words and punctuation "or the Trust Indenture, as the case may be" immediately
after the words "Equipment Trust Agreement" and before the comma therein.
SECTION 13. AMENDMENT OF SECTION 6.07 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.07 of the Original Trust Agreement is hereby amended by
inserting the words and punctuation "or the Trust Indenture, as the case may be"
after the words "Equipment Trust Agreement" each time such words appear therein.
SECTION 14. AMENDMENT OF SECTION 7.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 7.01 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" each time such words
appear and substituting therefor the words and punctuation "First Security Bank
of Utah, National Association", by deleting the words "Section 2.10 of the
Equipment Trust Agreement" and substituting therefor the words "Section 2.03(a)
of the Trust Indenture", by deleting the words "Equipment Trust Agreement" each
time such words appear in the penultimate sentence thereof and substituting
therefor the word "Trust Indenture" and by deleting the words "the Estate" each
time such words appear and substituting therefor the words "the Trust Indenture
Estate (as such term is defined in the Trust Indenture)".
SECTION 15. AMENDMENT OF SECTION 9.01(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 9.01(a) of the Original Trust Agreement is hereby amended by
deleting the words "Equipment Trust Trustee" each time such words appear and
substituting therefor the words "Indenture Trustee".
SECTION 16. AMENDMENT OF SECTION 9.02 OF THE ORIGINAL TRUST
AGREEMENT. Section 9.02 of the Original Trust Agreement is hereby amended by
deleting the word and numbers "Section 101(16)" and substituting therefor the
word and numbers "Section 40102(a)(15)", by deleting the words "Equipment Trust
Agreement" from clause (F) thereof and substituting therefor the words "Trust
Indenture", by deleting the words "Equipment Trust Trustee" from clause (F)
thereof and substituting therefor the words "Indenture Trustee", by deleting the
word "Holders" from clause (F) thereof and substituting therefor the word
"holders", by inserting the word "Secured" immediately before the word
"Certificates" in clause (F) thereof and by deleting the words "Event of
Acceleration" and substituting therefor the words "Event of Default (as such
term is defined in the Trust Indenture)".
SECTION 17. AMENDMENT OF SECTION 10.01(b) OF THE ORIGINAL TRUST
AGREEMENT. Section 10.01(b) of the Original Trust Agreement is hereby amended by
deleting the words "Equipment Trust Trustee" and substituting therefor the words
"Indenture Trustee".
SECTION 18. AMENDMENT OF SECTION 10.05 OF THE ORIGINAL TRUST
AGREEMENT. Section 10.05 of the Original Trust Agreement is hereby amended by
adding the words "or the Trust Indenture" immediately after the words "Equipment
Trust Agreement".
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<PAGE> 8
SECTION 19. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by
deleting the words "Equipment Trust Agreement" and substituting therefor the
word "Trust Indenture".
SECTION 20. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by
deleting the words and punctuation ", the Equipment Trust Trustee" from clause
(A) of the last sentence thereof and by deleting clause (C) in its entirety from
the last sentence thereof and substituting therefor the following: "(C) if to
the Indenture Trustee to the address provided in or pursuant to Section 10.05 of
the Trust Indenture or (D) if to any holder of Secured Certificates, addressed
to such holder at its address set forth in the certificate register maintained
pursuant to Section 2.07 of the Trust Indenture.".
SECTION 21. AMENDMENT OF SECTION 11.11 OF THE ORIGINAL TRUST
AGREEMENT. Section 11.11 of the Original Trust Agreement is hereby amended by
deleting the first sentence thereof and substituting therefor the following:
"THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE."
SECTION 22. AMENDMENT OF THE ORIGINAL TRUST AGREEMENT. The
Original Trust Agreement is hereby amended by deleting Annex A thereto in its
entirety.
SECTION 23. ACKNOWLEDGMENTS AND DIRECTION. (a) The parties
hereto acknowledge and confirm that, pursuant to the Assignment Agreement, the
Owner Participant succeeded to all of the Original Owner Participant's right,
title and interest in, to and under the Trust Estate, the Aircraft and the
Operative Documents, including without limitation the Trust Agreement and the
Lease, and to all of the privileges and obligations of the Original Owner
Participant under the Trust Agreement and the other Operative Documents, except
for those obligations retained by the Original Owner Participant as provided in
the Assignment Agreement.
(b) The parties hereto acknowledge and confirm that, pursuant
to the Instrument of Transfer, the Owner Trustee succeeded to all the estates,
properties, rights, powers and trusts of the Original Owner Trustee as trustee
under the Trust Agreement with like effect as if originally named the Owner
Trustee therein, including without limitation all right, title and interest of
the Owner Trustee in and to the Aircraft and in, to and under the Lease and the
other Operative Documents.
(c) Pursuant to and in conformity with Section 10.01 of the
Trust Agreement, the Owner Participant hereby requests the Owner Trustee to
execute this Amendment. The Owner Participant represents and warrants that it is
a Majority in Interest of Owner Participants.
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<PAGE> 9
SECTION 24. RATIFICATION. Except as modified hereby, the Trust
Agreement shall continue in full force and effect as originally executed. From
and after the date of this Amendment, each and every reference in the Trust
Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar
words or phrases referring to the Trust Agreement or any word or phrase
referring to a section or provision of the Trust Agreement is deemed for all
purposes to be a reference to the Trust Agreement or such section or provision
as amended by this Amendment.
SECTION 25. MISCELLANEOUS. This Amendment may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment to be duly executed as of the day and year first written above.
[Owner Participant]
By:
------------------------------------
Title:
---------------------------------
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By:
------------------------------------
Title:
---------------------------------
10
<PAGE> 1
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1989 B]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1989 B], dated as of June
12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as expressly stated herein, but solely as Owner Trustee under the Trust
Agreement referred to below (together with its successors under the Trust
Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity, except as expressly
stated herein, but solely as Indenture Trustee hereunder (together with its
successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Trustee desires by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner Trustee of the
Secured Certificates and (ii) to provide for the assignment, mortgage and pledge
by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of all of the Owner Trustee's right, title
and interest in and to the Aircraft and, except as hereinafter expressly
provided, all of the Owner Trustee's right, title and interest in, to and under
the Lease and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
<PAGE> 2
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment of the Principal Amount of,
interest on, Make-Whole Amount, if any, and all other amounts due with respect
to, all Secured Certificates from time to time outstanding hereunder and the
performance and observance by the Owner Trustee of all the agreements, covenants
and provisions herein and in the Participation Agreement and the Secured
Certificates contained, for the benefit of the Certificate Holders and the
prompt payment of all amounts from time to time owing under the Participation
Agreement to the Certificate Holders by the Owner Trustee and for the uses and
purposes and subject to the terms and provisions hereof, and in consideration of
the premises and of the covenants herein contained, and of the acceptance of the
Secured Certificates by the holders thereof, and for other good and valuable
consideration the receipt and adequacy whereof are hereby acknowledged, the
Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors in trust and assigns, for the security and benefit of the Certificate
Holders, a first priority security interest in and mortgage lien on all right,
title and interest of the Owner Trustee in, to and under the following described
property, rights and privileges, other than Excluded Payments (which
collectively, excluding Excluded Payments but including all property hereafter
specifically subjected to the Lien of this Trust Indenture by the Trust
Agreement and Indenture Supplement or any mortgage supplemental hereto, are
included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor in which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Trust Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Basic Rent, Supplemental Rent,
and payments of any kind thereunder, but excluding any Excluded Payments) and
the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Trust
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited (other
than Excluded Payments) or required to be deposited with the Indenture Trustee
pursuant to any terms of this Trust Indenture or the Lease or required hereby or
by the Lease to be held by the Indenture Trustee hereunder; and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
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<PAGE> 3
Concurrently with the delivery hereof, the Owner Trustee delivered
to the Indenture Trustee the original executed counterpart of the Lease and the
Lease Supplement No. 1 (to each of which a chattel paper receipt is attached),
and executed copies of the Participation Agreement, and the Purchase Agreement
Assignment with the Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (8) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party, to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to any of the Indenture Agreements to which
it is a party, or, except as herein expressly provided, to make any payment, or
to make any inquiry as to the nature or sufficiency of any payment received by
it, or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, but only so long as an Event of Default is continuing, and with
full power (in the name of the Owner Trustee or otherwise) to ask for, require,
demand, receive, compound and give acquittance for any and all monies and claims
for monies (in each case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or arising out of
the Indenture Agreements, and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or appropriate to protect and preserve
the right, title and interest of the Indenture Trustee in and to such Rents and
other sums and the security intended to be afforded hereby; provided, however,
that no action of the Indenture Trustee pursuant to this paragraph shall
increase the obligations or liabilities of the Owner Trustee to any Person
beyond those obligations and liabilities specifically set forth in this Trust
Indenture and in the other Operative Documents. Under the Lease, Lessee is
directed, so long as this Trust Indenture shall not have been fully discharged,
to make all payments of Rent (other than Excluded Payments) and all other
amounts which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease (other than Excluded Payments) directly to, or as directed
by, the Indenture Trustee at such address or addresses as the Indenture Trustee
shall specify, for application as provided in this Trust Indenture. The Owner
Trustee agrees that promptly upon receipt thereof, it will transfer to the
Indenture Trustee any and all monies from time to time received by it
constituting part of the Trust Indenture Estate, for distribution by the
Indenture Trustee pursuant to this Trust Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Indenture Trustee under this Trust Indenture.
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<PAGE> 4
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that none of the Owner Trustee in its individual capacity,
the Owner Participant or (except upon the written request of the Indenture
Trustee pursuant to the terms of the preceding sentence or of Lessee pursuant to
the terms of the Participation Agreement) the Owner Trustee in its trust
capacity shall have any obligation as to any recording, filing, refiling or
re-recording of any documents or instruments in regard to maintaining the
perfection of the security interests created hereunder, in the Trust Indenture
Estate or any security interest that may be claimed to have been created by the
Lease or the ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee and its predecessor(s) in this transaction, and that it will not, except
as otherwise provided in this Trust Indenture and except with respect to
Excluded Payments to which it is entitled, (i) accept any payment from Lessee
under any Indenture Agreement, (ii) enter into any agreement amending or
supplementing any Indenture Agreement, (iii) execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers or privileges
under, any Indenture Agreement, (iv) settle or compromise any claim (other than
those relating to an Excluded Payment) arising under any Indenture Agreement or
(v) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any Indenture Agreement to arbitration
thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment
of Rent (other than Excluded Payments), including Basic Rent,
Stipulated Loss Value, Termination Value or any other payment
to be made pursuant to Section 9 or 10 of the Lease prior to
the date for the payment thereof provided for by the Lease or
assign, transfer or hypothecate (other than to the Indenture
Trustee hereunder) any payment of Rent, including Basic Rent,
Stipulated Loss Value, Termination Value or any other payment
to be made pursuant to Section 9 or 10 of the Lease, then due
or to accrue in the future under the Lease in respect of the
Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection
with the appointment of a successor owner trustee, sell,
mortgage, transfer, assign or hypothecate (other than to the
Indenture Trustee hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be received by
it from the use or disposition of the Airframe and Engines,
other than amounts distributed to it pursuant to Article III
hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
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<PAGE> 5
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
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<PAGE> 6
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments). "Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to clauses 2(B)(Y) and 2(B)(Z) of Section 9(b) of the
Lease or the amounts payable to the Owner Trustee pursuant to the third sentence
of Section 19(d) of the Lease plus all reasonable expenses incurred by the Owner
Trustee and the Owner Participant in connection with such assumption, as
applicable, (vii) any payment of the foregoing under the Guarantee, (viii)
interest accrued on any of the above as provided in the Operative Documents, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified
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<PAGE> 7
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1989 B], dated
as of March 15, 1989, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery of the Original Trust Indenture, as said Lease
Agreement has been, or may from time to time be, supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Indenture. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Default" shall mean a "Potential Default" as defined in the
Lease.
"Lease Event of Default" shall mean an "Event of Default" as defined
in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield (plus, in the case of Series C and D
Secured Certificates, 75 basis points) exceeds (b) the outstanding principal
amount of such Secured Certificate plus accrued interest. For purposes of
determining the Make-Whole Amount, "TREASURY YIELD" at the time of determination
with respect to any Secured Certificate means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Secured Certificate and
trading in the public securities market either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Secured Certificate and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Secured Certificate, in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Secured Certificate is reported on the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519). "H.15(519)" means the
weekly statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day prior to
the applicable redemption date and the "MOST RECENT H.15(519)" means the
H.15(519) published prior to the close of business on the third Business Day
prior to the applicable redemption date.
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<PAGE> 8
"Mortgaged Property" shall have the meaning specified in Section
3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ], a [ ]
corporation, so long as such party shall have any interest in the Trust Estate,
and transferees thereof as permitted by Section 8 of the Participation
Agreement.
"PA Amendment No. 1" shall mean the First Amendment to Participation
Agreement [NW 1989 B] dated as of the Closing Date, among Lessee, the Owner
Trustee, the Pass Through Trustee, the Owner Participant, the Subordination
Agent, and State Street Bank and Trust Company in its individual capacity and as
Indenture Trustee.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, [
] as original owner participant, [
] as Original Holder, The First National Bank of Boston as original
owner trustee, and Meridian Trust Company, as equipment trust trustee, as
amended by PA Amendment No. 1, as the same may from time to time be supplemented
or further amended, or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 hereof.
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<PAGE> 9
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Series D" or "Series D Secured Certificates" means Secured
Certificates issued and designated as "Series D" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series D."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement
to the Trust Agreement and to this Indenture, in substantially the form of
Exhibit A hereto, which shall particularly describe the Aircraft, and any
Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture", and "the Indenture" shall mean this Trust
Indenture and Security Agreement [NW 1989 B] as it may from time to time be
supplemented or amended as herein provided, including supplementing by the Trust
Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
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<PAGE> 10
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1989 B] DATED AS OF MARCH 15, 1989.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N662US.
No.____ Date: [______,__]
$__________________
<TABLE>
<CAPTION>
INTEREST RATE MATURITY DATE
------------- -------------
<S> <C>
[________] [________,_______]
</TABLE>
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1989 B], dated as of
March 15, 1989, between the Owner Participant named therein and The First
National Bank of Boston (herein as such Trust Agreement may be supplemented or
amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay
to ___________, or the registered assignee thereof, the principal sum of
$_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the
Principal Amount remaining unpaid from time to time (calculated on the basis of
a year of 360 days comprised of twelve 30-day months) from the date hereof until
paid in full at a rate per annum equal to the Interest Rate indicated above. The
Principal Amount of this Secured Certificate shall be payable in installments on
the dates set forth in Schedule I hereto equal to the corresponding percentage
of the Principal Amount of this Secured Certificate set forth in Schedule I
hereto. Accrued but unpaid interest shall be due and payable in semi-annual
installments commencing January 2, 1997, and thereafter on July 2 and January 2
of each year, to and including _______, _____. Notwithstanding the foregoing,
the final payment made on this Secured Certificate shall be in an amount
sufficient to discharge in full the unpaid Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the Trust
Indenture and Security Agreement [NW 1989 B], dated as of June 12, 1996, between
the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE
TRUSTEE"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Secured Certificate and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
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<PAGE> 11
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if
any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred
to in the Trust Indenture which have been or are to be issued by the Owner
Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate
is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all
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<PAGE> 12
of which terms and conditions in the Trust Indenture and the Participation
Agreement each holder hereof agrees by its acceptance of this Secured
Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1)[Series A and Series B Secured Certificates](2) [Series A,
Series B and Series C Secured Certificates](3), and this Secured Certificate is
issued subject to such provisions. The Certificate Holder of this Secured
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Trust Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
- -------------------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
(3) To be inserted in the case of a Series D Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 13
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity but solely as
Owner Trustee
By ___________________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By ___________________________________________
Name:
Title:
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<PAGE> 14
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
<TABLE>
<CAPTION>
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
<S> <C>
</TABLE>
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in four separate series consisting of Series A, Series
B, Series C and Series D and in the maturities and principal amounts and shall
bear interest as specified in Schedule I hereto. On the date of the consummation
of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall
be issued to the Pass Through Trustees (or their designee) under the Pass
Through Agreements as set forth in Schedule II hereto in connection therewith
and (ii) the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate (other
than any Series D Secured Certificate) a fraction, the numerator of
which is the aggregate principal balance then outstanding of the
Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Certificate Holders under this
Trust Indenture, each Certificate Holder, by its acceptance of a Secured
Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to sue the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee,
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directly or indirectly (other than the recourse liability of the Owner Trustee
(in its individual capacity)), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture, and (iii) any Certificate Holder
or the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a registered Certificate
Holder, all payments to it shall be made to the account of such Certificate
Holder specified in Schedule I thereto and otherwise in the manner provided in
or pursuant to the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) unless it shall have specified
some other account or manner of payment by notice to the Indenture Trustee
consistent with this Section 2.04.
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(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
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Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
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made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 6, 8(c), 8(q)(A), 8(t), 8(x), 8(gg), 8(hh), 8(ii), 8(ll),
8(nn), 12, 13(b), 13(c), 15(b), 15(c), and 15(d), and shall be deemed to have
represented, warranted and covenanted, to the parties to the Participation
Agreement as to the matters represented, warranted and covenanted by the
original Loan Participant in the Participation Agreement. Subject to compliance
by the Certificate Holder and its transferee (if any) of the requirements set
forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall
use all reasonable efforts to issue new Secured Certificates upon transfer or
exchange within 10 Business Days of the date a Secured Certificate is
surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the holder of
such Secured Certificate, execute and the Indenture Trustee shall authenticate
and deliver in replacement thereof a new Secured Certificate, payable in the
same Principal Amount dated the same date and captioned as issued in connection
with the Aircraft. If the Secured Certificate being replaced has become
mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
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SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at
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any office or agency maintained for such purposes pursuant to Section 2.07, and
from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation Agreement,
and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations of the Owner
Trustee in its individual capacity and of the Owner Participant that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon the
events and subject to the terms and conditions and for the price set forth in
this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind except as to its title to the
Secured Certificates and except against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Trust Indenture Estate, this Trust
Indenture and the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default, the purchase price
thereof shall equal the price provided in the preceding sentence plus the
Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to
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occur pursuant to the terms of the preceding sentence. Such election to purchase
the Secured Certificates shall become irrevocable upon the sixteenth day
preceding the date specified in the written notice described in the first
sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Certificate Holders will comply with all
the provisions of Section 2.07 to enable new Secured Certificates to be issued
to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured Certificates
of any Series, each Certificate Holder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full, (ii) after the
Secured Obligations in respect of Series A Secured Certificates have been paid
in full, the Certificate Holders of Series B until the Secured Obligations in
respect of Series B Secured Certificates have been paid in full and (iii) after
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full, the Certificate Holders of Series C until the Secured Obligations
in respect of Series C Secured Certificates have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Indenture Trustee pursuant to Section
4.03 hereof shall be promptly distributed in the following order of priority:
FIRST, (i) so much of such installment or payment as shall be required
to pay in full the aggregate amount of the payment or
payments of Principal Amount and interest and other amounts
(as well as any interest on any overdue Principal Amount
and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due
under all Series A Secured Certificates shall be distributed
to the Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
Series A Secured Certificate bears to the aggregate amount
of the payments then due under all Series A Secured
Certificates;
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(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the Certificate
Holders of Series B ratably, without priority of one over
the other, in the proportion that the amount of such payment
or payments then due under each Series B Secured Certificate
bears to the aggregate amount of the payments then due under
all Series B Secured Certificates;
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the Certificate
Holders of Series C ratably, without priority of one over
the other, in the proportion that the amount of such payment
or payments then due under each Series C Secured Certificate
bears to the aggregate amount of the payments then due under
all Series C Secured Certificates; and
(iv) after giving effect to paragraph (iii) above, so much of
such installment or payment remaining as shall be required
to pay in full the aggregate amount of the payment or
payments of Principal Amount and interest and other amounts
(as well as any interest on any overdue Principal Amount
and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due
under all Series D Secured Certificates shall be distributed
to the Certificate Holders of Series D ratably, without
priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
Series D Secured Certificate bears to the aggregate amount
of the payments then due under all Series D Secured
Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall have
occurred and be continuing, then such balance shall not be
distributed as provided in this clause "Second" but shall be
held by the Indenture Trustee as part of the Trust Indenture
Estate and invested in accordance with Section 5.09 hereof
until whichever of the following shall first occur: (i) all
Events of Default shall have been cured or waived, in which
event such balance shall be distributed as provided in this
clause "Second" without reference to this proviso, (ii)
Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the
provisions of such Section 3.03, or (iii) the 120th day
after the receipt of such payment in which case such payment
shall be distributed as provided in this clause "Second"
without reference to this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
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FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders
for any reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents and then (b) to
pay any other amounts then due to the Indenture Trustee and the
Certificate Holders under this Trust Indenture, the Participation
Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if
any, then due and payable in respect of the Series A Secured
Certificates;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series B Secured Certificates;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series C Secured Certificates;
and (iv) after giving effect to paragraph (iii) above, to
pay the amounts specified in paragraph
(iv) of clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the
Series D Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of
Default shall have occurred and be continuing and the Secured Certificates shall
have become due and payable pursuant to Section 4.04(b) hereof, as well as all
payments or amounts then held by the Indenture Trustee as part of the Trust
Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the
"MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred
by the Indenture Trustee (to the extent not previously reimbursed),
the expenses of any sale, taking or other proceeding, reasonable
attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the
Indenture Trustee or the Certificate Holders in the protection,
exercise or enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee or any Certificate Holder,
liquidated or otherwise, upon such Event of Default shall be applied
by the Indenture Trustee as between itself and the Certificate
Holders in
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reimbursement of such expenses and any other expenses for which the
Indenture Trustee or the Certificate Holders are entitled to
reimbursement under any Operative Document and in the case the
aggregate amount to be so distributed is insufficient to pay as
aforesaid, then ratably, without priority of one over the other, in
proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing or
prior Certificate Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or payments made
by each such then existing or prior Certificate Holder pursuant to
said Section 5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series A Secured Certificates, and the accrued
but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series A, and in
case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series A
Secured Certificates held by each holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series A Secured
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series B
Secured Certificates, and the accrued but unpaid interest
and other amounts due thereon and all other Secured
Obligations in respect of the Series B Secured Certificates
to the date of distribution, shall be distributed to the
Certificate Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one
over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series B Secured Certificates held
by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount
of all Series B Secured Certificates held by all such
holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest
and other amounts due thereon and all other Secured
Obligations in respect of the Series C Secured Certificates
to the date of distribution, shall be distributed to the
Certificate Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one
over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series C Secured Certificates held
by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount
of all Series C Secured Certificates held by all such
holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
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(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to
pay in full the aggregate unpaid Principal Amount of all
Series D Secured Certificates, and the accrued but unpaid
interest and other amounts due thereon and all other Secured
Obligations in respect of the Series D Secured Certificates
the date of distribution, shall be distributed to the
Certificate Holders of Series D, and in case the aggregate
amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one
over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series D Secured Certificates held
by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount
of all Series D Secured Certificates held by all such
holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured
Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i)
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prior to the payment in full of all Secured Obligations due the Certificate
Holders, in the order of priority specified in Section 3.01 hereof subject to
the proviso thereto, and (ii) after payment in full of all Secured Obligations
due the Certificate Holders, in the following order of priority:
FIRST, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of
Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent received or
realized at any time after payment in full of all Secured Obligations due the
Certificate Holders, shall be distributed by the Indenture Trustee in the order
of priority specified in clause (ii) of the immediately preceding sentence of
this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to the
Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Secured Certificates and hereunder in accordance with the
terms of the Secured Certificates and this Trust Indenture and all
amounts, if any, payable by it to the Certificate Holders under the
Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity
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with respect to the Aircraft or any other portion of the Trust Estate;
that it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will
give prompt written notice of such Event of Default, Default or Event
of Loss to the Indenture Trustee, each Certificate Holder, Lessee and
the Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each report
or notice received pursuant to Section 9(a) and 11(c) of the Lease to
the extent that the same shall not have been furnished to the Indenture
Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent
of the Indenture Trustee (acting pursuant to instructions given in
accordance with Section 9.01 hereof), the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event
of Default caused solely by a failure of Lessee to pay to the Owner
Trustee or the Owner Participant when due any amount that is included
in the definition of Excluded Payments shall not constitute an Event of
Default unless notice is given by the Owner Trustee to the Indenture
Trustee that such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other
amount due and payable under any Secured Certificate or hereunder
(other than any such failure arising by virtue of a tax withheld
pursuant to Section 2.04(b) hereof or as a result of a Lease Event of
Default or a Lease Default) and such failure shall have continued
unremedied for ten Business Days in the case of any payment of
Principal Amount or interest or Make-Whole Amount, if any, thereon and,
in the case of any other amount, for ten Business Days after the Owner
Trustee and the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the
Participation Agreement, or by the Owner Participant pursuant to
Section 8(h) of the Participation Agreement shall remain undischarged
for a period of 30 days after the Owner Trustee and the Owner
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Participant shall have received written notice from the Indenture
Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or
the Owner Trustee herein, in the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement)
or in any certificate furnished by the Owner Participant or the Owner
Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform any other
covenant or obligation of the Owner Trustee or Owner Participant, as
the case may be, for the benefit of the Indenture Trustee or the
Certificate Holders contained in the Participation Agreement, Section
4.01(a) of the Trust Agreement, the Secured Certificates or this Trust
Indenture which is not remedied within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant;
or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f) unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary case
or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
a final non-appealable order, judgment or decree shall be entered in
such case or proceeding by a court or a trustee, custodian, receiver or
liquidator, to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g).
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SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the Owner
Trustee and the Owner Participant prompt written notice of any Event of Default
of which the Indenture Trustee has Actual Knowledge and, if any such Event of
Default results from a Lease Event of Default, shall give the Certificate
Holders, the Owner Trustee and the Owner Participant not less than ten Business
Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after
which the Indenture Trustee may commence and consummate the exercise of any
remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect
of the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture
Trustee shall have insufficient funds to make any payment of Principal Amount
and interest on any Secured Certificate on the day it becomes due and payable,
the Owner Trustee or the Owner Participant may, but shall not be obligated to,
pay the Indenture Trustee prior to the Enforcement Date, in the manner provided
in Section 2.04 hereof, for application in accordance with Section 3.01 hereof,
an amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of payments of Basic Rent
on each of the three immediately preceding Basic Rent payment dates, or the
Owner Trustee has cured six previous Events of Default in respect of payments of
Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this
Trust Indenture be deemed to cure any Event of Default which would otherwise
have arisen on account of the nonpayment by Lessee of such installment of Basic
Rent (but not any other Default or Event of Default which shall have occurred
and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the
Owner Participant may, but shall not be obligated to, cure such Event of Default
prior to the Enforcement Date as is necessary to accomplish the observance or
performance of the defaulted covenant, condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Basic Rent which was overdue at the time of such payment and
interest payable by Lessee on account of its being overdue and any Supplemental
Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant
to the immediately preceding paragraph (but in either case shall have no rights
as a secured party hereunder), and thereafter, the Owner Trustee or the Owner
Participant, as the case may be, shall be entitled to receive such overdue Basic
Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt
thereof by the Indenture Trustee (and shall be entitled to bring an action
against Lessee to enforce such payment); provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Basic Rent, Supplemental Rent and
such interest and (ii) the Owner Trustee shall not be entitled to seek to
recover any such payment (or any payment in lieu thereof) except pursuant to the
foregoing right of subrogation by demand or suit for damages.
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SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an Event of
Default shall have occurred and be continuing and so long as the same shall
continue unremedied, then and in every such case the Indenture Trustee may,
subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Unless an Event of Default not resulting from or
relating to a Lease Event of Default has occurred and is continuing, the Owner
Trustee or the Owner Participant may bid at any public sale and become the
purchaser. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder as
a result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee's own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid interest thereon (without Make-Whole Amount) and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
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This Section 4.04(b), however, is subject to the condition that, if
at any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale pursuant
to Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
(d) In the event of any sale of the Trust Indenture Estate, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing,
subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture
Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture
Trustee such instruments of title and other documents as the Indenture Trustee
may deem necessary or advisable to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any part of the Mortgaged Property included in the Trust Indenture Estate
to which the Indenture Trustee shall at the time be entitled hereunder. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent
permitted by applicable law, and (ii) pursue all or part of such Mortgaged
Property wherever it may be found and, in the event that a Lease Event of
Default has occurred and is continuing, may enter any of the premises of Lessee
wherever such Mortgaged Property may be or be supposed to be and search for such
Mortgaged Property and take possession of and remove such Mortgaged Property.
All expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged
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Property, as the Indenture Trustee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Mortgaged Property or any part thereof as the
Indenture Trustee may determine, and the Indenture Trustee shall be entitled to
collect and receive directly all tolls, rents (including Rent), revenues,
issues, income, products and profits of the Mortgaged Property and every part
thereof, except Excluded Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Trust Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income,
products and profits shall be applied to pay the expenses of the maintenance,
use, operation, storage, insurance, leasing, control, management, disposition,
improvement, modification or alteration of the Mortgaged Property and of
conducting the business thereof, and to make all payments which the Indenture
Trustee may be required or may elect to make, if any, for taxes, assessments,
insurance or other proper charges upon the Mortgaged Property or any part
thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the Owner
Trustee), and all other payments which the Indenture Trustee may be required or
authorized to make under any provision of this Trust Indenture, as well as just
and reasonable compensation for the services of the Indenture Trustee, and of
all persons properly engaged and employed by the Indenture Trustee with respect
hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Trust Indenture shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of the Owner Trustee or Lessee or to be an acquiescence
therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any proceeding
to enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Indenture
Trustee and Lessee shall, subject to any determination in such proceedings, be
restored to their former positions and rights hereunder with respect to the
Mortgaged Property, and all rights, remedies and powers of the Owner Trustee,
the Indenture Trustee or Lessee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Certificate Holders,
the Indenture Trustee shall not waive any Default (i) in the payment of the
Principal Amount, Make-Whole Amount, if any, and interest and other amounts due
under any Secured Certificate then outstanding, or (ii) in respect of a covenant
or provision hereof which, under Article IX hereof, cannot be modified or
amended without the consent of each Certificate Holder.
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SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE,
ETC..
The Owner Trustee irrevocably appoints the Indenture Trustee the
true and lawful attorney-in-fact of the Owner Trustee in its name and stead and
on its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture, the
right of any Certificate Holder to receive payment of principal of, and premium,
if any, and interest on a Secured Certificate on or after the respective due
dates expressed in such Secured Certificate, or to bring suit for the
enforcement of any such payment on or after such respective dates in accordance
with the terms hereof, shall not be impaired or affected without the consent of
such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay Rent, the Indenture
Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner
Participant, Lessee, and each Certificate Holder. Subject to the terms of
Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Basic Rent within one Business
Day after the same shall become due, if
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any portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of a Default) unless notified
in writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01
and 5.03 hereof, upon the written instructions at any time and from time to time
of a Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
or any other part of the Trust Indenture Estate as shall be specified in such
instructions; and (iii) after the occurrence and during the continuance of an
Event of Default, approve as satisfactory to the Indenture Trustee all matters
required by the terms of the Lease to be satisfactory to the Owner Trustee, it
being understood that without the written instructions of a Majority in Interest
of Certificate Holders, the Indenture Trustee shall not approve any such matter
as satisfactory to the Indenture Trustee; provided, that anything contained in
this Trust Indenture, the Lease or the other Operative Documents to the contrary
notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the
rights referred to in this clause (1) shall not be deemed to include
the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at
law or in equity, to enforce payment by Lessee or the Guarantor of such
amounts included in Excluded Payments or performance by Lessee or the
Guarantor of such insurance covenant, or to recover damages for the
breach thereof or for specific performance of any covenant of Lessee or
the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing, the Indenture Trustee shall not,
without the consent of the Owner Trustee, which consent shall not be
withheld if no right or interest of the Owner Trustee or the Owner
Participant shall be diminished or impaired thereby, (i) enter into,
execute and deliver amendments, modifications, waivers or consents in
respect of any of the provisions of the Lease, or (ii) approve any
accountants, engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to the Owner Trustee pursuant to the
Operative Documents; provided that whether or not an Event of Default
shall have occurred and be continuing, no amendment, modification,
waiver or consent in respect of the Lease shall affect the amount or
timing of, or the right to enforce payment of, any Excluded Payment;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the
Owner Participant shall have the right, together with the Indenture
Trustee, (i) to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel and other documents and all information
which any thereof is permitted or required to give or furnish to the
Owner Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on Lessor
or the Owner Participant, (iv) to exercise, to the extent necessary to
enable it to exercise its rights under Section 4.03 hereof, the rights
of Lessor under Section 21 of the Lease and (v) to give notices of
default under Section 14 of the Lease;
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(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have
the right to the exclusion of the Indenture Trustee to adjust Rent,
Stipulated Loss Values and Termination Values as provided in Section
3(d) of the Lease and to select counsel with respect to any opinion
relating to tax matters to be delivered solely to the Owner
Participant;
(5) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee may,
without the consent of the Indenture Trustee, (i) solicit and make bids
with respect to the Aircraft under Section 9 of the Lease in respect of
a termination of the Lease by Lessee pursuant to Section 9 thereof,
(ii) determine "fair market sales value" and "fair market rental value"
under Section 19 of the Lease for all purposes except following an
Event of Default pursuant to Section 15 of the Lease, and (iii) make an
election pursuant to and in accordance with the provisions of Section
9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights
of the "Lessor" under the Lease shall be exercised by the Owner Trustee
to the exclusion of the Indenture Trustee including, without
limitation, the right to (i) exercise all rights with respect to
Lessee's use and operation, modification or maintenance of the Aircraft
and any Engine which the Lease specifically confers on Lessor, and (ii)
consent to and approve any assignment pursuant to Section 13 of the
Lease; provided that the foregoing shall not limit (A) any rights
separately granted to the Indenture Trustee under the Operative
Documents or (B) the right of the Indenture Trustee to receive any
funds to be delivered to the "Lessor" under the Lease (except with
respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file
or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
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SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
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A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to be
received (including the manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number) as consideration for the Airframe
to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the Replacement
Airframe the Owner Trustee will be the legal owner
of such Replacement Airframe free and clear of all
Liens except as are permitted by Section 6 of the
Lease, that such Replacement Airframe will on such
date be in good working order and condition, and
that such Replacement Airframe has been or,
substantially concurrently with such withdrawal,
will be duly registered in the name of the Owner
Trustee under the Federal Aviation Act or under
the law then applicable to the registration of the
Airframe and that an airworthiness certificate has
been duly issued under the Federal Aviation Act
(or such other applicable law) with respect to
such Replacement Airframe, and that such
registration and certificate is in full force and
effect, and that Lessee will have the full right
and authority to use such Replacement Airframe;
(iv) the existence of the insurance required by Section
11 of the Lease with respect to such Replacement
Airframe and the payment of all premiums then due
thereon;
(v) that the Replacement Airframe is of the same or an
improved model as the Airframe requested to be
released from this Indenture;
(vi) the fair market value of the Replacement Airframe
as of the date of such certificate (which value in
the judgment of Lessee shall be not less than the
then fair market value of the Airframe requested
to be released) (assuming such Airframe was in the
condition and repair required to be maintained
under the Lease);
(vii) the fair market value of the Airframe immediately
prior to the date the Airframe suffered an Event
of Loss (assuming such Airframe was in the
condition and repair required to be maintained
under the Lease);
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(viii) that no Lease Event of Default and no event which,
with lapse of time or notice, or both, would
become a Lease Event of Default, has occurred
which has not been remedied or waived, and that
Lessee will not be in default, by the making and
granting of the request for release and the
addition of a Replacement Airframe, in the
performance of any of the terms and covenants of
the Lease; and
(ix) that the release of the Airframe so to be released
will not be in contravention of any of the
provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
(ii) a description of the Replacement Engine (including
the manufacturer's name and serial number) as
consideration for the Engine to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the Replacement
Engine the Owner Trustee will be the legal owner
of such Replacement Engine free and clear of all
Liens except as are permitted by Section 6 of the
Lease, that such Replacement Engine will on such
date be in good working order and condition and
that such Replacement Engine is substantially the
same as the Engine to be released (or as improved
model);
(iv) the fair market value of the Replacement Engine as
of the date of such certificate (which value shall
not be less than the then fair market value of the
Engine to be released (assuming such Engine was in
the condition and repair required to be maintained
under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered
by such Engine and assuming that such Engine was
in the condition and repair required to be
maintained under the Lease);
(vi) that each of the conditions specified in Section
10(b) of the Lease with respect to such
Replacement Engine have been satisfied and that
Lessee will not be in default, by the making and
granting of the request for release and the
addition of the Replacement Engine, in the
performance of any of the terms and covenants of
the Lease;
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(vii) that, with respect to the replacement of an Engine
pursuant to Section 9(d) of the Lease, no Lease
Event of Default and no Lease Default, has
occurred which has not been remedied or waived;
and
(viii) that the release of the Engine so to be released
will not be in contravention of any of the
provisions of this Indenture.
(3)(a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this Indenture
as deemed necessary or desirable by counsel for the Indenture Trustee to protect
the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to
and deposited with the Indenture Trustee conform to the
requirements of this Indenture and the Lease and, upon
the basis of such application, the property so sold or
disposed of may be lawfully released from the lien of
this Indenture and all conditions precedent herein
provided for relating to such release have been complied
with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the lien of this Indenture and
covered by the Lease, the instruments subjecting such
Replacement Airframe or Replacement Engine to the Lease
and to the Lien of this Indenture, as the case may be,
have been duly filed for recordation pursuant to the
Federal Aviation Act or any other law then applicable to
the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or
advisable in order to establish and perfect the right,
title, estate
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and interest of the Owner Trustee to and the lien of this
Indenture on such Replacement Aircraft or Replacement
Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being substituted
as contemplated by Section 10 of the Lease, (a) the Owner Trustee and the
Indenture Trustee agree for the benefit of the Certificate Holders and Lessee,
subject to fulfillment of the conditions precedent and compliance by Lessee with
its obligations set forth in Section 10 of the Lease and the requirements of
Section 5.06 hereof with respect to such Replacement Airframe or Replacement
Engine, to execute and deliver a Lease Supplement and a Trust Agreement and
Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease,
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Indenture.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds,
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for which the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Indenture Trustee, as provided in the
fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04
hereof, and (iii) for liabilities that may result, in the case of the Owner
Trustee, from the inaccuracy of any representation or warranty of the Owner
Trustee expressly made in its individual capacity in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the Refunding Agreement)
or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the
Indenture Trustee or any Certificate Holder in connection with the transactions
contemplated by the Operative Documents) or, in the case of the Indenture
Trustee (in its individual capacity), from the inaccuracy of any representation
or warranty of the Indenture Trustee (in its individual capacity) in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee
nor the Indenture Trustee shall be liable for any action or inaction of the
other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with
written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY
NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE
TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE
AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Owner Trustee made
in its individual capacity and the representations and warranties of the
Indenture Trustee, in each case expressly made in this Trust Indenture or in the
Participation Agreement (or, upon consummation of the
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Refinancing Transaction, the Refunding Agreement). The Loan Participants, the
Certificate Holders and the Owner Participant make no representation or warranty
hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee pursuant to
any provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest all monies held as directed by Lessee so long as no Lease Event of
Default or Lease Default has occurred and is continuing (or in the absence of
such direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein and in
the Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in
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the Trust Indenture Estate toward such payments. The Indenture Trustee agrees
that it shall have no right against the Loan Participants, the Certificate
Holders, the Owner Trustee or the Owner Participant for any fee as compensation
for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely as
Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, to the extent not reimbursed by Lessee. Without limiting the
foregoing, the Indenture Trustee agrees that, prior to seeking indemnification
from the Trust Indenture Estate, it will demand, and take such action as it may
in its discretion determine to be reasonable to pursue, indemnification
available to the Indenture Trustee under the Lease or the Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Expenses to the extent relating to or
arising from the willful misconduct or gross negligence (or negligence in the
case of handling funds) of the Indenture Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any representation or
warranty of the Indenture Trustee (in its individual capacity) referred to in
Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last
sentence of Section 5.04 hereof, or as otherwise excluded by the terms of
Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities
under such Sections. In addition, if necessary, the Indenture Trustee shall be
entitled to indemnification from the Trust Indenture Estate for any liability,
obligation, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
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ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
bank or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of
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the Indenture Trustee may be transferred, shall, subject to the terms of
paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the
Indenture Trustee under this Trust Indenture without further act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
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(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or modification of, or consent under, the
terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified, amended, changed or
waived in such manner as shall be agreed to by the Owner Participant and Lessee
and (ii) the Owner Trustee and Lessee may enter into amendments of or additions
to the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments, modifications
and changes do not and would not affect the time of, or reduce the amount of,
Rent payments until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.10, 2.11, 2.15, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, the
definitions of "Majority in Interest of Certificate Holders", "Make-Whole
Amount" or "Certificate Holder", or the percentage of Certificate Holders
required to take or approve any action hereunder, (ii) reduce the amount, or
change the time of payment or method of calculation of any amount, of Principal
Amount, Make-Whole Amount, if any, or interest with respect to any Secured
Certificate, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Certificate Holders, the Owner Trustee and Lessee, (iii)
reduce, modify or amend any
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indemnities in favor of the Certificate Holders, (iv) consent to any change in
the Trust Indenture or the Lease which would permit redemption of Secured
Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the
purchase of the Secured Certificates other than as permitted by Section 2.14
hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
altering the absolute and unconditional character of the obligations of Lessee
to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part thereof other
than Permitted Liens or deprive any Certificate Holder of the benefit of the
Lien of this Trust Indenture on the Trust Indenture Estate, except as provided
in connection with the exercise of remedies under Article IV hereof. So long as
no Lease Event of Default has occurred and is continuing, without the consent of
Lessee no amendment or supplement to this Trust Indenture or waiver or
modification of the terms hereof shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee under
the Trust Agreement or the institution acting as Indenture Trustee hereunder,
any document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to any
part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or any
part thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
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addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
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SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a vote of
a Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity, except as
expressly provided herein, but solely as Owner
Trustee, as Owner Trustee
By: ________________________________________________
Name: ________________________________________________
Title:
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By: ________________________________________________
Name: ________________________________________________
Title:
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-----------------------------
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
-----------------------------
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1989 B]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1989 B], dated
_______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee (herein called the "OWNER TRUSTEE ") under that certain
Trust Agreement [NW 1989 B] dated as of March 15, 1989 (the "TRUST AGREEMENT"),
between FIRST NATIONAL BANK OF BOSTON and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the TRUST INDENTURE AND SECURITY AGREEMENT [NW 1989 B],
dated as of June 12, 1996 (as amended and supplemented to the date hereof, the
"TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Agreement and Indenture Supplement, together
with such counterpart of the Trust Indenture, is being filed for recordation on
the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
<PAGE> 55
AIRFRAME
One airframe identified as follows:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
<S> <C> <C> <C>
</TABLE>
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
<S> <C> <C>
</TABLE>
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Certificate Holders, in the trust
created by the Trust Indenture, all of the right, title and interest of the
Owner Trustee in, to and under the Lease Supplement [of even date herewith]
covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of
EXHIBIT A-2
<PAGE> 56
any one Secured Certificate over any other by reason of priority of time of
issue, sale, negotiation, date of maturity thereof or otherwise for any reason
whatsoever, and for the uses and purposes and subject to the terms and
provisions set forth in the Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof.
The Trust Indenture is each hereby incorporated by reference herein
and is hereby ratified, approved and confirmed. This Trust Indenture Supplement
is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 57
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Agreement and Indenture Supplement to be duly executed by one of its officers,
thereunto duly authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee, Owner Trustee
By: ____________________________________________
Name:
Title:
EXHIBIT A-4
<PAGE> 58
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A . . . . . . $49,938,000 7.67%
Series B . . . . . . $16,646,000 8.07%
Series C . . . . . . $16,646,000 8.97%
Series D . . . . . . $ 4,494,343 10.15%
</TABLE>
<PAGE> 59
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N662US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 2.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 2.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.00000000%
Jul 2, 2000 2.00000000%
Jan 2, 2001 0.00000000%
Jul 2, 2001 2.00000000%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.00000000%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.00000000%
Jan 2, 2004 0.00000000%
Jul 2, 2004 4.00000000%
Jan 2, 2005 0.00000000%
Jul 2, 2005 4.00000000%
Jan 2, 2006 0.00000000%
Jul 2, 2006 4.00000000%
Jan 2, 2007 0.00000000%
Jul 2, 2007 4.00000000%
Jan 2, 2008 0.00000000%
Jul 2, 2008 4.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 6.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 11.51491449%
Jul 2, 2011 0.00000000%
Jan 2, 2012 19.71524290%
Jul 2, 2012 0.00000000%
Jan 2, 2013 21.22740198%
Jul 2, 2013 0.00000000%
Jan 2, 2014 5.54244063%
</TABLE>
<PAGE> 60
SERIES B
AIRCRAFT: N662US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 2.00000000%
Jul 2, 1997 0.37621050%
Jan 2, 1998 1.62378950%
Jul 2, 1998 2.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 2.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 2.00000000%
Jan 2, 2001 0.00000000%
Jul 2, 2001 2.00000000%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.00000000%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.00000000%
Jan 2, 2004 0.00000000%
Jul 2, 2004 4.00000000%
Jan 2, 2005 0.00000000%
Jul 2, 2005 4.00000000%
Jan 2, 2006 0.00000000%
Jul 2, 2006 4.00000000%
Jan 2, 2007 0.00000000%
Jul 2, 2007 4.00000000%
Jan 2, 2008 0.00000000%
Jul 2, 2008 4.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 6.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 30.48588850%
Jan 2, 2011 27.51411150%
</TABLE>
<PAGE> 61
SERIES C
AIRCRAFT: N662US
<TABLE>
<CAPTION>
PERCENTAGE OF PRINCIPAL AMOUNT
PAYMENT DATE TO BE PAID
------------ ------------------------------
<S> <C>
Jan 2, 1997 2.00000000%
Jul 2, 1997 2.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 2.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 2.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 2.00000000%
Jan 2, 2001 0.00000000%
Jul 2, 2001 2.00000000%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.00000000%
Jan 2, 2003 0.00000000%
Jul 2, 2003 4.59216629%
Jan 2, 2004 0.00000000%
Jul 2, 2004 1.40783371%
Jan 2, 2005 0.00000000%
Jul 2, 2005 4.00000000%
Jan 2, 2006 0.00000000%
Jul 2, 2006 19.58123273%
Jan 2, 2007 0.00000000%
Jul 2, 2007 26.40358044%
Jan 2, 2008 0.00000000%
Jul 2, 2008 30.01518683%
</TABLE>
<PAGE> 62
SERIES D
AIRCRAFT: N662US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 14.94672302%
Jan 2, 1999 0.00000000%
Jul 2, 1999 25.68735853%
Jan 2, 2000 0.00000000%
Jul 2, 2000 9.03874048%
Jan 2, 2001 0.00000000%
Jul 2, 2001 26.57901277%
Jan 2, 2002 0.00000000%
Jul 2, 2002 23.74816519%
</TABLE>
<PAGE> 63
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as
of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as
of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1C, dated as
of June 12, 1996.
4. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1D, dated as
of June 12, 1996.
<PAGE> 1
AMENDED AND RESTATED LEASE AGREEMENT
[NW 1989 B]
This AMENDED AND RESTATED LEASE AGREEMENT [NW 1989 B], dated as of June
3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (as defined in Section 1 hereof) (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE");
WITNESSETH:
WHEREAS, Lessor and Lessee have entered into that certain Lease
Agreement [NW 1989 B], dated as of March 15, 1989, as supplemented by Lease
Supplement No. 1 [NW 1989 B], dated March 16, 1989 (the "ORIGINAL LEASE") which
was recorded by the Federal Aviation Administration on March 16, 1989 and
assigned Conveyance No. R40942;
WHEREAS, Lessor and Lessee now desire to amend and restate the Original
Lease in its entirety on the terms and conditions herein provided; and
WHEREAS, Lessee and Lessor intend this Lease to constitute a lease
agreement and not a security agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Lessor and Lessee agree as follows:
SECTION 1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement [NW 1989 B] and shall be equally applicable to both the singular and
the plural terms herein defined:
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Aircraft" means the Airframe to be delivered and leased under
the Lease (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) of the Lease) together with the four
Engines initially leased under the Lease (or any engine substituted for
any of such Engines pursuant to
<PAGE> 2
the terms of the Lease), whether or not any of such initial or
substituted gines may from time to time be installed on such initial or
substituted Airframe or may be installed on any other airframe or on
any other aircraft.
"Airframe" means: (i) the Boeing 747-451 aircraft (except
Engines or engines from time to time installed thereon) specified in
the initial Lease Supplement, which aircraft shall be leased by Lessor
to Lessee hereunder and under such Lease Supplement, and any aircraft
(except Engines or engines from time to time installed thereon) which
may from time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to clause (ii)
of the first paragraph of Section 10(a); and (ii) any and all Parts (A)
so long as the same shall be incorporated or installed in or attached
to such aircraft (except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 8 after removal from such
aircraft (except Engines or engines from time to time installed
thereon); provided, however, that at such time as an aircraft (except
Engines or engines from time to time installed thereon) shall be deemed
part of the property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced Airframe
shall cease to be an Airframe hereunder.
"Applicable Law" means all applicable laws, ordinances,
treaties, judgments, decrees, injunctions, writs and orders of any
court, arbitrator or governmental agency or authority and rules,
regulations, orders, interpretations, directives, licenses and permits
of any governmental body, instrumentality, agency or authority,
including, in respect of the Airframe or any Engine, all directives of
any applicable civil aviation authority.
"Applicable Rate" means, as of any date, the weighted average
of the interest rates borne by the Secured Certificates then
outstanding.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Base Rate" means the rate of interest announced from time to
time by Chase Manhattan Bank, N.A., at its principal office in New
York, New York as its "base rate" or its equivalent successor rate if
the base rate is no longer used.
"Basic Rent" means, for the Basic Term, the rent payable for
the Aircraft pursuant to Section 3(c) of the Lease Agreement as
adjusted as provided in Section 3(d) of the Lease Agreement and, for
any Renewal Term, Basic Rent determined pursuant to Section 19 of the
Lease Agreement.
-2-
<PAGE> 3
"Basic Term" means the term for which the Aircraft is leased
hereunder pursuant to Section 3(a) of the Lease Agreement commencing on
the Commencement Date and ending on September 15, 2014.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the
Delivery Date, specifically referring to the Airframe and each Engine,
which Bill of Sale and warranty shall contain, among other things, a
statement that such Bill of Sale thereby conveys to the Owner Trustee
good and marketable title to the Airframe and each Engine described in
such Bill of Sale, free and clear of all liens, encumbrances and rights
of others except Permitted Liens.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close
in the City of New York, New York; Boston, Massachusetts; Salt Lake
City, Utah; or Minneapolis, Minnesota.
"Certificate Holder" means Certificate Holder as defined in
the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the United
States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49, United
States Code, for aircraft capable of carrying ten or more individuals
or 6,000 pounds or more of cargo or that otherwise is certified or
registered to the extent required to fall within the purview of 11
U.S.C. Section 1110 or any analogous successor provision of the
Bankruptcy Code.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as amended,
or any substantially similar program.
"Closing" means the consummation of the refinancing operation
contemplated by Section 1 of the Refunding Agreement.
"Closing Date" means the date on which the Closing shall
occur.
"Code" means the Internal Revenue Code of 1986, as amended
through the Delivery Date.
"Commencement Date" means September 15, 1989.
-3-
<PAGE> 4
"Consent and Agreement" means the Consent and Agreement [NW
1989 B], dated as of March 15, 1989, executed by the Manufacturer, as
the same may be amended, modified or supplemented from time to time in
accordance with the applicable provisions thereof.
"Delivery Date" means March 16, 1989.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of four Pratt & Whitney Model PW4056
engines listed by manufacturer's serial number in the initial Lease
Supplement, whether or not from time to time thereafter installed on
the Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for any of such four
engines, together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom
so long as title thereto shall remain vested in Lessor in accordance
with the terms of Section 8 after removal from such Engine; provided,
however, that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine pursuant to the
applicable provisions hereof, the replaced Engine shall cease to be an
Engine hereunder. The term "Engines" means, as of any date of
determination, all Engines then leased hereunder.
"Equipment Trust Agreement" means the Original Trust
Indenture.
"Equipment Trust Trustee" means the Equipment Trust Trustee
under the Original Trust Indenture, and any entity which may from time
to time be acting as Equipment Trust Trustee under the Original Trust
Indenture.
"Event of Default" has the meaning specified in Section 14
hereof.
"Event of Loss" with respect to the Aircraft, Airframe or any
Engine means any of the following events with respect to such property:
(i) the loss of such property or the use thereof due to the destruction
of or damage to such property which renders repair uneconomic or which
renders such property permanently unfit for normal use by Lessee for
any reason whatsoever; (ii) any damage to such property which results
in an insurance settlement with respect to such property on the basis
of a total loss, or a constructive or compromised total loss; (iii) the
theft or disappearance of such property, or the confiscation,
condemnation or seizure of, or requisition of title to, or use of, such
property by any governmental or purported governmental authority (other
than a requisition for use by the United States Government or any other
government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event referred
to in this clause (iii) shall have resulted in the
-4-
<PAGE> 5
loss of possession of such property by Lessee for a period in excess of
180 consecutive days or on the last day of the Term, whichever first
occurs; (iv) as a result of any law, rule, regulation, order or other
action by the Federal Aviation Administration or other governmental
body of the government of registry of the Aircraft having jurisdiction,
the use of such property in the normal course of the business of air
transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of such 180
day period, shall have undertaken and shall be diligently carrying
forward all steps which are necessary or desirable to permit the normal
use of such property by Lessee or, if such prohibition is continuing,
on the last day of the Term; (v) the requisition for use by the United
States Government or any other government of registry of the Aircraft
or any instrumentality or agency of any thereof, which shall have
occurred during the Basic Term (or any Renewal Term) and shall have
continued for 30 days beyond the Term, provided, however, that no Event
of Loss pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section 10(d)
hereof; and (vi) any divestiture of title to an Engine treated as an
Event of Loss pursuant to Section 7(b) hereof. 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 Airframe.
"Excess Amount" for the Commencement Date means an amount
equal to the amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit B hereto opposite the Commencement
Date.
"Excluded Payments" shall have the meaning specified in the
Trust Indenture.
"Expenses" has the meaning given in Section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC
Form 8050-2 or such other form as may be approved by the Federal
Aviation Administration on the Delivery Date for the Aircraft, executed
by Lessee in favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States
Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that
amends, supplements or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to their
functions.
-5-
<PAGE> 6
"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, Airframe and/or any
Engine or engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal Aviation
Administration, the Civil Aviation Authority of the United Kingdom, the
Direction Generale de l'Aviation Civile of the French Republic or the
Luftfahrt Bundesamt of the Federal Republic of Germany.
"Guarantee" means the Guarantee [NW 1989 B], dated as of the
Closing Date, made by the Guarantor, as such Guarantee may be amended
or supplemented from time to time pursuant to the applicable provisions
thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnified Person" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement, (ii) the
Indenture Trustee, (iii) the Owner Participant, (iv) the Trust Estate,
(v) the Loan Participants and each other Certificate Holder, (vi) the
Subordination Agent, (vii) the Liquidity Provider, (viii) the Pass
Through Trustees, (ix) each Affiliate of the Persons described in
clauses (i) through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the
Persons described in clauses (i) through (viii), inclusive, (xii) the
successors and permitted assigns of the Persons described in clauses
(i) through (iv), inclusive, and (xiii) the successors and permitted
assigns of the Persons described in clauses (v), (vi), (vii) and
(viii); provided that the Persons described in clauses (v), (vi),
(vii), (viii), (x) and (xiii) are Indemnified Persons only for purposes
of Section 7(c) of the Participation Agreement.
"Indemnitee" has the meaning given in Section 7(b) of the
Participation Agreement.
"Indenture Trustee" means the Indenture Trustee under the
Trust Indenture, and any entity which may from time to time be acting
as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as a
result of (A) claims against the Indenture Trustee not related to its
interest in the Aircraft or the administration of the Trust Estate
pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not
permitted by, or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitutes gross negligence or
-6-
<PAGE> 7
willful misconduct, (C) claims against the Indenture Trustee relating
to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said
Section 7, or (D) claims against the Indenture Trustee arising out of
the transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust Indenture Estate
or the Operative Documents other than a transfer of the Aircraft
pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the
Trust Indenture, or a transfer of the Aircraft pursuant to Section 15
of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant
to the Trust Indenture.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider and
the Subordination Agent.
"Interim Term" means the period commencing on the Delivery
Date and ending on and including the day immediately preceding the
Commencement Date unless earlier terminated in accordance with the
provisions of the Lease.
"Lease", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Amended and Restated Lease Agreement [NW 1989 B], as
the same may from time to time be further supplemented or amended, or
the terms thereof waived or modified, to the extent permitted by, and
in accordance with, the terms of the Trust Agreement, including one or
more Lease Supplements entered into pursuant to the applicable
provisions hereof.
"Lease Period" means each of the consecutive periods
throughout the Basic Term and any Renewal Term and ending on a Lease
Period Date, the first such period commencing on and including the
Commencement Date.
"Lease Period Date" means March 15, 1990 and each succeeding
September 15 and March 15 to and including March 15, 1996, July 2, 1996
and each succeeding January 2 and July 2 to and including July 2, 2014,
September 15, 2014 and each succeeding March 15 and September 15, to
and including the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A hereto, entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and
pursuant to the terms of this Lease Agreement, and any subsequent Lease
Supplement entered into in accordance with the terms hereof.
"Lessor Liens" means any Lien or disposition of title or
interest affecting or in respect of the Aircraft, the Airframe, any
Engine, this Lease or the Trust Estate arising as a result of (i)
claims against Lessor, First Security Bank of
-7-
<PAGE> 8
Utah, National Association, in its individual capacity, or the Owner
Participant not related to the transactions contemplated by the
Operative Documents, (ii) any act or omission of the Owner Participant,
Lessor, or First Security Bank of Utah, National Association, in its
individual capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of any of
the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank of Utah, National
Association, in its individual capacity, with respect to Taxes or
Expenses against which Lessee is not required to indemnify the Owner
Participant, Lessor or First Security Bank of Utah, National
Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner
Participant arising out of any transfer by Lessor or the Owner
Participant of all or any portion of the respective interests of Lessor
or the Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of the
Aircraft by Lessor pursuant to this Agreement, the transfer pursuant to
the Trust Indenture or a transfer of the Aircraft pursuant to Section
9, 10 or 19 hereof or pursuant to the exercise of the remedies set
forth in Section 15 hereof or the succession by First Security Bank of
Utah, National Association as trustee under the Trust Agreement;
provided, however, that any Lien which is attributable solely to First
Security Bank of Utah, National Association or the Owner Participant,
as applicable, and would otherwise constitute a Lessor Lien under the
Lease shall not constitute a Lessor Lien under the Lease so long as (1)
the existence of such Lien poses no material risk of seizure of the
Aircraft, (2) the existence of such Lien does not interfere in any way
with the use or operation of the Aircraft by Lessee (or any Sublessee),
(3) the existence of such Lien does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Trust
Indenture, (4) First Security Bank of Utah, National Association or the
Owner Participant, as the case may be, is diligently contesting such
Lien and (5) the existence of such Lien does not result in threatened
or actual interruption in the payment of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders.
"Lessor's Cost" for the Aircraft means $125,000,000.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease, sublease, sub-sublease or security interest.
"Liquidity Facilities" means the three Revolving Credit Agreements
between the Subordination Agent, as borrower, and the Liquidity Provider, and
any replacement thereof, in each case as the same may be amended, modified or
supplemented.
"Liquidity Provider" means Westdeutsche Landesbank Girozentrale, acting
through its New York branch, as Class A Liquidity Provider, Class B
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Liquidity Provider and Class C Liquidity Provider under the Liquidity
Facilities, or any successor thereto.
"Loan Participant" means for any period prior to the Closing
the Original Loan Participant and its successors and assigns, and from
and after the Closing each Purchaser and its successors and registered
assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
of or claims against any Certificate Holder not related to the
transactions contemplated by the Operative Documents.
"Majority in Interest of Certificate Holders" has the meaning
set forth in the Trust Indenture.
"Make-Whole Amount" has the meaning assigned to that term in
the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer's Bill of Sale" means the bills of sale for the
Aircraft on AC Form 8050-2 or such other form as may be then approved
by the Federal Aviation Administration for the Aircraft, one executed
by the Manufacturer in favor of Boeing Sales Corporation, a subsidiary
of the Manufacturer, and one executed by Boeing Sales Corporation in
favor of Lessee.
"Net Economic Return" means the Owner Participant's net
after-tax yield and aggregate after-tax cash flow utilizing the
multiple investment sinking fund method of analysis, computed on the
basis of the same methodology and assumptions as were utilized by the
Owner Participant in determining Basic Rent, Stipulated Loss Values and
Termination Values as of the Delivery Date.
"Net Present Value of Rents" means the net present value, as
of the Commencement Date, of Basic Rent set forth in Exhibit B hereto,
discounted at an annual interest rate of 10.50% on a semi-annual basis.
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Lease, the documents referred to in
Section 4(a)(v) of the Participation Agreement (including any
amendments, modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture, the Guarantee and the Secured
Certificates.
"Original Loan Participant" means [_______________], a
banking institution organized under the laws of the [____________].
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"Original Trust Indenture" means the Equipment Trust Agreement
[NW 1989 B], dated as of March 15, 1989, among the Owner Trustee,
Lessee and Meridian Trust Company, as supplemented by Equipment Trust
Agreement and Trust Agreement Supplement No. 1 [NW 1989 B], dated March
16, 1989, and as amended by First Amendment to Equipment Trust
Agreement [NW 1989 B], dated as of December 19, 1991, and as further
amended, modified and supplemented prior to the Closing Date.
"Owner Participant" means the [________________] and any
person to which such corporation transfers all or any portion of its
right, title and interest in and to the Trust Agreement, the Trust
Estate and the Participation Agreement, to the extent permitted by
Section 8.01 of the Trust Agreement and Section 8 of the Participation
Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner
Trustee pursuant to Section 9.01 of the Trust Agreement, and references
to a predecessor Owner Trustee in its individual capacity by name in
the Operative Documents shall include such successor Owner Trustee in
its individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation Agreement,
the Trust Agreement, the Trust Supplement covering the Aircraft, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Trust Indenture and the Secured Certificates.
"Owner Trustee's Bill of Sale" means a bill of sale for the
Aircraft from the Owner Trustee to the Equipment Trust Trustee.
"Owner Trustee's Bills of Sale" means, collectively, the Owner
Trustee's Bill of Sale and the Owner Trustee's FAA Bill of Sale for the
Aircraft.
"Owner Trustee's FAA Bill of Sale" means a bill of sale for
the Aircraft on AC Form 8050-2 or such other form as may be approved by
the Federal Aviation Administration on the Delivery Date for the
Aircraft, executed by the Owner Trustee in favor of the Equipment Trust
Trustee and dated the Delivery Date.
"Participation Agreement" means that certain Participation
Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, the
Equipment Trust Trustee, the Initial Owner Participant, the Original
Loan Participant and Lessor, as such Participation Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
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"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than (a) complete Engines or engines, (b) any items
leased by Lessee from a third party (other than Lessor) title to which
is not required to be vested in Lessor pursuant to Section 8 hereof,
and (c) cargo containers) which may from time to time be incorporated
or installed in or attached to the Airframe or any Engine or so long as
title thereto shall remain vested in Lessor in accordance with Section
8 after removal therefrom.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trustee in connection
with the Refinancing Transaction.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the four separate pass through trust supplements
referred to on Schedule I to the Refunding Agreement to be entered into
by and among Lessee, the Guarantor, and each Pass Through Trustee in
connection with the Refinancing Transaction.
"Pass Through Trustee" means State Street Bank and Trust
Company, a Massachusetts trust company in its capacity as trustee under
each Pass Through Trust Agreement, and each other person that may from
time to time be acting as successor trustee under any such Pass Through
Trust Agreement.
"Past Due Rate" means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be paid
by the Indenture Trustee to the Loan Participants, or the holders of
any outstanding Secured Certificates, the "Past Due Rate" as defined in
the Trust Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of Rent after
the satisfaction and discharge of the Trust Indenture), a rate per
annum equal to 1% over the Base Rate.
"Permitted Lien" means any Lien referred to in clauses (i)
through (vii) of Section 6 hereof.
"Permitted Sublessee" means any entity listed in Exhibit E
hereto and such other entities to which Lessor shall consent, such
consent not to be unreasonably withheld.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
"Potential Default" means any event which is or after notice
or passage of time, or both, would be an Event of Default pursuant to
Section 14(a), (b), (e), (f) or (g) hereof.
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"Purchase Agreement" means the Purchase Agreement No. 1267,
dated December 13, 1985, between the Manufacturer and Lessee relating
to the purchase by Lessee of the Aircraft, as originally executed or as
modified, amended or supplemented in accordance with the terms thereof,
but only insofar as the foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1989 B], dated as of March 15, 1989, between Lessee and
Lessor, as the same may be amended, supplemented or modified from time
to time, with a form of Consent and Agreement to be executed by the
Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"Refinancing Certificate" means a certificate of an authorized
representative of the Owner Participant delivered pursuant to Section
17(a)(1) of the Participation Agreement, setting forth, among other
things, the Refinancing Date, the principal amount of debt to be issued
by the Owner Trustee on the Refinancing Date, and the proposed revised
schedules of Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization Schedules.
"Refinancing Date" means the proposed date on which the
outstanding Series BB Certificates will be redeemed and refinanced
pursuant to Section 17 of the Participation Agreement.
"Refinancing Expenses" means the costs, fees, commissions and
other expenses payable as set forth in Section 11(a) of the Refunding
Agreement.
"Refinancing Secured Certificates" means the Secured
Certificates to be issued by Lessor to the Purchasers pursuant to the
Trust Indenture and the Refunding Agreement on the Closing Date.
"Refinancing Transaction" means a refinancing transaction
pursuant to Section 17 of the Participation Agreement involving, among
other things, (i) the redemption of the Series BB Certificates issued
on March 16, 1989 and the concurrent issuance and sale of the
Refinancing Secured Certificates to the Pass Through Trustees (or their
designee) and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
"Refunding Agreement" means that certain Refunding Agreement
[NW 1989 B], dated as of June 3, 1996, among Lessor, Lessee, the
Guarantor, the Owner Participant, the Purchasers, the Indenture Trustee
and the Subordination Agent, as the same may from time to time be
supplemented or amended, or the
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terms thereof waived or modified, to the extent permitted by, and in
accordance with, the terms thereof.
"Renewal Term" shall mean any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19(a) hereof.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Secured Certificates" has the meaning assigned to that term
in the Trust Indenture.
"Series BB Certificate" means any certificate issued by the
Equipment Trust Trustee under the Original Trust Indenture,
substantially in the form of Exhibit A annexed thereto.
"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including September 15, 2014, means, but subject
always to the provisions of Section 3(d)(v), the amount determined by
multiplying Lessor's Cost by the percentage specified in Exhibit C
hereto opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted from time
to time as provided in Section 3(d) hereof and in Section 8 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after
September 15, 2014 shall be the amount determined as provided in
Section 19(a) of the Lease Agreement.
"Stipulated Loss Value Date" means (a) during the Interim
Term, during the Basic Term through the Closing Date and during any
Renewal Term, the fifteenth calendar day of each calendar month, and
(b) during the Basic Term after the Closing Date, the second calendar
day of each calendar month.
"Sublease" means any sublease permitted by the terms of
Section 7(b)(x) hereof.
"Sublessee" means any person for so long, but only so long, as
such person is in possession of the Airframe and/or any Engine pursuant
to the terms of a Sublease which is then in effect pursuant to Section
7(b)(x) hereof.
"Subordination Agent" means State Street Bank and Trust
Company of Connecticut, National Association, a national banking
association, as subordination agent under the Intercreditor Agreement,
or any successor thereto.
"Subsidiary" means a Person controlled by another Person.
"Supplemental Rent" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than Basic
Rent) which Lessee
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assumes or agrees to pay under any Operative Document to or on behalf
of Lessor or any other Person, (b) amounts payable by Lessor pursuant
to clause (b) of the third paragraph of Section 2.02 of the Trust
Indenture, (c) Lessor's pro rata share of all compensation and
reimbursement of expenses, disbursements and advances payable by Lessee
under the Pass Through Trust Agreements, and (d) Lessor's pro rata
share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the
Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement. As used
herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" (as such term is
defined in the Intercreditor Agreement).
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1989 B], dated as of March 15, 1989, between the Initial
Owner Participant and Lessee, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions thereof.
"Taxes" mean any and all fees (including, without limitation,
license, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use,
turnover, value added, property (tangible and intangible), excise,
franchise, capital, doing business and stamp taxes), levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Interim Term, Basic Term and, if actually
entered into, any Renewal Term.
"Termination Date" means (a) during the Interim Term, during
the Basic Term through the Closing Date and during any Renewal Term,
the fifteenth day of each calendar month, and (b) during the Basic Term
after the Closing Date, the second calendar day of each calendar month.
"Termination Value" with respect to the Aircraft as of any
date through and including September 15, 2014, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost by the percentage specified in
Exhibit D hereto opposite the Termination Date with respect to which
the amount is determined (as such Exhibit D of the Lease Agreement may
be adjusted from time to time as provided in Section 3(d) hereof and in
Section 8 of the Tax Indemnity Agreement).
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"Transaction Expenses" means: (i) the reasonable and actual
fees, expenses and disbursements of (1) Messrs. Whitman & Ransom,
special counsel for the Equipment Trust Trustee, and Stevens & Lee,
Pennsylvania counsel for the Equipment Trust Trustee, (2) Messrs.
Csaplar & Bok, counsel for the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (3) Messrs.
Shearman & Sterling, special counsel to the Original Loan Participant,
such information to be furnished by the Original Loan Participant, and
(4) Messrs. Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, such information to be furnished by Lessee, (ii) all fees,
taxes and other charges payable in connection with the recording or
filing of instruments and financing statements, such information to be
furnished by Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial fee
and reasonable and actual disbursements of the Equipment Trust Trustee
under the Original Trust Indenture, such information to be furnished by
the Equipment Trust Trustee, (v) the fee of Avmark Inc. (or of such
other appraiser as shall be acceptable to Lessee and the Owner
Participant) with respect to the appraisal of the Aircraft pursuant to
Section 4(a)(xx) of the Participation Agreement, such information to be
furnished by the Initial Owner Participant, and (vi) the reasonable and
actual fees, expenses and disbursements of Messrs. Luce, Forward,
Hamilton & Scripps, special counsel to the Initial Owner Participant
and Imperial Corporation of America, in connection with the
preparation, execution and delivery of the Operative Documents and the
closings of the transactions contemplated thereby in an aggregate
amount not to exceed $190,000, such information to be furnished by the
Initial Owner Participant.
"Trust Agreement" means that certain Trust Agreement [NW 1989
B], dated as of March 15, 1989, between the Initial Owner Participant
and The First National Bank of Boston, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without limitation, the
Instrument of Transfer, Removal, Appointment, Assumption and
Acceptance, dated May, 1996, pursuant to which First Security Bank of
Utah, National Association, succeeded The First National Bank of Boston
as Owner Trustee thereunder and supplementation thereof by one or more
Trust Supplements entered into pursuant to the applicable provisions
thereof.
"Trust Estate" means the Trust Estate as that term is defined
in the Trust Agreement.
"Trust Indenture" or "Indenture" means that certain Trust
Indenture and Security Agreement [NW 1989 B], dated as of the date
hereof, between Lessor and the Indenture Trustee, as originally
executed or as modified, amended or supplemented in accordance with the
provisions thereof.
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"Trust Indenture Estate" has the meaning assigned to that term
in the Trust Indenture.
"Trust Supplement" means a supplement to the Trust Agreement
and the Trust Indenture, substantially in the form of Exhibit A to the
Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier as to
which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the Federal Aviation Act,
or which may operate as an air carrier by certification or otherwise
under any successor or substitute provisions therefor or in the absence
thereof.
"Wet Lease" means any arrangement whereby the Lessee (or any
Sublessee) agrees to furnish the Airframe and Engines or engines
installed thereon to a third party pursuant to which such Airframe and
Engines or engines (i) shall be operated solely by regular employees of
Lessee (or any Sublessee) possessing all current certificates and
licenses that would be required under the Federal Aviation Act or, if
the Aircraft is not registered in the United States, all certificates
and licenses required by the laws of the jurisdiction of registry, for
the performance by such employees of similar functions within the
United States of America or such other jurisdiction of registry (it is
understood that cabin attendants need not be regular employees of
Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee (or
any Sublessee) in accordance with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby confirms that, pursuant
to the Original Lease, Lessor (through its authorized representatives) accepted
delivery of, and simultaneously leased to Lessee under the Original Lease, the
Aircraft on the Delivery Date. Lessee hereby confirms that, pursuant to the
Original Lease, Lessee (through its authorized representatives) accepted
delivery of, and simultaneously leased from Lessor under the Original Lease, the
Aircraft on the Delivery Date. Lessor and Lessee hereby confirm to each other
that such acceptance of delivery of, and such leasing of, the Aircraft under the
Original Lease and the continued leasing of the Aircraft under this Lease on the
terms and conditions herein stated, shall continue to constitute irrevocable
acceptance by Lessee of the Aircraft for all purposes of this Lease
notwithstanding the amendment and restatement of this Lease as contemplated
hereby.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term. The Interim
Term shall commence on the Delivery Date and end on and include the day
immediately preceding the Commencement Date unless earlier terminated pursuant
to the provisions hereof. The Basic Term shall commence on the Commencement Date
and end on September 15, 2014, or such earlier date as this Lease may be
terminated in accordance with the provisions hereof.
(b) [Intentionally Omitted].
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(c) Basic Rent. Lessee shall pay Basic Rent with respect to each Lease
Period during the Basic Term on each Lease Period Date during the Basic Term, in
installments in the amounts as provided in the next sentence. Each such
installment of Basic Rent shall be equal to Lessor's Cost multiplied by the
percentage for the applicable Lease Period Date specified in Exhibit B hereto
and shall accrue with respect to the period specified in Exhibit B. In addition,
Lessee shall pay Basic Rent on the Closing Date in an amount equal to Lessor's
Cost multiplied by the percentage specified in Exhibit B hereto for the Closing
Date.
(d) Adjustments to Rent.
(i) In the event of a refinancing or a refunding as
contemplated by Section 17 of the Participation Agreement, then the
Basic Rent percentages set forth in Exhibit B and Stipulated Loss Value
percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated (upwards or
downwards) by the Owner Participant as contemplated by such Section to
(1) maintain the Owner Participant's Net Economic Return and (2)
minimize the Net Present Value of Rents to Lessee and minimize the
Stipulated Loss Value and Termination Value percentages to the extent
possible consistent with clause (1).
(ii) In the event that (A) the Closing Date occurs other than
on June 12, 1996, or (B) Refinancing Expenses paid by Lessor pursuant
to Section 11(a) of the Refunding Agreement are determined to be less
than 1.0049% of Lessor's Cost or (C) except for the application of
Section 467 of the Code or any regulations thereunder, there shall have
occurred on or after the date of the execution and delivery of the
Refunding Agreement and on or prior to the Closing Date a change in any
Applicable Law of, or relating to, Taxes which causes the transactions
contemplated or effected by the Refunding Agreement to have adverse tax
consequences to the Owner Participant or any of its Affiliates which
would not have occurred but for such transactions, then in each case
the Basic Rent percentages set forth in Exhibit B and Stipulated Loss
Value percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated by the Owner
Participant, on or prior to October 1, 1996 using the same methods and
assumptions used to calculate original Basic Rent and Stipulated Loss
Value and Termination Value percentages, in order to: (1) maintain the
Owner Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee and minimize the Stipulated Loss Value
and Termination Value percentages to the extent possible consistent
with clause (1). In such recalculation there will be no change in the
amortization of the Secured Certificates.
(iii) [Reserved]
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(iv) Any recalculation of Basic Rent, Excess Amount and
Stipulated Loss Value and Termination Value percentages pursuant to
this Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in Exhibit F
hereto. Such recalculated Basic Rent, Excess Amount and Stipulated Loss
Value and Termination Value percentages shall be set forth in a Lease
Supplement or an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this
Lease or any other Operative Document to the contrary notwithstanding,
each installment of Basic Rent payable hereunder, whether or not
adjusted in accordance with this Section 3(d), shall, together with the
amount of the Excess Amount in respect of the date on which such
installment is payable, and each payment of Termination Value and
Stipulated Loss Value, whether or not adjusted in accordance with this
Section 3(d), shall together with all other amounts payable
simultaneously therewith by Lessee pursuant to this Lease (excluding
Excluded Payments (as defined in the Trust Indenture)), in each case be
under any circumstances and in any event in an amount at least
sufficient to pay in full, on the date on which such amount of Rent is
due, any payments then required to be made on account of the principal
of and interest on the Secured Certificates. It is agreed that no
installment of Basic Rent or payment of Termination Value or Stipulated
Loss Value or amount calculated by reference thereto shall be increased
or adjusted by reason of (i) any attachment or diversion of Rent on
account of (A) Lessor Liens or (B) any other Lien on or against the
Trust Estate, any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to the
transactions contemplated by the Operative Documents, (ii) any
modification of the payment terms of the Secured Certificates made
without the prior written consent of Lessee or (iii) the acceleration
of any Secured Certificate or Secured Certificates due to the
occurrence of an "Event of Default" (as defined in the Trust Indenture)
which does not constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d)
shall cause Basic Rent from the date of such adjustment (a) to be
consistent with the requirements of Revenue Procedure 75-21, 1975-1
C.B. 715 and Revenue Procedure 75-28, 1975-1 C.B. 752, both as in
effect and as interpreted on the Delivery Date, and (b) to be
consistent with Section 467 of the Code, but only to the extent such
Code section is complied with as of the Delivery Date; provided,
however, that for purposes of determining whether Section 467 is
complied with as of the Delivery Date, if the structure of the Rent on
the Delivery Date (the "INITIAL RENT STRUCTURE") is in compliance with
Section 467 or any Treasury Regulations promulgated thereunder (or any
successor provisions) on the Delivery Date as a result of any
"grandfather" provision, transitional rule or for any other reason,
then the Initial Rent Structure shall be deemed to be in compliance
with Section 467 as of the Delivery Date.
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However, in the event the Initial Rent Structure is not in compliance
with Section 467 as of the Delivery Date such that the Owner
Participant is required to include into income a "constant rental
amount", any subsequent adjustment in Basic Rent shall be in compliance
with Section 467 and will provide the Owner Participant with such
reduced Net Economic Return that was obtained taking into account such
constant rental amount, provided that notwithstanding the foregoing,
any adjustment pursuant to Section 3(d)(ii)(C) shall take into account
such change in Applicable Law of, or relating to, Taxes and shall
maintain the Owner Participant's Net Economic Return as if such change
did not occur.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid) promptly
to Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental
Rent with respect to Stipulated Loss Value or Termination Value as the same
shall become due and owing and all other amounts of Supplemental Rent within
five days after demand or within such other relevant period as may be provided
in any Operative Document, and in the event of any failure on the part of Lessee
to pay any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or in any other Operative Document or by law or
equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall pay as
Supplemental Rent the Make-Whole Amount, if any, due pursuant to Section 2.10(b)
or Section 2.11 of the Trust Indenture in connection with a prepayment of the
Secured Certificates upon redemption of such Secured Certificates in accordance
with such Section 2.10(b) or Section 2.11. Lessee also will pay to Lessor, or to
whomsoever shall be entitled thereto, as Supplemental Rent, on demand, to the
extent permitted by applicable law, interest at the Past Due Rate on any part of
any installment of Basic Rent not paid when due for any period for which the
same shall be overdue and on any payment of Supplemental Rent not paid when due
for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made directly by
Lessee (whether or not any Sublease shall be in effect) in Dollars by wire
transfer of immediately available funds prior to 10:30 A.M., New York time, on
the due date thereof, to Lessor at its account at First Security Bank of Utah,
National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-0000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1989 B (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby
irrevocably directs and Lessee agrees, that, unless the Indenture Trustee shall
otherwise direct, all Rent payable to Lessor and assigned to the Indenture
Trustee pursuant to the Trust Indenture shall be paid prior to 10:30 A.M., New
York time on the due date thereof in funds of the type specified in this Section
3(f) directly to the Indenture Trustee at its account at State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No.
011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department,
Reference: Northwest/NW 1989 B (or such other account of the Indenture Trustee
in the continental United States as the Indenture Trustee shall direct in a
notice to Lessee at least 10 Business Days prior to the date such payment of
Rent is due). All payments of Supplemental Rent
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owing to the Indenture Trustee or to a Loan Participant or any other Certificate
Holder pursuant to the Participation Agreement shall be made in Dollars in
immediately available funds prior to 10:30 A.M., New York time, on the due date
thereof at the office of the Indenture Trustee or at such other office of such
other financial institution located in the continental United States as the
party entitled thereto may so direct at least 10 Business Days prior to the due
date thereof. All payments of Supplemental Rent payable to the Owner
Participant, to the extent that such amounts constitute Excluded Payments (as
defined in the Trust Indenture), shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date thereof, to
the account of the Owner Participant specified in Schedule I to the
Participation Agreement (or to such other account as may be specified in writing
by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if any date
on which a payment of Rent becomes due and payable is not a Business Day, then
such payment shall not be made on such scheduled date but shall be made on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. NEITHER LESSOR, THE
INDENTURE TRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED
TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION, VALUE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE
OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that First Security Bank of Utah, National Association, in its individual
capacity, (i) represents and warrants that on the Delivery Date, Lessor shall
have received whatever title to the Aircraft as was conveyed to it by Lessee,
(ii) represents and warrants that as of the Closing Date the Aircraft shall be
free of Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) attributable to it,
(iii) covenants that it will not, through its own actions or inactions,
interfere in Lessee's quiet enjoyment of the Aircraft during the Term, (iv)
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine or any portion of the Trust Estate and (v) represents and warrants
that it is a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and agrees that if at any time it
shall cease to be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement, it will promptly resign
as Owner Trustee (if and so long as such citizenship is necessary under the
Federal Aviation Act as in effect at such time or, if it is
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<PAGE> 21
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Owner Participant, the Certificate Holders or
Lessee), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. Lessor covenants that
during the Term (so long as this Lease shall not have been declared in default
pursuant to Section 15 hereof) it will not, through its own actions or inactions
interfere in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return. Unless
purchased by Lessee pursuant to Section 9(b) or Section 19 hereof, upon the
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c) or Section 15 hereof, Lessee, at its own expense, will
return the Airframe to Lessor at a major airport in one of the forty-eight
contiguous states of the United States chosen by Lessee, and Lessee will give
Lessor ten days prior written notice of the place of such return; provided,
however, that if Lessor shall have made the request for storage pursuant to
Section 5(d) hereof, Lessee shall return the Airframe to Lessor at the location
of such storage. At the time of such return, (i) Lessee will, unless otherwise
requested by Lessor at least 90 days prior to the return hereunder, cause the
Aircraft, if it is not then so registered, to be registered under the laws of
the United States with the Federal Aviation Administration in the name of the
Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if such registration is prohibited by reason of
the failure of the Owner Trustee or its designee to be eligible on such date to
own an aircraft registered with the Federal Aviation Administration, and (ii)
the Airframe will be fully equipped with the Engines, or other Pratt & Whitney
PW4056 engines (or four other engines of the same make and model or four engines
of the same or another manufacturer of equivalent utility, fair market value,
and remaining useful life, and suitable for installation and use on the Airframe
without impairing the fair market value, utility or remaining useful life of the
Aircraft) duly installed thereon. Also, at the time of such return, such
Airframe and Engines or engines (i) shall be certified (or, if not then
registered under the Federal Aviation Act, shall be eligible for certification)
as an airworthy aircraft by the Federal Aviation Administration, (ii) shall be
free and clear of all Liens (other than Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of Lessor
Liens, and Indenture Trustee's Liens) and rights of third parties under pooling,
interchange, overhaul, repair or other similar agreements or arrangements, (iii)
shall be in passenger configuration and in as good operating condition as when
delivered to Lessee hereunder, ordinary wear and tear excepted, or, in the case
of any such engines owned by Lessee, shall have a fair market value, utility and
remaining useful life at least equal to, and shall be in as good operating
condition as required by the terms hereof with respect to Engines constituting
part of the Aircraft but not then installed on the Airframe, (iv) in the event
that Lessee (or any Sublessee then in possession of the Aircraft) shall not then
be using a continuous maintenance program with respect to the Airframe, Lessee
agrees that during the period of operation of the Aircraft immediately prior to
such return (A) Lessee or such Sublessee, as the case may be, shall have been
using a block overhaul program with respect to the Airframe which shall have
been approved by all necessary governmental approvals of the country under the
laws of which the Aircraft shall then have been registered
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<PAGE> 22
and (B) the Airframe shall have remaining until the next scheduled block
overhaul at least 25% of the allowable hours between block overhauls permitted
under the block overhaul program then used by Lessee or such Sublessee, (v) in
the event that Lessee (or any Sublessee then in possession of the Aircraft)
during the period of operation of the Aircraft immediately prior to such return
shall not have been using an on-condition maintenance program with respect to
the Engines or engines, Lessee agrees that the average number of hours or cycles
of operation (whichever shall be applicable under the maintenance program then
in use with respect to such Engines or engines) on such Engines or engines
remaining until the next scheduled engine refurbishment shall be at least 25% of
the hours or cycles (whichever shall be applicable) between engine refurbishment
allowed under the maintenance program then in use with respect to such Engines
or engines, and (vi) have all Lessee's and any Sublessee's exterior markings
removed or painted over and the areas where such markings were removed or
painted over refurbished as necessary to blend with adjacent areas. In the event
the Federal Aviation Administration shall issue any directive which would
require improvement to the Aircraft in order for the airworthiness certificate
of the Aircraft to be maintained in good standing, Lessee shall not apply for an
extension of the date of compliance with the directive as to the Aircraft to a
date after the date of return of the Aircraft pursuant to this Section 5, unless
it shall previously or concurrently have applied for such an extension with
respect to all Boeing 747-400 aircraft in its fleet affected by such directive.
If clause (iv) of the first paragraph of this Section 5(a) shall be
applicable but the Airframe does not meet the conditions specified in said
clause (iv), Lessee shall pay or cause to be paid to Lessor a Dollar amount
computed by multiplying (i) 120% of the direct cost to Lessee (based upon the
direct cost to Lessee for similar aircraft in the fleet of Lessee) during the
preceding 12 months of performing an airframe block overhaul of the type
referred to in such clause (iv) by (ii) a fraction of which (x) the numerator
shall be the excess of 25% of hours of operation allowable between such block
overhauls over the actual number of hours of operation remaining on the Airframe
to the next such block overhaul and (y) the denominator shall be the number of
hours of operation allowable between such block overhauls in accordance with
such block overhaul program.
If clause (v) of the first paragraph of this Section 5(a) shall be
applicable but the Engines or engines do not meet the conditions specified in
said clause (v), Lessee shall pay with respect to each Engine or engine or cause
to be paid to Lessor as Dollar amount computed by multiplying (i) 120% of the
direct cost to Lessee (based upon the direct cost to Lessee for similar aircraft
in the fleet of Lessee) during the preceding 12 months of performing for an
engine of the same model as the Engines the scheduled engine refurbishment under
the maintenance program then used by Lessee or any Sublessee for engines of the
same model as the Engines by (ii) a fraction of which (x) the numerator shall be
the excess of 25% of the hours or cycles of operation (whichever is applicable)
between engine refurbishment allowable under the maintenance program then in use
with respect to such Engines or engines over the actual average
number of hours or cycles of operation on such Engines or engines remaining
until the next such scheduled engine refurbishment and (y) the denominator shall
be the number of hours or cycles allowable between such scheduled engine
refurbishment.
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<PAGE> 23
During the last 6 months of the Term (unless Lessee shall have elected
to purchase the Aircraft or renew this Lease in accordance with the terms of
this Lease), with reasonable notice, Lessee will cooperate, and cause any
Sublessee to cooperate, in all reasonable respects with the efforts of Lessor to
sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating thereto, provided that such cooperation shall not interfere with the
normal operation of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
to Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
title) bill of sale with respect to each such engine, in form and substance
satisfactory to Lessor (together with an opinion of counsel in form and
substance reasonably satisfactory to Lessor to the effect that such full
warranty bill of sale has been duly authorized and delivered and is enforceable
in accordance with its terms and that such engines are free and clear of Liens
other than Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens, and Indenture
Trustee's Liens), against receipt from Lessor of a bill of sale evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the return
of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any termination
of this Lease referred to in paragraph (a) of this Section 5, (i) Lessor shall
pay Lessee, as compensation for any fuel or oil contained in the fuel or oil
tanks of such Airframe, the value of such fuel or oil as calculated by reference
to the then current market price of fuel or oil, as the case may be, and (ii)
Lessee shall deliver or cause to be delivered to Lessor all logs, manuals and
data and inspection, modification and overhaul records required to be maintained
with respect thereto under applicable rules and regulations of each country
under the laws of which the Aircraft has been registered during the period of
operation thereof.
(d) Storage Upon Return. If, at least 30 days prior to termination of
this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c), Lessee receives from Lessor a written request for storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with free parking facilities for the Aircraft (maintenance costs
and other out-of-pocket costs other than parking fees and Lessee's corporate
overhead to be for the account of Lessor) for a period not exceeding thirty days
commencing on the date of such termination, at a location in one of the
forty-eight contiguous states of the United States selected by Lessee and used
as a location for the parking or storage of aircraft. Not less than fifteen days
prior to the end of such thirty day period, Lessor may request, and Lessee shall
provide, parking facilities for an additional sixty day period. During such
sixty day period, all costs relating thereto, including, without limitation,
maintenance costs and other out-of-pocket expenses and parking fees (but
excluding Lessee's corporate
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<PAGE> 24
overhead) shall be for the account of Lessor. Lessee will maintain insurance for
the Aircraft during such period not exceeding thirty days or additional sixty
days, as applicable, and be reimbursed by Lessor for the premiums thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Aircraft, title
thereto or any interest therein or in this Lease, except (i) the respective
rights of Lessor as owner of the Aircraft and Lessee as herein provided, the
Lien of the Trust Indenture, and any other rights existing pursuant to the
Operative Documents, (ii) the rights of others under agreements or arrangements
to the extent permitted by the terms of Sections 7(b) and 8(b) hereof, (iii)
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Loan Participant Liens and
Indenture Trustee's Liens, (iv) Liens for taxes of Lessee (or any Sublessee)
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve any material danger of the sale,
forfeiture or loss of the Airframe or any Engine or any interest therein, (v)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing obligations
that are not overdue for a period of more than 60 days or are being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of the Airframe or any
Engine or any interest therein, (vi) Liens arising out of any judgment or award
against Lessee (or any Sublessee), unless the judgment secured shall not, within
30 days after the entry thereof, have been discharged, vacated, reversed or
execution thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within 30 days after the expiration of such stay, and (vii)
any other Lien with respect to which Lessee (or any Sublessee) shall have
provided a bond or other security adequate in the reasonable opinion of Lessor.
Lessee will promptly, at its own expense, take (or cause to be taken) such
actions as may be necessary duly to discharge any such Lien not excepted above
if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION AND
SUBLEASES; INSIGNIA. (a) (I) Registration and Maintenance. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) cause the
Aircraft to continue to be duly registered in the name of Lessor under the
Federal Aviation Act, and, subject to the second paragraph of this Section 7(a)
and Section 8(f) of the Participation Agreement, to remain duly registered in
the name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any other laws at any time except as provided in Section 8(f)
of the Participation Agreement and shall cause the Trust Indenture to be duly
recorded and maintained of record as a security interest on the Aircraft; (ii)
maintain, service, repair, and overhaul (or cause to be maintained, serviced,
repaired, and overhauled) the Aircraft so as to keep the Aircraft in as good
operating condition as when originally delivered by Manufacturer to Lessee,
ordinary wear and tear excepted, and so as to keep the Aircraft in such
condition as may be necessary to enable the applicable airworthiness
certification for the
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<PAGE> 25
Aircraft to be maintained in good standing at all times (other than during
temporary periods of storage in accordance with applicable regulations) under
the Federal Aviation Act, except when all Boeing 747-400 aircraft powered by
engines of the same type as those with which the Airframe shall be equipped at
the time of such grounding and registered in the United States have been
grounded by the Federal Aviation Administration other than as a result of
actions taken or omitted to be taken by Lessee (or, if a Sublease is then in
effect, any Sublessee) (although such certification need actually be maintained
only during such periods as the Aircraft is registered under such Act), or the
applicable laws of any other jurisdiction in which the Aircraft may then be
registered from time to time in accordance with Section 8(f) of the
Participation Agreement, utilizing, except during any period that a Sublease is
in effect, the same manner of maintenance, service, repair or overhaul used by
Lessee with respect to similar aircraft owned or operated by Lessee and
utilizing, during any period that a Sublease is in effect, the same manner of
maintenance, service, repair or overhaul used by the Sublessee with respect to
similar aircraft operated by the Sublessee; (iii) maintain or cause to be
maintained all records, logs and other materials required to be maintained in
respect of the Aircraft by the Federal Aviation Administration or the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered; and (iv) promptly furnish or cause to be furnished to Lessor
such information as may be required to enable Lessor to file any reports
required to be filed by Lessor with any governmental authority because of
Lessor's ownership of the Aircraft. (II) Operation. Lessee will not maintain,
use, service, repair, overhaul or operate the Aircraft (or permit any Sublessee
to maintain, use, service, repair, overhaul or operate the Aircraft) in
violation of any law or any rule, regulation, order or certificate of any
government or governmental authority (domestic or foreign) having jurisdiction,
or in violation of any airworthiness certificate, license or registration
relating to the Aircraft issued by any such authority, except to the extent
Lessee (or, if a Sublease is then in effect, any Sublessee), after providing
written notice to Lessor, is contesting in good faith the validity or
application of any such law, rule, regulation or order in any reasonable manner
which does not materially adversely affect Lessor. Lessee will not operate the
Aircraft, or permit any Sublessee to operate the Aircraft, in any area excluded
from coverage by any insurance required by the terms of Section 11; provided,
however, that the failure of Lessee to comply with the provisions of this
sentence shall not give rise to an Event of Default hereunder where such failure
is attributable to causes beyond the reasonable control of Lessee (or, if a
Sublease is then in effect, the Sublessee) or to extraordinary circumstances
involving an isolated occurrence or series of incidents not in the ordinary
course of the regular operations of Lessee (or, if a Sublease is then in effect,
the Sublessee).
At any time on or after the fifth anniversary of the Delivery Date,
Lessor, upon compliance with all of the terms of Section 8(f) of the
Participation Agreement, shall, at the request and sole expense of Lessee,
cooperate with Lessee to take all actions required to change the registration of
the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed in any airframe other than the Airframe; provided that so
long as no Potential Default or Event of
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<PAGE> 26
Default shall have occurred and be continuing at the time of such sublease,
delivery, transfer or relinquishment of possession or installation, and so long
as the action to be taken shall not deprive the Indenture Trustee of the Lien of
the Trust Indenture on the Airframe or (subject to the further proviso (B) to
clause (i) of this Section 7(b)) any Engine, and so long as Lessee (or any
Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof,
Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or
engines then installed thereon to normal interchange
agreements or any Engine to normal pooling or similar
arrangements, in each case customary in the airline industry
and entered into by Lessee (or any Sublessee) in the ordinary
course of its business; provided, that (A) no such agreement
or arrangement contemplates or requires the transfer of title
to the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Foreign Air Carrier;
(ii) deliver possession of the Airframe or
any Engine to the manufacturer thereof (or for delivery
thereto) or to any organization (or for delivery thereto) for
testing, service, repair, maintenance or overhaul work on the
Airframe or Engine or any part of any thereof or for
alterations or modifications in or additions to such Airframe
or Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii) install an Engine on an airframe owned
by Lessee (or any Sublessee) free and clear of all Liens,
except: (A) Permitted Liens and those which apply only to the
engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
shall not be divested as a result thereof and (C) mortgage
liens or other security interests, provided, that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased
to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all Liens, except: (A) the rights of the parties to the
lease or conditional sale or other security agreement covering
such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and
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<PAGE> 27
(y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned
by Lessee (or any Sublessee), leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject
to a conditional aisle or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b)
hereof, subject any appliances, Parts or other equipment owned
by Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to
subject) the Airframe or any Engine to the Civil Reserve Air
Fleet Program and transfer (or permit any Sublessee to
transfer) possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency
thereof pursuant to the Civil Reserve Air Fleet Program, so
long as Lessee (or any Sublessee) shall (A) promptly notify
Lessor upon subjecting the Airframe or any Engine to the Civil
Reserve Air Fleet Program in any contract year and provide
Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United
States Air Force to whom notice must be given pursuant to
Section 15 hereof, and (B) promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the
United States of America or any agency or instrumentality
thereof pursuant to such program;
(viii) enter into a Wet Lease for the
Airframe and Engines or engines then installed thereon with
any third party;
(ix) transfer possession of the Airframe or
any Engine to the United States of America or any
instrumentality or agency thereof pursuant to a contract, a
copy of which shall be provided to Lessor; or
(x) so long as the term of any sublease does
not extend beyond the Term and so long as the Sublessee is not
subject to a proceeding or final order under bankruptcy,
insolvency or reorganization laws on the date the sublease is
entered into, Lessee may, at any time, enter into any sublease
with (1) a U.S. Air Carrier, (2) any person approved in
writing by Lessor, which
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<PAGE> 28
approval shall not be unreasonably withheld or (3) after the
fifth anniversary of the Delivery Date, with any Permitted
Sublessee; provided, however, that no sublease entered into
pursuant to this clause (x) shall extend beyond the date which
is one year prior to the expiration of the Basic Term or any
Renewal Term then in effect unless the Owner Participant shall
have previously approved in writing the maintenance procedures
of the Sublessee or Lessee shall have irrevocably committed to
purchase the Aircraft, or (if permitted by the terms hereof)
extend the Term of this Lease by a period of at least one year
from the end of the proposed sublease.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
which has a term of more than three months, shall be effectively and expressly
subject and subordinate to, all the terms of this Lease and to the security
interest provided in the Trust Indenture, including, without limitation, the
covenants contained in Section 7(a) hereof and Lessor's rights to repossession
pursuant to Section 15 hereof and to avoid such Sublease upon such repossession,
and Lessee shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such Sublease or transfer had
not occurred, and the terms of any such Sublease shall not permit any Sublessee
to further sublease the Aircraft or to take any action not permitted to be taken
by Lessee in this Lease with respect to the Aircraft. No pooling agreement,
sublease or other relinquishment of possession of the Airframe or any Engine
shall in any way discharge or diminish any of Lessee's obligations to Lessor
hereunder or constitute a waiver of Lessor's rights or remedies hereunder.
Lessor agrees, for the benefit of Lessee (and any Sublessee) and for the benefit
of any mortgagee or other holder of a security interest in any engine (other
than an Engine) owned by Lessee (or any Sublessee), any lessor of any engine
(other than an Engine) leased to Lessee (or any Sublessee) and any conditional
vendor of any engine (other than an Engine) purchased by lessee (or any
Sublessee) subject to a conditional sale agreement or any other security
agreement, that no interest shall be created hereunder in any engine so owned,
leased or purchased and that neither Lessor nor its successors or assigns will
acquire or claim, as against Lessee (or any Sublessee) or any such mortgagee,
lessor or conditional vendor or other holder of a security interest or any
successor or assignee of any thereof, any right, title or interest in such
engine as the result of such engine being installed on the Airframe; provided,
however, that such agreement of Lessor shall not be for the benefit of any
lessor or secured party of any airframe (other than the Airframe) leased to
Lessee (or any Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement or for the benefit of any mortgagee
of or any other holder of a security interest in an airframe owned by Lessee (or
any Sublessee), unless such lessor, conditional vendor, other secured party or
mortgagee has expressly agreed (which agreement may be contained in such lease,
conditional sale or other security agreement or mortgage) that neither it nor
its successors or assigns will acquire, as against Lessor, any right, title or
interest in an Engine as a result of such Engine being installed on such
airframe. Lessee shall provide to the Owner Participant written notice of any
Sublease hereunder which has a term of more than
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<PAGE> 29
three months (such notice to be given prior to entering into such Sublease, if
practicable, but in any event promptly after entering into any such Sublease).
(c) Insignia(c) Insignia. On or prior to the Closing Date, or
as soon thereafter as practicable, Lessee agrees to affix and maintain (or cause
to be affixed and maintained) in the cockpit of the Airframe adjacent to the
airworthiness certificate therein and on each Engine a nameplate bearing the
inscription:
Leased From
First Security Bank of Utah, National Association, as Owner
Trustee
Owner and Lessor
and, for so long as the Airframe and each Engine shall be subject to any
security interest as provided in the Trust Indenture, bearing the following
additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any person, association or corporation to be placed on the
Airframe or on any Engine as a designation that might be interpreted as a claim
of ownership; provided, that nothing herein contained shall prohibit Lessee (or
any Sublessee) from placing its customary colors and insignia on the Airframe or
any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Par(a) Replacement of Parts.
Lessee, at its own cost and expense, will promptly replace or cause to be
replaced all Parts which may from time to time be incorporated or installed in
or attached to the Airframe or any Engine and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever, except as
otherwise provided in paragraph (c) of this Section 8. In addition, Lessee (or
any Sublessee) may, at its own cost and expense, remove in the ordinary course
of maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided, that Lessee (or any Sublessee),
except as otherwise provided in paragraph (c) of this Section 8, will, at its
own cost and expense, replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and pooling arrangements to the extent permitted by paragraph (b) of this
Section 8 and except in the case of replacement property temporarily installed
on an emergency basis) and shall be in as good operating condition as, and shall
have a fair market value, utility and remaining useful life at least equal
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to, the Parts replaced assuming such replaced Parts were in the condition and
repair required to be maintained by the terms hereof. All Parts at any time
removed from the Airframe or any Engine shall remain the property of Lessor, no
matter where located, until such time as such Parts shall be replaced by Parts
which have been incorporated or installed in or attached to the Airframe or such
Engine and which meet the requirements for replacement Parts specified above.
Immediately upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine as above provided, without further act
(subject only to Permitted Liens and any pooling arrangement to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis), (i) title to
such replacement Part shall thereupon vest in Lessor, (ii) such replacement Part
shall become subject to this Lease and be deemed part of the Airframe or such
Engine for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine, and
(iii) title to the replaced Part shall thereupon vest in Lessee (or, if a
Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in paragraph (a) of this Section 8 may be subjected by
Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a part entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided, that the Part replacing such removed Part shall
be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided, that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens other than Permitted Liens or (ii)
replaces such replacement Part by incorporating or installing in or attaching to
the Airframe or Engine a further replacement Part owned by Lessee (or any
Sublessee) free and clear of all Liens other than Permitted Liens and by causing
title to such further replacement Part to vest in Lessor in accordance with such
paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its
own expense, will make (or cause to be made) such alterations and modifications
in and additions to the Airframe and Engines as may be required from time to
time to meet the applicable standards of the Federal Aviation Administration or
any applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered as permitted by Section 8(f) of the
Participation Agreement; provided, however, that Lessee (or, if a Sublease is
then in effect, any Sublessee) may, in good faith, after providing written
notice to Lessor, contest the validity or application of any such law, rule,
regulation or order in any reasonable manner which does not adversely affect
Lessor; and provided, further, that Lessee's failure to make (or cause to be
made) any such alterations or modifications shall not constitute noncompliance
with the requirements of this paragraph (c) of this Section 8 or a breach of
Lessee's
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undertaking hereunder for so long a period as may be necessary to remedy such
failure, if such failure can be remedied, so long as during such period Lessee
(or any Sublessee) is using due diligence and best efforts to remedy such
failure. In addition, Lessee (or any Sublessee), at its own expense, may from
time to time add further parts or accessories and make such alterations and
modifications in and additions to the Airframe or any Engine as Lessee (or any
Sublessee) may deem desirable in the proper conduct of its business, including,
without limitation, removal of Parts which Lessee (or any Sublessee) deems in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or such Engine (such parts, "OBSOLETE PARTS"); provided that
no such alteration, modification, addition or removal shall materially decrease
the fair market value, utility or remaining useful life of the Airframe or such
Engine, or materially impair the condition or impair the airworthiness thereof,
below the fair market value, utility, remaining useful life, condition or
airworthiness thereof immediately prior to such alteration, modification,
addition or removal assuming the Airframe or such Engine was then of the fair
market value, utility and remaining useful life and in the condition and
airworthiness required to be maintained by the terms of this Lease, except that
the fair market value (but not the utility, condition, airworthiness or
remaining useful life) of the Airframe or any Engine may be reduced from time to
time by the value of Obsolete Parts which shall have been removed so long as the
aggregate original cost of all Obsolete Parts which shall have been removed and
not replaced shall not exceed $600,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (except those parts which Lessee has
leased from others and which also qualify for removal in accordance with the
next sentence) shall, without further act, vest in Lessor. Notwithstanding the
foregoing sentence, Lessee (or any Sublessee) may, at any time during the Term,
so long as no Event of Default shall have occurred and be continuing, remove or
suffer to be removed any Part, provided that such Part (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated
or installed in or attached to the Airframe or any Engine at the time of
delivery thereof hereunder or any Part in replacement of or substitution for any
such Part, (ii) is not required to be incorporated or installed in or attached
or added to the Airframe or any Engine pursuant to the terms of Section 7 hereof
or the first sentence of this paragraph (c) and (iii) can be removed from the
Airframe or such Engine without materially diminishing or impairing the fair
market value, utility, condition, airworthiness or remaining useful life which
the Airframe or such Engine would have had at such time had such alteration,
modification or addition not occurred. Upon the removal by Lessee (or Sublessee)
of any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed the property of Lessor or part of the Airframe or Engine from which it
was removed. Any Part not removed by Lessee (or any Sublessee) as above provided
prior to the return of the Airframe or Engine to Lessor hereunder shall remain
the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. So
long as no Event of Default shall have occurred and be continuing, Lessee shall
have the right to elect to terminate this Lease on any Lease Period Date
occurring on or after the fifth anniversary of the Delivery Date. Lessee may
exercise this option either by (i) purchasing the Aircraft pursuant to paragraph
(b) of this Section 9 or (ii) causing the Aircraft to be sold pursuant to
paragraph (c) of this Section 9; provided, however, that Lessee may give no more
than one
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Termination Notice with respect to a sale pursuant to paragraph (c) of this
Section 9 during each two year period during the Term. Lessee shall give to
Lessor and, if any Secured Certificates are then outstanding, the Indenture
Trustee, at least ninety days' advance written notice of Lessee's intention so
to terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying the
Lease Period Date on which Lessee intends to terminate this Lease (such
specified date, a "TERMINATION DATE") and whether Lessee intends to exercise its
option to purchase under Section 9(b) or its option to sell under Section 9(c);
provided, however, that Lessee shall have the right to revoke such Termination
Notice by written notice to Lessor and, if any Secured Certificates are then
outstanding, the Indenture Trustee, not less than 20 days prior to the
Termination Date, in which case this Lease shall continue in full force and
effect.
(b) Option to Purchase. On any Termination Date (except if the
Termination Date is during the last twelve months of the Lease Term), Lessee
may, but shall not be required to, purchase the Aircraft at a purchase price
equal to the greater of (i) its Termination Value on the Termination Date, or
(ii) its "fair market sales value" on the Termination Date determined in
accordance with Section l9(c) hereof, together with a payment of the other
amounts referred to in this Section 9(b). In such event, Lessor shall, without
recourse or warranty (except as to the absence of Lessor Liens, including for
this purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens), sell the Aircraft to Lessee on the Termination Date
and, in the case of clause (1) below, exercise such rights as it has to cause
the Aircraft to be released from the Lien of the Trust Indenture in exchange
for, at Lessee's option, either (1) the payment in cash in Dollars in funds of
the type specified in Section 3(f) hereof of an amount equal to the sum of (A)
all unpaid Basic Rent with respect to the Aircraft due prior to such Termination
Date and, if such Basic Rent is payable in arrears on such Termination Date as
indicated on Exhibit B, on such Termination Date, and all unpaid Supplemental
Rent due on or prior to such Termination Date, including, without limitation,
the Make-Whole Amount, if any, due on the Secured Certificates, plus (B) all
reasonable expenses incurred by Lessor and the Owner Participant in connection
with such sale except those incurred and payable by Lessor as a result of an
appraisal conducted pursuant to Section l9(c) hereof, plus (C) the greater of
(x) the Termination Value for the Aircraft, computed as of the Termination Date
and (y) the fair market sales value of the Aircraft on the Termination Date,
determined in accordance with Section l9(c) hereof or (2) (A) the assumption by
Lessee, pursuant to Section 8(x) of the Participation Agreement and Section 2.13
of the Trust Indenture, of all of the obligations of Lessor under the Trust
Indenture, (B) the payment in cash in Dollars in funds of the type specified in
Section 3(f) hereof of an amount equal to the sum of (X) all unpaid Basic Rent
with respect to the Aircraft due prior to such Termination Date and, if such
Basic Rent is payable in arrears on such Termination Date as indicated on
Exhibit B, on such Termination Date, and all unpaid Supplemental Rent due on or
prior to such Termination Date plus (Y) all reasonable expenses incurred by
Lessor and the Owner Participant in connection with such sale except those
incurred and payable by Lessor as a result of an appraisal conducted pursuant to
Section l9(c) hereof plus (Z) the excess of the greater of (I) Termination Value
for the Aircraft, computed as of the Termination Date and (II) the fair market
sales value of the Aircraft on the Termination Date, determined in accordance
with Section l9(c) hereof over the sum of all amounts of principal and accrued
but unpaid interest with respect to the Secured Certificates assumed by Lessee
pursuant to Section 8(x) of
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the Participation Agreement and Section 2.13 of the Trust Indenture. Upon
payment in full of the amounts required to be paid and the performance of all
acts required to be performed by Lessee pursuant to the preceding sentence, (i)
the obligation of Lessee to pay Basic Rent hereunder with respect to the
Aircraft for any period commencing on or after the Termination Date shall
terminate and (ii) the Lease shall terminate on the Termination Date.
(c) Optional Sale of the Aircraft. In the event that Lessee
shall not elect to purchase the Aircraft pursuant to Section 9(b), then during
the period from the giving of the notice referred to in Section 9(a) until the
proposed Termination Date, Lessee, as agent for Lessor and at no expense to
Lessor, shall use its best efforts to obtain bids in the worldwide market for
the purchase of the Aircraft and, in the event it receives any bid, Lessee
shall, within five Business Days after receipt thereof and at least ten Business
Days prior to the proposed Termination Date, certify to Lessor in writing the
amount and terms of such bid, and the name and address of the party or parties
(who shall not be Lessee or any person, firm or corporation affiliated with
Lessee but who may be the Owner Participant, any Affiliate thereof or any person
contacted by the Owner Participant) submitting such bid. After Lessee shall have
certified to Lessor all bids received, the Owner Participant, any Affiliate
thereof or any person contacted by the Owner Participant may submit a further
bid or bids to Lessee not later than five Business Days prior to the Termination
Date proposed by Lessee. Subject to the next succeeding sentence, on or before
the Termination Date, subject to the release of the mortgage and security
interest with respect to the Aircraft under the Trust Indenture: (1) Lessee
shall deliver the Aircraft, or cause the Aircraft to be delivered, to the
bidder(s), if any, which shall have submitted the highest bid therefor at least
ten (or, in the case of the Owner Participant, any Affiliate thereof, or person
contacted by the Owner Participant, five) Business Days prior to such
Termination Date, in the same manner and in the same condition and otherwise in
accordance with all the terms of this Lease as if delivery were made to Lessor
pursuant to Section 5, and shall duly transfer to Lessor title to any engines
not owned by Lessor, all in accordance with the terms of Section 5, (2) Lessor
shall comply with the terms of the Trust Indenture and exercise such rights as
it has to cause the Aircraft to be released from the Lien thereof and shall,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for
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the proviso in the definition of Lessor Liens), subject to prior or concurrent
payment by Lessee of all amounts due under clause (3) of this sentence, sell the
Aircraft for cash in Dollars to such bidder(s), the total selling price realized
at such sale to be retained by Lessor, and (3) Lessee shall simultaneously pay
or cause to be paid to Lessor in funds of the type specified in Section 3(f)
hereof, an amount equal to the sum of (u) all unpaid Basic Rent with respect to
the Aircraft due prior to the Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all unpaid Supplemental Rent due on or prior to such
Termination Date, including, without limitation, the Make-Whole Amount, if any,
due on the Secured Certificates, plus (v) the excess, if any, of (A) the
Termination Value for the Aircraft, computed as of the Termination Date, over
(B) the sale price of the Aircraft sold by Lessor after deducting the reasonable
expenses incurred by Lessor and the Owner Participant in connection with such
sale, and, upon such payment, Lessor simultaneously will transfer to Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest in
and to any Engines constituting part of the Aircraft which were not sold with
the Aircraft. Notwithstanding the preceding sentence, Lessor may, if Lessee has
not elected to purchase the Aircraft pursuant to Section 9(b), elect to retain
title to the Aircraft. If Lessor so elects, Lessor shall give to Lessee written
notice of such election at least five Business Days prior to the Termination
Date accompanied by an irrevocable undertaking by the Owner Participant to make
available to Lessor for payment to the Indenture Trustee on the Termination Date
the amount required to pay in full the unpaid principal amount of the Secured
Certificates outstanding on the Termination Date plus interest accrued thereon
through such date together with all other amounts due thereunder as a result of
the payment thereof, including Make-Whole Amount, if any, due on the Secured
Certificates if the same is not otherwise paid. Upon receipt of notice of such
an election by Lessor and the accompanying undertaking by the Owner Participant,
Lessee shall cease its efforts to obtain bids as provided above and shall reject
all bids theretofore or thereafter received. On the Termination Date, Lessor
shall pay in funds of the type specified in Section 3(f) in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination Date
plus interest accrued thereon through such date together with all other amounts
due thereunder as a result of payments thereof, including Make-Whole Amount, if
any, due on the Secured Certificates and, provided that the Secured Certificates
are paid as aforesaid, Lessee shall deliver the Airframe and Engines or engines
to Lessor in accordance with Section 5 and shall pay all Basic Rent due prior to
the Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to such Termination Date. If no sale
shall have occurred on the Termination Date or Lessor has not made the payment
contemplated by the preceding sentence and thereby caused this Lease to
terminate, this Lease shall continue in full force and effect as to the
Aircraft, Lessee shall pay the reasonable costs and expenses incurred by the
Owner Participant and Lessor, if any, in connection with preparation for such
sale (unless such failure to terminate this Lease is a consequence of the
failure of Lessor or the Owner Participant without due cause to make, or cause
to be made, the payment referred to in the immediately preceding sentence) and
Lessee may give one or more additional Termination Notices. In the event of any
such sale or such retention of the Aircraft by Lessor and upon compliance by
Lessee with the provisions of this paragraph, the obligation of Lessee to pay
Basic Rent or any other amounts hereunder shall cease to accrue and this Lease
shall terminate. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise take any action
in connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft and
to exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Trust Indenture, against receipt of the payments provided herein.
(d) Termination as to Engines. So long as no Event of Default
shall have occurred and be continuing, Lessee shall have the right at its option
at any time during the Term, on at least 30 days' prior written notice, to
terminate this Lease with respect to any Engine. In such event, and prior to the
date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an
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Event of Loss had occurred with respect to such Engine, and Lessor shall
transfer title to the replaced Engine as provided in Section 5(b).
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of
Loss with Respect to the Aircraft (a) Event of Loss with Respect to the
Aircraft. Upon the occurrence of an Event of Loss with respect to the Airframe
or the Airframe and the Engines and/or engines then installed thereon, Lessee
shall forthwith (and in any event, within fifteen days after such occurrence)
give Lessor and, if any Secured Certificates are then outstanding, the Indenture
Trustee written notice of such Event of Loss, and within 45 days after such
Event of Loss Lessee shall give Lessor and, if any Secured Certificates are then
outstanding, the Indenture Trustee written notice of its election to perform one
of the following options (it being agreed that if Lessee shall not have given
such notice of such election within such period Lessee shall be deemed to have
elected the option set forth in clause (i) below). Not later than the earlier of
(x) the Business Day next succeeding the 120th day following the occurrence of
such Event of Loss or (y) an earlier Business Day irrevocably specified fifteen
days in advance by notice from Lessee to Lessor and the Indenture Trustee,
Lessee shall:
(i) pay or cause to be paid to Lessor in
funds of the type specified in Section 3(f) hereof, the sum of
(A) Stipulated Loss Value of the Aircraft computed as of the
Stipulated Loss Value Date occurring on or immediately
following the date of such Event of Loss plus (B) interest on
such Stipulated Loss Value at the Applicable Rate then in
effect under the Secured Certificates from and including such
Stipulated Loss Value Date to, but not including, the date of
any advance payment in respect of Stipulated Loss Value as
provided below, and thereafter on the unpaid balance of such
Stipulated Loss Value from the date of such advance payment
to, but excluding, the date such Stipulated Loss Value is paid
in full; provided, however, that if the Commencement Date or a
Lease Period Date shall occur on or after the Stipulated Loss
Value Date with respect to which Stipulated Loss Value is
determined but prior to the date of such payment of the sum of
the amounts specified in clauses (A) and (B) above, Lessee
shall pay on the Commencement Date or such Lease Period Date
an amount equal to the Basic Rent that would have been due on
the Commencement Date or such Lease Period Date if such Event
of Loss had not occurred, which amount shall be credited as an
advance against the amounts payable pursuant to clauses (A)
and (B) above, or
(ii) elect to substitute an aircraft or an
airframe or an airframe and one or more engines.
At such time as Lessor shall have received the sum of the
amounts specified in clauses (A) and (B) of subparagraph (i) above, together
with all other amounts that then may be due hereunder (including, without
limitation, all Basic Rent due before the date of such payment and all
Supplemental Rent due on or before such date), under the Participation Agreement
and under the Tax Indemnity Agreement, (1) the obligation of Lessee to pay the
installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
Termination Value or
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any other amount shall cease to accrue, (2) this Lease shall terminate, (3)
Lessor will comply with the terms of the Trust Indenture and transfer to or at
the direction of Lessee, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all Lessor's right, title
and interest in and to the Airframe and any Engines subject to such Event of
Loss, as well as any Engines not subject to such Event of Loss, furnish to or at
the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, and
exercise such rights as it has to cause such Airframe and Engines to be released
from the Lien of the Trust Indenture, and (4) Lessee will be subrogated to all
claims of Lessor, if any, against third parties (except under any policies of
insurance maintained by Lessor or the Owner Participant), for damage to or loss
of the Airframe and any Engines which were subject to such Event of Loss to the
extent of the then insured value of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, not later than the later to occur of (i) the Business Day next succeeding
the 120th day following the occurrence of such Event of Loss and (ii) the Lease
Period Date next succeeding the occurrence of such Event of Loss, (A) convey or
cause to be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft
of the same make and model (or an airframe or an airframe and one or more
engines which, together with the Engines constituting a part of the Aircraft but
not installed thereon at the time of such Event of Loss constitute the Aircraft)
free and clear of all Liens (other than Permitted Liens) and having a fair
market value, utility and remaining useful life at least equal to, and being in
as good operating condition as, the Aircraft subject to such Event of Loss
(assuming that the Aircraft had been maintained in accordance with this Lease);
provided that any aircraft, airframe or engine so substituted hereunder shall be
of the same or an improved model as those initially leased hereunder and (B)
prior to or at the time of any such substitution, Lessee (or any Sublessee), at
its own expense, will (1) furnish Lessor with a full warranty bill of sale and a
Federal Aviation Administration bill of sale, in form and substance satisfactory
to Lessor, evidencing such transfer of title, (2) cause a Lease Supplement and a
Trust Supplement to be duly executed by Lessee and filed for recording pursuant
to the Federal Aviation Act, or the applicable laws, rules and regulations of
any other jurisdiction in which the Airframe may then be registered as permitted
by Section 8(f) of the Participation Agreement, (3) furnish Lessor with such
evidence of compliance with the insurance provisions of Section 11 with respect
to such substituted property as Lessor may reasonably request, (4) provide the
documentation required to be provided by it pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to Lessee
(or any Sublessee), evidencing such transfer, (5) provide the Owner Participant
with an opinion of counsel to Lessee (who shall be reasonably satisfactory to
the Owner Participant) as to the tax consequences of such
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substitution, (6) furnish Lessor with an opinion of counsel (which shall be
Cadwalader, Wickersham & Taft and, if not, other counsel chosen by Lessee and
reasonably acceptable to Lessor) reasonably satisfactory to Lessor to the effect
that Lessor and the Indenture Trustee as assignee of Lessor will be entitled to
the benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the
substitute aircraft, provided that such opinion need not be delivered to the
extent that immediately prior to such substitution the benefits of Section 1110
of the U.S. Bankruptcy Code were not, solely by reason of a change in law or
governmental interpretation thereof, available to Lessor and, so long as any
Secured Certificates are outstanding, the Indenture Trustee as assignee of
Lessor's rights under the Lease with respect to the Aircraft, and (7) Lessee
will be subrogated to all claims of Lessor, if any, against third parties
(except under any insurance policies maintained by Lessor or the Owner
Participant) for damage to or loss of the Airframe and any Engine which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft. For all purposes hereof, the property so substituted shall after such
transfer be deemed part of the property leased hereunder and shall be deemed an
"Aircraft", "Airframe" and "Engine", as the case may be, as defined herein. No
Event of Loss with respect to the Airframe or the Airframe and the Engines or
engines then installed thereon for which substitution has been elected pursuant
to Section 10(a)(ii) hereof shall result in any reduction in Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty days
after the occurrence of such Event of Loss, convey or cause to be conveyed to
Lessor, as replacement for the Engine with respect to which such Event of Loss
occurred, title to another Pratt & Whitney PW 4056 engine (or engine of the same
or another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value or
utility of the Aircraft) free and clear of all Liens (other than Permitted
Liens, which engine may upon its transfer to Lessor become subject to any and
all Permitted Liens) and having a fair market value, utility and remaining
useful life at least equal to, and being in as good operating condition as, the
Engine with respect to which such Event of Loss occurred (assuming that such
Engine had been maintained in accordance with this Lease). Prior to or at the
time of any such conveyance, Lessee, at its own expense, will (i) furnish Lessor
with a warranty (as to title) bill of sale, in form and substance reasonably
satisfactory to Lessor, with respect to such replacement engine, (ii) cause a
Lease Supplement and Trust Supplement to be duly executed by Lessee and to be
filed for recording pursuant to the Federal Aviation Act, or the applicable
laws, rules and regulations of any other jurisdiction in which the Airframe may
then be registered as permitted by Section 8(f) of the Participation Agreement,
(iii) furnish Lessor with such evidence of compliance with the insurance
provisions of Section 11 hereof with respect to such replacement engine as
Lessor may reasonably request, (iv) provide the documentation required to be
provided by it pursuant to Section 5.06 of the Trust Indenture, and Lessor will
comply with the terms of the Trust Indenture and transfer to or at the direction
of Lessee without recourse or warranty (except as to absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) all of Lessor's right, title and interest, if
any,
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in and to (A) the Engine with respect to which such Event of Loss occurred
and furnish to or at the direction of Lessee a bill of sale in form and
substance reasonably satisfactory to Lessee, evidencing such transfer and (B)
all claims, if any, against third parties (except under any insurance policies
maintained by Lessor or the Owner Participant), for damage to or loss of the
Engine subject to such Event of Loss, and such Engine shall thereupon cease to
be an Engine leased hereunder. For all purposes hereof, each such replacement
engine shall, after such conveyance, be deemed part of the property leased
hereunder, and shall be deemed an "Engine". No Event of Loss with respect to an
Engine under the circumstances contemplated by the terms of this paragraph (b)
shall result in any reduction in Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. As between Lessor and Lessee, any payments (other
than insurance proceeds the application of which is provided for in Section 11)
received at any time by Lessor or by Lessee from any governmental authority or
other person with respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to
the Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) if such property has not been and will
not be replaced pursuant to the last paragraph of Section
10(a), after reimbursement of Lessor and the Owner Participant
for reasonable costs and expenses, so much of such payments
remaining as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a), shall
be applied in reduction of Lessee's obligation to pay such
Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee
for its payment of such Stipulated Loss Value, and the
balance, if any, of such payments remaining thereafter will be
paid over to Lessee and Lessor as the respective interests of
Lessee and Lessor may appear or (B) if such property has been
or is being replaced pursuant to the last paragraph of Section
10(a), such payments shall be paid over to, or retained by,
(i) Lessee if such property has been replaced, or (ii) Lessor
if such property is being replaced (to be held by Lessor until
such property has been replaced), and upon completion of such
replacement, such payments shall be paid over to, or retained
by, Lessee; and
(ii) if such payments are received with
respect to an Engine under circumstances contemplated by
Section 10(b) hereof, so much of such payments remaining after
reimbursement of Lessor and the Owner Participant for
reasonable costs and expenses shall be paid over to, or
retained by, Lessee, provided that Lessee shall have fully
performed, or concurrently therewith will perform, the terms
of Section 10(b) with respect to the Event of Loss for which
such payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft(d) Requisition for Use
of the Aircraft by the United
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States Government or the Government of Registry of the Aircraft. In the event of
the requisition for use of the Airframe and the Engines or engines installed on
the Airframe during the Term by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, Lessee shall notify Lessor of such requisition, and all of Lessee's
obligations under this Lease with respect to the Aircraft shall continue to the
same extent as if such requisition had not occurred, provided that if such
Airframe and Engines or engines installed thereon are not returned by such
government prior to the end of the Term, Lessee shall be obligated to return the
Airframe and such Engines or engines to Lessor pursuant to, and in all other
respects in compliance with the provisions of, Section 5 promptly on the date of
such return by such government. If Lessee shall fail by reason of such
requisition to return the Airframe and such Engines or engines on or before the
thirtieth day beyond the end of the Term, such failure shall constitute an Event
of Loss which shall be deemed to have occurred on the last day of the Term,
provided, however, that Lessor may notify Lessee in writing on or before the
twentieth day following the last day of the Term that, in the event Lessee shall
fail by reason of such requisition to return the Airframe and such Engines or
engines on or before the thirtieth day beyond the end of the Term, such failure
shall not be deemed an Event of Loss. Upon the giving of such notice and such
failure to return by the thirtieth day beyond the end of the Term, Lessee shall
be relieved of all of its obligations pursuant to the provisions of Section 5
(but not under any other Section), except that if any engine not owned by Lessor
shall then be installed on the Airframe Lessee will, at no cost to Lessor,
furnish, or cause to be furnished, to Lessor a full warranty (as to title) bill
of sale with respect to each such engine, in form and substance satisfactory to
Lessor (together with an opinion of counsel to the effect that such full
warranty bill of sale has been duly authorized and delivered and is enforceable
in accordance with its terms and that such engines are free and clear of Liens
other than Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) and Indenture
Trustee's Liens), against receipt from Lessor of a bill of sale evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not then installed on the Airframe. All payments
received by Lessor or Lessee from such government for the use of such Airframe
and Engines or engines during the Term shall be paid over to, or retained by,
Lessee (or, if directed by Lessee, any Sublessee); and all payments received by
Lessor or Lessee from such government for the use of such Airframe and Engines
or engines after the end of the Term shall be paid over to, or retained by,
Lessor unless Lessee shall have exercised its purchase option hereunder, in
which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of an Engine (but not the Airframe) by the United States
Government or any other government of registry of the Aircraft or any agency or
instrumentality of any thereof (other than in the circumstances contemplated by
subsection (d)), Lessee shall replace such Engine hereunder by complying (or
causing any Sublessee to comply) with the terms of Section 10(b) to the same
extent as if an Event of Loss had occurred with respect thereto, and, upon
compliance with Section 10(b) hereof, any payments received by Lessor or Lessee
from such government with respect to such requisition shall be paid over to, or
retained by, Lessee.
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<PAGE> 40
(f) Application of Payments During Existence of Event of
Default(f) Application of Payments During Existence of Event of Default. Any
amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or any
Sublessee) if at the time of such payment or retention a Potential Default or an
Event of Default shall have occurred and be continuing, but shall be held by or
paid over to Lessor as security for the obligations of Lessee (or such
Sublessee) under this Lease and, if Lessor declares this Lease to be in default
pursuant to Section 15 hereof, applied against Lessee's obligations hereunder as
and when due. At such time as there shall not be continuing any such Potential
Default or Event of Default, such amount shall be paid to Lessee (or such
Sublessee) to the extent not previously applied in accordance with the preceding
sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property
Damage Insurance. (I) Except as provided in clause (II) of this Section 11(a),
Lessee will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) insurance and property damage insurance (exclusive of manufacturer's
product liability insurance) with respect to the Aircraft, in an amount not less
than the greater of (x) the amounts of public liability and property damage
insurance from time to time applicable to passenger aircraft owned or leased by
Lessee of the same type as the Aircraft which comprise Lessee's fleet and (y)
$300,000,000 per occurrence and (ii) cargo liability insurance, in the case of
both clause (i) and clause (ii), (A) of the type and covering the same risks as
from time to time applicable to passenger aircraft owned or leased by Lessee of
the same type which comprise Lessee's fleet and (B) which is maintained in
effect with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this paragraph (a) and any policies taken out in
substitution or replacement for any of such policies (A) shall name Lessor, in
its individual capacity and as owner of the Aircraft, the Indenture Trustee and
the Owner Participant (but without imposing on any such parties liability to pay
the premiums for such insurance) (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds
as their respective interests may appear, (B) shall provide that in respect of
the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) in such policies the insurance shall not be
invalidated by any action or inaction of Lessee (or, if any Sublease is then in
effect, any Sublessee) and shall insure Lessor, the Indenture Trustee and the
Owner Participant (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) regardless of any breach or violation
of any warranty, declaration or condition contained in such policies by Lessee
(or, if any Sublease is then in effect, any Sublessee), (C) may provide for
self-insurance to the extent permitted by Section 11(d) and (D) shall provide
that if the insurers cancel such insurance for any reason whatever or if such
insurance lapses for non-payment of premium or if any material change is made in
such insurance which adversely affects the interest of Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease), such cancellation, lapse or
change shall not be effective as to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) for thirty days (seven days in the case of war
risk and allied perils coverage) after receipt by Lessor, the Indenture Trustee
and the Owner Participant,
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<PAGE> 41
respectively, of written notice by such insurers of such cancellation, lapse or
change; provided, however, that if any notice period specified above is not
reasonably obtainable, such policies shall provide for as long a period of prior
notice as shall then be reasonably obtainable. Each liability policy (1) shall
be primary without right of contribution from any other insurance which is
carried by Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (2) shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if there
were a separate policy covering each insured, and (3) shall waive any right of
the insurers to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor or the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease) to the extent of any moneys due
to Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and
not in normal passenger service operation, Lessee may carry or cause to be
carried, in lieu of the insurance required by clause (I) above, insurance
otherwise conforming with the provisions of said clause (I) except that (A) the
amounts of coverage shall not be required to exceed the amounts of public
liability and property damage insurance from time to time applicable to
passenger aircraft owned or leased by Lessee of the same type as the Aircraft
which comprise Lessee's fleet and which are on the ground and not in normal
passenger service operation; and (B) the scope of the risks covered and the type
of insurance shall be the same as from time to time shall be applicable to
passenger aircraft owned or leased by Lessee of the same type which comprise
Lessee's fleet and which are on the ground and not in normal passenger service
operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I)
Except as provided in clause (II) of this Section 11(b), Lessee shall maintain
or cause to be maintained in effect, at its or any Sublessee's expense, with
insurers of recognized responsibility, all-risk aircraft hull insurance covering
the Aircraft and all-risk coverage of Engines and Parts while temporarily
removed from the Aircraft and not replaced by similar components (including,
without limitation, war risk and governmental confiscation and expropriation
(other than by the government of registry of the Aircraft) and hijacking
insurance, if and to the extent the same is maintained by Lessee (or, if a
Sublease is then in effect, any Sublessee) with respect to other aircraft owned
or operated by Lessee (or such Sublessee) on the same routes, except that Lessee
(or such Sublessee) shall maintain war risk and governmental confiscation and
expropriation (other than by the government of registry of the Aircraft) and
hijacking insurance if the Aircraft is operated on routes where the custom is
for major international air carriers flying comparable routes to carry such
insurance) which is of the type as from time to time applicable to passenger
aircraft owned or leased by Lessee of the same type which comprise Lessee's
fleet; provided, that such insurance shall at all times while the Aircraft is
subject to this Lease be for an amount (subject to self-insurance to the extent
permitted by Section 11(d)) not less than the Stipulated Loss Value for the
Aircraft. Any policies carried in accordance with this paragraph (b) covering
the Aircraft and any policies taken out in
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<PAGE> 42
substitution or replacement for any such policies (i) shall name Lessor, as
owner of the Aircraft, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as Sublessor under the
Sublease) as additional insureds, as their respective interests may appear (but
without imposing on any such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent permitted in
Section 11(d), (iii) shall provide that (A) in the event of a loss involving
proceeds in excess of $5,000,000 (or, if the Aircraft is then under a Sublease,
in excess of $2,500,000), the proceeds in respect of such loss up to the amount
of Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so
long as the Trust Indenture shall not have been discharged, the Indenture
Trustee) (except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be held
for the account of Lessor (or, so long as the Trust Indenture shall not have
been discharged, the Indenture Trustee) whether such payment is made to Lessee
(or any Sublessee) or any third party), it being understood and agreed that in
the case of any payment to Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, Lessor (or the Indenture Trustee) shall, upon
receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or its
order, and (B) the entire amount of any loss involving proceeds of $5,000,000
(or, if the Aircraft is then under a Sublease, of $2,500,000) or less or the
amount of any proceeds of any loss in excess of Stipulated Loss Value for the
Aircraft shall be paid to Lessee or its order unless an Event of Default shall
have occurred and be continuing and the insurers have been notified thereof by
Lessor or the Indenture
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<PAGE> 43
Trustee, (iv) shall provide that if the insurers cancel such insurance for any
reason whatever, or if such insurance lapses for non-payment of premium or if
any material change is made in the insurance which adversely affects the
interest of Lessor, the Indenture Trustee or the Owner Participant, such
cancellation, lapse or change shall not be effective as to Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease) for thirty days (seven days in
the case of hull war risk and allied perils coverage) after receipt by Lessor,
the Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), respectively,
of written notice by such insurers of such cancellation, lapse or change,
provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable, (v) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if a Sublease is then in effect, any
Sublessee or sub-sublessee) and shall insure the respective interests of Lessor,
the Indenture Trustee and the Owner Participant (and, if any Sublease shall be
in effect, Lessee in its capacity as sublessor under the Sublease), as they
appear, regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee or sub-sublessee), (vi) shall be primary without any right
of contribution from any other insurance which is carried by Lessor, the Owner
Participant or the Indenture Trustee (or, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), (vii) shall waive any
right of subrogation of the insurers against Lessor, the Owner Participant and
the Indenture Trustee (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor, the Indenture
Trustee, the Owner Participant or Lessee (or any Sublessee) to the extent of any
moneys due to Lessor, the Indenture Trustee or the Owner Participant. In the
case of a loss with respect to an engine (other than an Engine) installed on the
Airframe, Lessor shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of Lessee or any other third party that is
entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received from insurance carried by Lessee as the result of the
occurrence of an Event of Loss will be applied as follows:
(x) if such payments are received with
respect to the Airframe (or the Airframe and the Engines
installed thereon) that has not been and will not be replaced
pursuant to the last paragraph of Section 10(a), so much of
such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) and the Owner
Participant for reasonable costs and expenses, as shall not
exceed the Stipulated Loss Value required to be paid by Lessee
pursuant to Section 10(a) hereof shall be applied in reduction
of Lessee's obligation to pay such Stipulated Loss Value, if
not already paid by Lessee, or, if already paid by Lessee,
shall be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such
payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee);
or (ii) if such property has been or is being replaced
pursuant to the last paragraph of Section 10(a), such payments
shall be paid over to, or retained by, (A) Lessee if such
property has been replaced or (B) Lessor if such property is
being replaced (to be held by Lessor until such property has
been replaced), and upon completion of such replacement, such
payments shall be paid over to, or retained by, Lessee; and
(y) if such payments are received with
respect to an Engine under the circumstances contemplated by
Section 10(b) hereof, so much of such payments remaining after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) and the Owner Participant for reasonable
costs and expenses shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided,
that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments from
insurance carried by Lessee for any property damage loss to the Airframe or any
Engine not constituting an Event of Loss with respect thereto will be applied in
payment for repairs or for replacement
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<PAGE> 44
property in accordance with the terms of Sections 7 and 8, if not already paid
for by Lessee (or any Sublessee), and any balance (or if already paid for by
Lessee (or any Sublessee), all such insurance proceeds) remaining after
compliance with such Sections with respect to such loss shall be paid to Lessee
(or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and
not in normal passenger service operation, Lessee may carry or cause to be
carried, in lieu of the insurance required by clause (I) above, insurance
otherwise conforming with the provisions of said clause (I) except that the
scope of the risks and the type of insurance shall be the same as from time to
time applicable to passenger aircraft owned or leased by Lessee of the same type
which comprise Lessee's fleet and which are on the ground and not in normal
passenger service operation; provided, however, that Lessee shall maintain
insurance against risk of loss or damage to the Aircraft in an amount at least
equal to the Stipulated Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in normal passenger service operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee, and the Owner Participant, on or
before the Closing Date and on or before November 1 in each year thereafter
during the Term commencing November 1, 1996, a report, signed by Rollins Hudig
Hall or any other independent firm of insurance brokers reasonably acceptable to
Lessor (the "Insurance Brokers" describing in reasonable detail the insurance
and reinsurance then carried and maintained with respect to the Aircraft and
stating the opinion of such firm that the insurance then carried and maintained
with respect to the Aircraft complies with the terms hereof; provided, that all
information contained in the foregoing report shall not be made available by
Lessor, the Indenture Trustee or the Owner Participant to anyone except (A) to
permitted transferees of Lessor's, the Owner Participant's or the Indenture
Trustee's interest, and to bona fide potential transferees, who agree to hold
such information confidential, (B) to Lessor's, the Owner Participant's or the
Indenture Trustee's counsel or independent certified public accountants or
independent insurance advisors who agree to hold such information confidential
or (C) as may be required by any statute, court or administrative order or
decree or governmental ruling or regulation. Lessee will cause such Insurance
Brokers to agree to advise Lessor, the Indenture Trustee and the Owner
Participant in writing of any default in the payment of any premium and of any
other act or omission on the part of Lessee of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least 30 days (seven days in the
case of war risk and allied perils coverage), prior to the expiration or
termination date of any insurance carried and maintained on the Aircraft
pursuant to this Section 11. In the event that Lessee or any Sublessee shall
fail to maintain or cause to be maintained insurance as herein provided, Lessor
or the Indenture Trustee may at its sole option provide such insurance and, in
such event, Lessee shall, upon demand, reimburse Lessor or the Indenture
Trustee, as Supplemental Rent, for the cost thereof to Lessor or the Indenture
Trustee, as the case may be, without waiver of any other rights Lessor may have.
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<PAGE> 45
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b) hereof, insuring
for a maximum amount which is less than the Stipulated Loss Value of the
Aircraft) in the insurance policies covering the risks required to be insured
against pursuant to this Section 11 under a program applicable to all aircraft
in Lessee's fleet (without discrimination in respect of the Aircraft), but in no
case shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof (the obligations of which
are supported by the full faith and credit of the United States Government) or,
upon the written consent of Lessor, other government of registry of the Aircraft
or any agency or instrumentality thereof, against such risk in an amount which,
when added to the amount of insurance against such risk maintained by Lessee (or
any Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11. Lessee shall provide to the Owner Participant
written notice of any indemnification or insurance provided pursuant to this
Section 11(f) as soon as practicable.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default shall have occurred and be continuing, but shall
be held by or paid over to Lessor as security for the obligations of Lessee (or
any Sublessee) under this Lease and, if a Potential Default or an Event of
Default shall have occurred and be continuing, applied against Lessee's
obligations hereunder as and when due. At such time as there shall not be
continuing any Potential Default or such Event of Default,
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<PAGE> 46
such amount shall be paid to Lessee (or such Sublessee) to the extent not
previously applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, Lessor, the
Owner Participant or the Indenture Trustee or their respective authorized
representatives may inspect the Aircraft and inspect and make copies (at Lessor,
the Owner Participant's or the Indenture Trustee's expense, as the case may be)
of the books and records of Lessee relating to the maintenance of the Aircraft;
any such inspection of the Aircraft shall be a visual, walk-around inspection
and shall not include opening any panels, bays or the like without the express
consent of Lessee; provided that no exercise of such inspection right shall
interfere with the normal operation of the Aircraft by, or the business of,
Lessee (or any Sublessee). Upon receipt by Lessee of a written request from the
Owner Participant specifying that the Owner Participant desires to have an
authorized representative observe the next scheduled major overhaul to be
performed on the Aircraft, Lessee shall cooperate with the Owner Participant to
enable the Owner Participant's authorized representative to observe the next
scheduled major overhaul to be performed on the Aircraft; provided that Lessee
shall be required to so cooperate only to the extent necessary to enable the
Owner Participant's authorized representative to observe one scheduled major
overhaul during each three year period of the Term and (notwithstanding the
foregoing) one scheduled major overhaul during the last year of the Term;
provided that the Owner Participant's authorized representative shall merely
observe such major overhaul, shall not interfere with or extend in any manner
the normal conduct or duration of the major overhaul and shall not be entitled
to direct any of the work performed in connection with such overhaul. None of
Lessor, the Owner Participant nor the Indenture Trustee shall have any duty to
make any such inspection nor shall any of them incur any liability or obligation
by reason of not making any such inspection.
SECTION 13. ASSIGNMENT. EXCEPT AS OTHERWISE PROVIDED HEREIN,
LESSEE WILL NOT, WITHOUT PRIOR WRITTEN CONSENT OF LESSOR, ASSIGN ANY OF ITS
RIGHTS HEREUNDER. LESSOR AGREES THAT IT WILL NOT ASSIGN OR CONVEY ITS RIGHT,
TITLE AND INTEREST IN AND TO THIS LEASE OR THE AIRCRAFT EXCEPT AS PROVIDED
HEREIN, IN THE TRUST AGREEMENT OR IN THE PARTICIPATION AGREEMENT. Subject to the
foregoing, the terms and provisions of this Lease shall be binding upon and
inure to the benefit of Lessor and Lessee and their respective successors and
permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
(a) Lessee shall not have made a payment of Basic
Rent within 10 Business Days after the same shall have become due; or
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(b) Lessee shall have failed to make a payment of
Supplemental Rent after the same shall have become due and such failure
shall continue for 10 Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that any
failure to pay any amount owed by Lessee under the Tax Indemnity
Agreement or any failure of Lessee to pay to Lessor or the Owner
Participant any Excluded Payments shall not constitute an Event of
Default unless notice is given by the Owner Participant to Lessee and
the Indenture Trustee that such failure shall constitute an Event of
Default); or
(c) Lessee shall have failed to perform or observe
(or caused to be performed and observed) any other covenant or
agreement (except the covenants set forth in the Tax Indemnity
Agreement and in clauses (iv)(B) and (v) of the first paragraph of
Section 5(a) hereof) to be performed or observed by it under any
Operative Document, and such failure shall continue unremedied for a
period of thirty days after written notice thereof by Lessor or the
Indenture Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause (ii) or
clause (iii) of the first sentence of Section 7(a), or under the second
sentence of Section 7(a) as it relates to maintenance, service, repair
or overhaul or under Section 8 and, notwithstanding the reasonable
diligence of Lessee in attempting to cure such failure, such failure is
not cured within said thirty day period but is curable with future due
diligence, there shall exist no Event of Default under this Section 14
so long as Lessee is proceeding with due diligence to cure such failure
and the last day of the Term has not yet occurred; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement, the Refunding Agreement or
any document or certificate furnished by Lessee in connection herewith
or therewith or pursuant hereto or thereto (except the representations
and warranties set forth in Section 3 of the Tax Indemnity Agreement
and such documents or certificates as are furnished to the Owner
Participant solely in connection with matters dealt with in the Tax
Indemnity Agreement and for no other purpose and except for
representations or warranties contained in the Pass Through Trust
Agreement or the Underwriting Agreement (as defined in the Refunding
Agreement) or any document or instrument furnished pursuant to either
thereof) shall prove to have been incorrect in any material respect at
the time made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the interests of
the Owner Participant, Lessor or the Certificate Holders) within thirty
days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such
incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Lessee under the federal bankruptcy laws, as
now constituted or hereafter amended, or any other applicable federal
or state bankruptcy, insolvency or other similar law in the United
States or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Lessee or for
all or substantially all of its property, or seeking the winding-up or
liquidation of its affairs
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and the continuation of any such case or other proceeding undismissed
and unstayed for a period of 90 consecutive days or an order, judgment
or decree shall be entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee, or of any substantial part of its
property, or sequestering any substantial part of the property of
Lessee and any such order, judgment or decree or appointment or
sequestration shall be final or shall remain in force undismissed,
unstayed or invocated for a period of 90 days after the date of entry
thereof; or
(f) the commencement by Lessee of a voluntary case or
proceeding under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the consent by
Lessee to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Lessee or for all or substantially all of its
property, or the making by Lessee of any assignment for the benefit of
creditors or Lessee shall take any corporate action to authorize any of
the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and maintained)
insurance required to be maintained in accordance with the provisions
of Section 11 hereof.
provided, however, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an "Event of Loss" so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Event of Default shall not have been remedied, Lessor may do one or
more of the following with respect to all or any part of the Airframe and any or
all of the Engines as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable law then in effect; provided, however, that during any period the
Aircraft is subject to the Civil Reserve Air Fleet Program in accordance with
the provisions of Section 7(b) and in the possession of the United States
government or an instrumentality or agency thereof Lessor shall not, on account
of any Event of Default, be entitled to do any of the following in such manner
as to limit Lessee's control under this Lease (or any Sublessee's control under
any Sublease) of any Airframe or any Engines installed thereon, unless at least
60 days' (or such lesser period as may then be applicable under the Air Mobility
Command program of the United States Government) written notice of default
hereunder shall have been given by Lessor by registered or certified mail to
Lessee (and any Sublessee) with a copy addressed to the Contracting Office
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Representative for the Air Mobility Command of the United States Air Force under
any contract with Lessee (or any Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's
expense, cause Lessee to return promptly, and Lessee shall return
promptly, the Airframe or any Engine as Lessor may so demand to Lessor
or its order in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 5 as if such Airframe or
Engine were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of the
Airframe or any Engine is located and take immediate possession of and
remove the same by summary proceedings or otherwise (and/or, at
Lessor's option, store the same at Lessee's premises until disposal
thereof by Lessor), all without liability accruing to Lessor for or by
reason of such entry or taking of possession or removing whether for
the restoration of damage to property caused by such action or
otherwise;
(b) sell the Aircraft at public or private sale, as
Lessor may determine, or otherwise dispose of, hold, use, operate,
lease to others or keep idle the Aircraft as Lessor, in its sole
discretion, may determine, all free and clear of any rights of Lessee,
except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) or paragraph (b) above, Lessor, by written notice to
Lessee specifying a payment date which shall be the Lease Period Date
not earlier than ten days from the date of such notice, may demand that
Lessee pay to Lessor, and Lessee shall pay Lessor, on the payment date
so specified, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the installments of Basic Rent for the Aircraft due
for Lease Periods commencing on or after the Lease Period Date
specified as the payment date in such notice), any unpaid Basic Rent
due on Lease Period Dates prior to the payment date so specified
(including without limitation any adjustments to Basic Rent payable
pursuant to Section 3(d)) plus whichever of the following amounts
Lessor, in its sole discretion, shall specify in such notice (together
with interest, if any, on such amount at the Past Due Rate from such
specified payment date until the date of actual payment of such
amount): (i) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Lease Period Date
specified as the payment date in such notice, over the aggregate fair
market rental value (computed as hereafter in this Section 15 provided)
of the Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the Lease
Period Date specified as the payment date in such notice at an annual
rate equal to the Base Rate plus 1%; or (ii) an amount equal to the
excess, if any, of the Stipulated Loss Value for the Aircraft on the
Lease Period Date specified as the payment date in such notice over the
fair market sales value of the Aircraft (computed as hereafter in this
Section provided) as of the Lease Period Date specified as the payment
date in such notice;
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(d) in the event Lessor, pursuant to paragraph (b)
above, shall have sold the Aircraft, Lessor, in lieu of exercising its
rights under paragraph (c) above with respect to the Aircraft, may, if
it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
to Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the installments of Basic
Rent for the Aircraft due for Lease Periods commencing after the Lease
Period Date preceding such date of sale) any unpaid Basic Rent with
respect to the Aircraft due prior to such date plus the amount of any
deficiency between the net proceeds of such sale (after deduction of
all reasonable costs of sale) and the Stipulated Loss Value of the
Aircraft, computed as of the Stipulated Loss Value Date on or
immediately succeeding the date of such sale together with interest, if
any, on the amount of such deficiency, at the Past Due Rate, from the
date of such sale to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to the
Aircraft, and/or may exercise any other right or remedy which may be
available to it under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for breach
hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller in possession, as the case may be,
in each case free of all rights of Lessee hereunder based upon the actual
condition and location of the Aircraft, which value shall be determined by
mutual agreement or, in the absence of mutual written agreement, pursuant to an
appraisal prepared and delivered by a nationally recognized firm of independent
aircraft appraisers nominated by Lessor, and Lessor shall promptly notify Lessee
of such nomination. Unless Lessee shall have objected in writing within ten days
after its receipt of Lessor's notice, Lessor's nomination shall be conclusive
and binding. If Lessee shall object, however, Lessor and Lessee shall endeavor,
within ten days after such objection is made, to select a mutually acceptable
appraiser; provided, that if Lessee shall not so endeavor to make such
selection, Lessor's nomination referred to in the preceding sentence hereof
shall be conclusive and binding. If Lessor and Lessee fail to reach agreement
(except for the reason referred to in the proviso in the preceding sentence), or
if any appraiser selected fails to act for any reason, then the question shall
be determined by an appraisal (applying the definitions of "fair market rental
value" and "fair market sales value" as set forth above based upon the actual
condition of the Aircraft) mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on
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behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall be
given within twenty Business Days after the appointment of such third appraiser.
As soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the determination
of such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon the parties hereto. If
no determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. The cost of such appraisal or appointment
shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable and actual legal fees and other costs
and expenses (including fees of the appraisers hereinabove referred to) incurred
by Lessor, the Indenture Trustee and the Owner Participant by reason of the
occurrence of any Event of Default or the exercise of Lessor's remedies with
respect thereto, including those incurred in connection with the return of the
Airframe or any Engine in accordance with the terms of Section 5 or in placing
such Airframe or Engine in the condition and airworthiness required by such
Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee or the Owner Participant) may
bid for and purchase such property. Lessor agrees to give Lessee at least 15
days' written notice of the date fixed for any public sale of any Airframe or
Engine or of the date on or after which will occur the execution of any contract
providing for any private sale and any such public sale shall be conducted in
general so as to afford Lessee (and any Sublessee) a reasonable opportunity to
bid, provided, however, that Lessee shall not be entitled to purchase the
Aircraft so long as any Event of Default is continuing hereunder. Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by lessor
of any or all of such other remedies. No waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement or
amendment to be duly filed and recorded, and maintained
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of record, in accordance with the applicable laws of the government of registry
of the Aircraft. In addition, Lessee will promptly and duly execute and deliver
to Lessor such further documents and take such further action as Lessor or the
Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor and the Indenture Trustee hereunder, including, without limitation, if
requested by Lessor or the Indenture Trustee, at the expense of Lessee, the
execution and delivery of supplements or amendments hereto or to the Trust
Indenture, each in recordable form, subjecting to this Lease and the Trust
Indenture, any airframe or engine substituted for the Airframe or any Engine
pursuant to the terms thereof and the recording or filing of counterparts
thereof, in accordance with the laws of such jurisdictions as Lessor or the
Indenture Trustee may from time to time deem advisable. Lessee will promptly
provide the Owner Participant, Lessor and the Indenture Trustee with such
financial information concerning Lessee or its parent corporation as is provided
from time to time to shareholders of Lessee's parent corporation. Commencing in
1997, Lessee will deliver to Lessor, the Owner Participant and the Indenture
Trustee (i) on or before April 30 of each year during the Term, commencing with
April 30, 1997, a certificate of Lessee, signed by the President, a Vice
President or the Chief Financial Officer of Lessee to the effect that the signer
is familiar with or has reviewed the relevant terms of this Lease and the signer
does not have actual knowledge of the existence, as of the date of such
certificate, of any condition or event which constitutes a Potential Default or
an Event of Default or of an event which with the giving of notice or lapse of
time or both would become an Event of Default under clauses (c) or (d) of
Section 14 hereof other than a failure to maintain the Aircraft in accordance
with Section 7 or Section 8 hereof which does not materially impair the value of
the Aircraft or a failure to maintain insurance in accordance with Section 11
hereof, (ii) within 60 days after the end of each of the first three quarterly
periods of each fiscal year of Lessee, a consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of such period,
together with the related consolidated statements of income and of surplus for
such period, (iii) within 120 days after the close of such fiscal year, a
consolidated balance sheet of Lessee and its consolidated subsidiaries prepared
by it as of the close of such fiscal year, together with the related
consolidated statements of income and surplus for such fiscal year, as certified
by independent public accountants, including their certificate and accompanying
comment, and (iv) promptly after filing with the Securities and Exchange
Commission, copies of Lessee's annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K. Lessee agrees that if the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer
or Assistant Treasurer of Lessee has actual knowledge of the existence of a
Potential Default or an event which with the giving of notice or lapse of time
or both would become an Event of Default under clauses (c) or (d) of Section 14
hereof other than a failure to maintain the Aircraft in accordance with Section
7 or Section 8 hereof which does not materially impair the value of the Aircraft
or a failure to maintain insurance in accordance with Section 11 hereof, then
Lessee shall promptly give to Lessor, the Owner Participant and the Indenture
Trustee notice thereof and such other information relating thereto as Lessor,
the Owner Participant or the Indenture Trustee shall reasonably request. Lessee
agrees that if an officer of Lessee has knowledge of the existence of an Event
of Default, Lessee shall promptly give notice thereof to Lessor and the
Indenture Trustee.
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SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be continued in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101
Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and
for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice President-Finance and
Treasurer (Telecopy No. (612) 726-0665), or to such other
address or telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust
Department (Telecopy No. (801) 246-5053), or to such other
address or telecopy number as Lessor shall from time to time
designate in writing to Lessee, and
(iii) if to the Indenture Trustee or the
Owner Participant, addressed to the Indenture Trustee or the
Owner Participant at such address or telecopy number as the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to the Indenture Trustee or
the Owner Participant at its address or telecopy number set
forth on the signature pages of the Refunding Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is a net
lease. All Rent shall be paid by Lessee to Lessor in funds of the type specified
in Section 3(f). Lessee's obligation to pay all Rent payable hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which Lessee may have against Lessor, in its individual
capacity or as Owner Trustee under the Trust Agreement, the Indenture Trustee
(in its individual capacity or as Indenture Trustee), the Owner Participant, or
anyone else for any reason whatsoever (whether in connection with the
transactions contemplated hereby or any other transactions), including, without
limitation, any breach by Lessor or the Owner Participant of their respective
warranties, agreements or covenants contained in any of the Operative Documents,
(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in or prohibition of the use or
possession thereof by Lessee (or any Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation or prohibition
resulting from the act of any government authority, (iii) any insolvency,
bankruptcy, reorganization or similar case or proceedings by or against Lessee
(or any Sublessee) or any other person, or (iv) any other circumstance,
happening, or event whatsoever, whether or not unforeseen or similar to any of
the foregoing. If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise
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except as specifically provided herein, Lessee nonetheless agrees without
limitation of the other rights or remedies of Lessor hereunder to pay to Lessor
an amount equal to each Rent payment at the time such payment would have become
due and payable in accordance with the terms hereof had this Lease not been
terminated in whole or in part. Lessee hereby waives, to the extent permitted by
applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Lease except in accordance with the express terms
hereof.
SECTION 19. RENEWAL OPTION; PURCHASE OPTION; VALUATION;
SPECIAL PURCHASE OPTION. (a) Renewal Option. (1) Fair Market Renewal Term. Not
less than 120 days before the end of the Basic Term or any Renewal Term for the
Aircraft, Lessee may deliver to Lessor a written notice irrevocably electing to
renew this Lease for a Renewal Term specified in such notice of not less than
one year and not more than three years and for a period of months divisible by
six for a Basic Rent equal to the "fair market rental value" of the Aircraft for
such period (any such renewal term, a "FAIR MARKET RENEWAL TERM").
(2) Fixed Renewal Term. Not less than 120 days before the end
of the Basic Term, Lessee may deliver to Lessor a written notice irrevocably
electing to renew this Lease for a single term having a duration and at a Basic
Rent as determined below (any such renewal term, a "FIXED RENEWAL TERM"). At
least 270 days before the end of the Basic Term Lessee shall, as a condition to
its exercise of the option set forth in this Section l9(a)(2), notify Lessor of
its demand for an appraisal pursuant to the appraisal procedures of Section
l9(c). The appraisers so appointed shall determine, as evidenced by an appraisal
reasonably satisfactory to the Owner Participant's counsel the total useful
life, the remaining useful life and the future residual value of the Aircraft on
the expiration date for the Fixed Renewal Term as may be set by reason of the
maximum period therefor in accordance with the constraints set forth in the
following sentence. The duration of the Fixed Renewal Term shall be a period
specified by Lessee before the end of the Basic Term which is not more than the
lesser of (y) two years and (x) that period of time (i) which would cause the
Term, after giving effect to such Fixed Renewal Term, to be equal to 80% of the
total useful life of the Aircraft as determined by the appraisers and (ii) at
the expiration of which the residual value of the Aircraft, as estimated by the
appraisers, would be at least equal to 20% of Lessor's Cost (without taking into
account inflation or deflation during the Term).
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section l9(a)(1) or l9(a)(2) on or before the day specified
therefor, Lessee shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Potential Default or an Event
of Default and that all necessary governmental authorizations and approvals
shall have been received and that Basic Rent for the Renewal Term has already
been determined as above provided, this Lease shall continue in full force and
effect during the Renewal Term, except that (x) Lessee shall pay Lessor Basic
Rent for the Aircraft during the Renewal Term in an amount equal, in the case of
a Fair
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Market Renewal Term, to the "fair market rental value" thereof for the Renewal
Term determined in accordance with Section l9(c), and equal, in the case of a
Fixed Renewal Term, to 50% of the average Basic Rent during the Basic Term (such
average being determined as the total of all payments of Basic Rent during the
Basic Term divided by 50), which Basic Rent shall be payable in semi-annual
installments in arrears, each such installment being due and payable on each
Lease Period Date occurring during the Renewal Term, commencing with the Lease
Period Date immediately following the commencement of the Renewal Term and (y)
the Stipulated Loss Value schedule applicable during the Renewal Term shall be
determined separately for each Renewal Term by the Owner Participant in good
faith to reflect Stipulated Loss Values in accordance with the following
sentence. Stipulated Loss Values during a Renewal Term shall on the date on
which such Renewal Term begins be equal to the fair market sales value of the
Aircraft as of such date, determined in accordance with provisions of this
Section l9(a)(4) and Section l9(c) hereof, and shall decline ratably on a
monthly basis to the fair market sales value of the Aircraft as of the last day
of such Renewal Term, determined in accordance with the provisions of this
Section l9(a)(4) and Section l9(c) hereof.
(b) Purchase Options. (1) At the expiration of the Basic Term,
Lessee shall have the option, upon at least 120 days' irrevocable prior notice
to Lessor, to purchase the Aircraft on the last Business Day of the Basic Term,
for a purchase price equal to the "fair market sales value" of the Aircraft
computed as of thirty days prior to such date in accordance with the procedures
of Section l9(c) hereof. Upon such payment in full and payment of any other
amounts then due hereunder (including costs or expenses of the Owner Participant
in connection with such purchase), Lessor will transfer to Lessee, without
recourse or warranty (except as to the absence of Lessor Liens, including for
this purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens), all of Lessor's right, title and interest in and to
the Aircraft and, if the Aircraft has not been released from the Lien of the
Trust Indenture, exercise such rights as it has to cause the Aircraft to be
released from the Lien thereof.
(2) At the expiration of any Renewal Term, Lessee shall have
the option, upon at least 120 days' irrevocable prior notice to Lessor, to
purchase the Aircraft on the last Business Day of such Renewal Term for a
purchase price equal to the fair market sales value of the Aircraft, computed as
of thirty days prior to such date in accordance with the procedures of Section
19(c) hereof. Upon such payment in full and payment of any other amounts then
due hereunder (including the costs or expenses of the Owner Participant and
Lessor, if any, in connection with such purchase), Lessor will transfer to
Lessee, without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) all of the Lessor's right, title and interest
in and to the Aircraft and, if the Aircraft has not been released from the Lien
of the Trust Indenture, exercise such rights as it has to cause the Aircraft to
be released from the Lien thereof.
(c) Valuation. At any time not earlier than 365 days prior to
the date on which Lessee may purchase the Aircraft pursuant to Section 9(b) or
Section l9(b) hereof or renew this Lease pursuant to Section l9(a) hereof,
Lessee may deliver to Lessor a revocable
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notice of its intent to exercise its renewal option or purchase option. For all
purposes of this Section 19, including the appraisal referred to in this Section
l9(c), in determining "fair market rental value" or "fair market sales value",
the Aircraft shall be valued (i) as if in the condition and otherwise in
compliance with the terms of Section 5 upon a return of the Aircraft to the
United States and as if it had been maintained by Lessee at all times in
accordance with Section 7(a)(I) during periods when no Sublease was in effect,
(ii) on the basis of the value which would obtain in an arm's-length transaction
between an informed and willing buyer-user or lessee (other than a lessee or an
Affiliate of a lessee currently in possession or a used equipment scrap dealer)
under no compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user and under no compulsion to sell or lease and
disregarding the purchase and renewal options of Lessee provided in this Lease,
and (iii) in the case of such valuation for determining "fair market rental
value", assuming such lessee would have substantially the same obligations
during the Fair Market Renewal Term as provided hereunder including without
limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by 210 days prior to
the end of the Basic Term or the Renewal Term in question (or by 210 days prior
to the Termination Date, in the case of Section 9(b)), then the question shall
be determined by an appraisal mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure, provided, if Lessee elects not
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<PAGE> 57
to renew this Lease or purchase the Aircraft following such appraisal or elects
to purchase the Aircraft pursuant to Section l9(b), Lessee shall pay all
expenses of such appraisal.
(d) Special Purchase Option. On March 15, 2011 (or, if March
15, 2011 is not a Business Day, the Business Day immediately succeeding March
15, 2011), Lessee shall have the option, upon at least 120 days' irrevocable
prior notice to Lessor and, if any Secured Certificates are then outstanding,
the Indenture Trustee, to purchase the Aircraft on such date for a purchase
price equal to 61.98% of Lessor's Cost. In addition, if on such date there shall
be any Secured Certificates outstanding, Lessee shall have the option to assume,
pursuant to Section 8(x) of the Participation Agreement and Section 2.13 of the
Trust Indenture, all of the obligations of Lessor under the Trust Indenture. If
such assumption is made, Lessee shall pay Lessor a purchase price equal to
61.98% of Lessor's Cost minus an amount equal to principal of and accrued but
unpaid interest on any Secured Certificates outstanding on such date. Upon such
payment in full and payment of any other amounts then due hereunder (including
costs or expenses of the Owner Participant in connection with such purchase, any
installments of Basic Rent due prior to such date and, if Basic Rent is payable
in arrears on such date as indicated on Exhibit B, on such date (but not any
installment of Basic Rent due on such date if Basic Rent is payable in advance
on such date), all unpaid Supplemental Rent due on or prior to such date,
including, if Lessee has not elected to make such assumption, the amount of
Make-Whole Amount, if any, which is payable on the Secured Certificates on such
date), Lessor will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to the Aircraft and under the Trust
Indenture and, unless there shall be any Secured Certificates outstanding after
such payment, exercise such rights as it has to cause the Aircraft to be
released from the Lien of the Trust Indenture.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF
SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this Lease, the Lease Supplements and
any amendments to this Lease and to grant a mortgage and security interest in
the Aircraft in favor of the Indenture Trustee for security purposes only,
subject to the reservations and conditions therein set forth. To the extent, if
any, that this Lease, the Lease Supplements and any amendments to this Lease
constitute 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, the Lease Supplements and any amendments to this Lease may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee under the Trust Indenture on the
signature page thereof. Lessee hereby accepts and consents to the assignment of
all Lessor's right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. Lessee agrees to pay directly to the Indenture
Trustee (or, after receipt by Lessee of notice from the Indenture Trustee of the
discharge of the Trust Indenture, to Lessor), all amounts of Rent due or to
become due hereunder and assigned to the Indenture Trustee and Lessee agrees
that the Indenture Trustee's right to such payments hereunder shall be absolute
and unconditional and shall not be affected
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<PAGE> 58
by any circumstance, including, without limitation, the circumstances set forth
in clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds (a) Investment of Security Funds. Any
moneys held by Lessor as security hereunder for future payments to Lessee shall,
until paid to Lessee, be invested by Lessor or, if the Trust Indenture shall not
have been discharged, by the Indenture Trustee, as the case may be, as Lessee
may from time to time direct in writing (and in absence of a written direction
by Lessee, there shall be no obligation to invest such moneys) in (i) direct
obligations of the United States of America and agencies guaranteed by the
United States government having a final maturity of ninety (90) days or less
from date of purchase thereof; (ii) certificates of deposit issued by, bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated under the laws of the United States of America
or one of the states thereof having combined capital and surplus and retained
earnings as of its last report of condition of at least $500,000,000 and having
a rating of Aa or better by Moody's Investors Service, Inc. ("MOODY'S") or AA or
better by Standard & Poor's Corporation ("S&P") and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii) commercial
paper of any holding company of a bank, trust company or national banking
association described in (ii) and commercial paper of any corporation or finance
company incorporated or doing business under the laws of the United States of
America or any state thereof having a rating assigned to such commercial paper
of A1 by S&P or P1 by Moody's and having a final maturity of ninety (90) days or
less from the date of purchase thereof; provided, however, that the aggregate
amount at any one time so invested in certificates of deposit issued by any one
bank shall not be in excess of 5% of such bank's capital and surplus. There
shall be promptly remitted to Lessee or its order (but no more frequently than
monthly) any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Potential Default or an Event of
Default shall have occurred and be continuing. Lessee shall be responsible for
any net loss realized as a result of any such investment and shall reimburse
Lessor (or the Indenture Trustee, as the case may be) therefor on demand.
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<PAGE> 59
(b) Liability of Lessor Limited(b) Liability of Lessor
Limited. It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder shall be binding upon Lessor
only in its capacity as trustee under the Trust Agreement, and the institution
acting as Lessor shall not be liable in its individual capacity for any breach
thereof except for its gross negligence or willful misconduct or for breach of
its covenants, representations and warranties contained herein, to the extent
covenanted or made in its individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee or the
Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, Lessee hereby waives any provision of law which
renders any provisions hereof prohibited or unenforceable in any respect. No
term or provision of this Lease may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. This Lease shall constitute an agreement
of lease, and nothing contained herein shall be construed as conveying to Lessee
any right, title or interest in the Aircraft except as a lessee only. Except as
provided in Section 8(u) of the Participation Agreement, neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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. The covenants and agreements of
Lessee set forth in this Lease and Lessee's obligations hereunder shall survive
the expiration or other termination of this Lease to the extent required for
full performance and satisfaction thereof.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case
of the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee,
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<PAGE> 60
succeed to all the rights, powers and title of Lessor hereunder and shall be
deemed to be Lessor and the owner of the Aircraft for all purposes hereof
without the necessity of any consent or approval by Lessee (subject to Section
10 of the Participation Agreement) and without in any way altering the terms of
this Lease or Lessee's obligations hereunder. One such appointment and
designation of a successor Owner Trustee shall not exhaust the right to appoint
and designate further successor Owner Trustees pursuant to the Trust Agreement,
but such right may be exercised repeatedly as long as this Lease shall be in
effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event
of Default shall have occurred and be continuing and notwithstanding any default
by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement, the Refunding Agreement or the
Trust Indenture, Lessor shall not interfere with Lessee's continued possession,
use and operation of, the Aircraft during the Term of this Lease (it being
understood that the foregoing shall not be deemed to have modified in any
respect the obligations of Lessee pursuant to Section 20 hereof, which
obligations are absolute and unconditional), and this Lease shall not be
terminated except as expressly provided herein.
SECTION 27. APPLICABILITY OF AMENDMENTS. The amendments to the
Original Lease effected by this Amended and Restated Lease Agreement are
applicable on and after the Closing Date.
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<PAGE> 61
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By: _______________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: _______________________________
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of June, 1996.
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By: _______________________________
Title:
-Signature Page-
<PAGE> 62
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1989 B]
LEASE SUPPLEMENT NO.
[NW 1989 B]
LEASE SUPPLEMENT NO. _ , dated __________, 19__, between First
Security Bank of Utah, National Association, not in its individual capacity, but
solely as Owner Trustee under the Trust Agreement [NW 1989 B], dated as of March
15, 1989, between [____________________], as Owner Participant, and The First
National Bank of Boston as predecessor to such Owner Trustee (such Owner
Trustee, in its capacity as such Owner Trustee, being herein called "LESSOR"),
and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Amended and Restated Lease Agreement [NW 1989 B], dated as of June __, 1996,
relating to one Boeing 747-451 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 from time to time of Lease Supplements
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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being filed
for recordation on the date hereof with the Federal Aviation Administration as
one document.
(2)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated _______, 199_ to the Lease Agreement, has been
recorded by the Federal Aviation Administration _______, 1989, as one document
and assigned Conveyance No. ________.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 747-451 aircraft (the "AIRCRAFT" ), which Aircraft as of the
date hereof consists of the following components:
(i) Airframe: FAA Registration No. _______;
manufacturer's serial no. _____; and
- ---------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 63
(ii) Engines: four (4) Pratt & Whitney Model PW4056
engines bearing, respectively, manufacturer's serial nos. P_______, P_______,
P_______ and P_______ (each of which engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft was March 16, 1989.
Except as otherwise provided in the Lease, the Term for the Aircraft shall
commence on the Delivery Date and end on September 15, 2014.
3. Lessee hereby confirms its agreement to pay Lessor Basic
Rent for the Aircraft throughout the Term therefor in accordance with Section 3
of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted
the Aircraft for all purposes hereof and of the Lease as being airworthy, in
good working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE> 64
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its Individual Capacity,
but solely as Owner Trustee,
Lessor
By: _______________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: _______________________________
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ___th day of ___________, 19__.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By: _______________________________
Title:
- ----------------
(3) This language contained in the original counterpart only.
<PAGE> 65
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1989 B]
BASIC RENT SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
COMMENCEMENT DATE EXCESS AMOUNT (PERCENTAGE OF LESSOR'S COST)
- ----------------- -------------------------------------------
Basic Rent
Lease (Percentage of
Period Date Lessor's Cost)
- ----------------- -------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE> 66
Basic Rent
Lease (Percentage of
Period Date Lessor's Cost)
- ----------------- -------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
EXHIBIT B - PAGE 2
<PAGE> 67
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1989 B]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated
Stipulated Loss Value
Loss Value Date Percentage
- ----------------------------- -------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 68
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1989 B]
Stipulated
Stipulated Loss Value
Loss Value Date Percentage
- ----------------------------- -------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXHIBIT C - PAGE 2
<PAGE> 69
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1989 B]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination Termination
Value Date Value Percentage
- ------------------------------- -------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 70
Termination Termination
Value Date Value Percentage
- ------------------------------- -------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT D - PAGE 2
<PAGE> 71
EXHIBIT E
SCHEDULE OF PERMITTED SUBLESSEES
AER LINGUS IRISH
AEROLINEAS ARGENTINAS
AEROMEXICO, AERONAVES DE MEXICO
AIR AFRIQUE
AIR CANADA
AIR EUROPA
AIR EUROPE
AIR 2000
AIR FRANCE
AIR NEW ZEALAND
ALITALIA - LINEE AEREE ITALIANE
AUSTRIAN AIRLINES
BRITISH AIRWAYS
CANADIAN AIRLINES INTERNATIONAL LTD.
CARGOLUX
CHINA AIRLINES
DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT
FINNAIR
THE FLYING TIGER LINE INC.
GARUDA
IBERIA - LINEAS AEREAS DE ESPANA
JAPAN AIR LINES
JAPAN AIR SYSTEM
KONINKLIJKE LUCHTVAART MAATSCHAPPIJ NV. (KLM)
KOREAN AIR LINES
LUXAIR
NORDAIR
OLYMPIC AIRWAYS SA
PHILIPPINE AIR LINES
QANTAS AIRWAYS LIMITED
SWISS AIR TRANSPORT COMPANY LTD.
THAI AIRWAYS INTERNATIONAL LTD.
UNION DE TRANSPORTES AERIENS
VARIG S.A.
SINGAPORE AIRLINES
AIR PORTUGAL - TAP
ALL NIPPON AIRWAYS
ANSETT AIRLINES OF AUSTRALIA
BRITANNIA AIRWAYS
CAAC - CIVIL AVIATION ADMINISTRATION OF CHINA
<PAGE> 72
CATHAY PACIFIC AIRWAYS
CONDOR FLUGDIENST
DAN-AIR SERVICES
ICELANDAIR
MONARCH AIRLINES
SABENA
SCANDINAVIAN AIRLINES SYSTEM - SAS
TRANS-AUSTRALIA AIRLINES - TAA
TRANSBRASIL
VASP
MEXICANA AIRLINES
ORION AIR
BWIA INTERNATIONAL
LAN - CHILE
AIRBORNE EXPRESS
FEDERAL EXPRESS
PUROLATOR
UNITED PARCEL SERVICE
EXHIBIT E - PAGE 2
<PAGE> 1
GUARANTEE
[NW 1989 B]
This GUARANTEE [NW 1989 B], dated as of June 12, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, has
entered into a Lease Agreement [NW 1989 B], dated as of March 15, 1989, between
the Lessee, as lessee, and The First National Bank of Boston, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "ORIGINAL OWNER TRUSTEE"), as lessor, and a
Lease Supplement No. 1 [NW 1989 B], dated March 16, 1989 (such Lease Agreement,
as so supplemented, the "ORIGINAL LEASE"), relating to one (1) Boeing 747-451
aircraft, together with four (4) Pratt & Whitney Model PW4056 engines (such
aircraft and engines, and any substitute Airframe and Engines under the Lease,
being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL
PARTICIPATION AGREEMENT"), among the Lessee, [_______________________], as
owner participant (the "ORIGINAL OWNER PARTICIPANT"), and certain other
parties; and
WHEREAS, pursuant to an Assignment and Assumption Agreement
dated as of December 19, 1991 by and among the Original Owner Participant,
[_________________], as owner participant (the "OWNER PARTICIPANT"), and
[_________________________________], a [__________] corporation, as parent of
the Owner Participant (the "ASSIGNMENT AGREEMENT"), the Original Owner
Participant transferred to the Owner Participant all of its right, title and
interest in the Trust Estate, the Aircraft and the Operative Documents,
including without limitation the Original Lease; and
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance dated May 16, 1996 among the Owner
Participant, the Original Owner Trustee and First Security Bank of Utah,
National Association (the "OWNER TRUSTEE"), the Owner Trustee succeeded to all
of the estates, properties, rights, powers, duties and trusts of the Original
Owner Trustee as trustee under the Original Trust Agreement and the other
Operative Documents to which the Original Owner Trustee was a party; and
WHEREAS, the Guarantor, the Lessee, the Owner Trustee, the
Owner Participant, State Street Bank and Trust Company, as indenture trustee
(the "INDENTURE TRUSTEE"), and certain other parties have entered into a
Refunding Agreement [NW 1989 B], dated as of June 3, 1996 (the "REFUNDING
AGREEMENT"), providing for a refinancing as contemplated by Section 17 of the
Original Participation Agreement; and
<PAGE> 2
WHEREAS, it is a condition precedent to the obligations of the
parties thereto to consummate the transactions contemplated by the Refunding
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, pursuant to the Refunding Agreement, (a) the Original
Participation Agreement is being amended (as so amended, the "PARTICIPATION
AGREEMENT"), (b) the Original Lease was amended and restated on June 3, 1996
(as so amended and restated, the "LEASE"), (c) the Owner Trustee and the
Indenture Trustee are entering into the Trust Indenture and Security Agreement
[NW 1989 B], together with a Trust Agreement and Indenture Supplement covering
the Aircraft (as so supplemented, the "TRUST INDENTURE"), and new secured
certificates in four series substantially in the form set forth in Section 2.01
of the Trust Indenture (the "SECURED CERTIFICATEs") will be issued, and (d) the
Owner Trustee as lessor under the lease (the "LESSOR") will assign by way of
collateral security certain of its right, title and interest in and to this
Guarantee to the Indenture Trustee pursuant the Trust Indenture, as security
for the obligations of the Lessor referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Refunding Agreement and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is
fully aware of the terms and conditions of the Lease, the Participation
Agreement and the other Operative Documents and the transactions and the other
documents contemplated thereby, and does hereby irrevocably and fully and
unconditionally guarantee, as primary obligor and not as surety merely, to the
Parties, as their respective interests may appear, the payment by the Lessee of
all payment obligations when due under the Lease (including, without
limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the
Tax Indemnity Agreement and the other Operative Documents to which the Lessee
is a party (such obligations of the Lessee guaranteed hereby being hereinafter
referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as
the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative
Documents, and the timely performance of all other obligations of the Lessee
thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the
"NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the
"OBLIGATIONS"). The Guarantor does hereby agree that in the event that the
Lessee fails to pay any Financial Obligation when due for any reason
(including, without limitation, the liquidation, dissolution, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceedings affecting the status, existence, assets or obligations of, the
Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such
- 2 -
<PAGE> 3
proceeding) within five days after the date on which such Financial Obligation
became due and payable and the applicable grace period has expired, the
Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice
from any Party (such notice to be sent to the Lessee (to the extent such Party
is not stayed or prevented from doing so by operation of law) and the
Guarantor) stating that such Financial Obligation was not paid when due and for
five days after the applicable grace period has expired, the amount of such
Financial Obligation. The Guarantor hereby agrees that in the event the Lessee
fails to perform any Nonfinancial Obligation for any reason (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Lessee, or the disaffirmance
with respect to the Lessee of the Lease or the Operative Documents to which the
Lessee is a party in any such proceeding) within 10 Business Days after the
date on which such Nonfinancial Obligation is required to be performed (for
avoidance of doubt, to include any applicable grace period), the Guarantor
shall cause such Nonfinancial Obligation to be performed within 10 Business
Days following the receipt of notice from any Party (such notice to be sent to
the Lessee (to the extent such Party is not stayed or prevented from doing so
by operation of law) and the Guarantor) stating that such Nonfinancial
Obligation was not performed when so required and that any applicable grace
period has expired.
(b) The obligations of the Guarantor hereunder shall not
be, to the fullest extent permitted by law, affected by: the genuineness,
validity, regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in accordance with the terms of
the Operative Documents) without the consent of the Guarantor, or by any
priority or preference to which any other obligations of the Lessee may be
entitled over the Lessee's obligations under the Lease and the other Operative
Documents to which the Lessee is a party, or by any other circumstance that
might otherwise constitute a legal or equitable defense to or discharge of the
obligations of a surety or guarantor including, without limitation, any defense
arising out of any laws of the United States of America or any State thereof
which would excuse, discharge, exempt, modify or delay the due or punctual
payment and performance of the obligations of the Guarantor hereunder. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not, to the fullest extent permitted by
law, affect the liability of the Guarantor hereunder: (a) the extension of the
time for or waiver of, at any time or from time to time, without notice to the
Guarantor, the Lessee's performance of or compliance with any of its
obligations under the Operative Documents (except that such extension or waiver
shall be given effect in determining the obligations of the Guarantor
hereunder), (b) any assignment, transfer, sublease or other arrangement by
which the Lessee transfers possession or loses control of the use of the
Aircraft, (c) any defect in the title, condition, design, operation or fitness
for use of, or damage to or loss or destruction of, the Aircraft, whether or
not due to
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<PAGE> 4
the fault of the Lessee, (d) any merger or consolidation of the Lessee or the
Guarantor into or with any other Person, or any sale, transfer, lease or
disposal of any of its assets or (e) any change in the ownership of any shares
of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any
unpaid amounts due or otherwise to enforce performance by the Lessee. The
Guarantor specifically agrees, to the fullest extent permitted by law, that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Party (i) file suit or proceed to obtain or
assert a claim for personal judgment against the Lessee for the Obligations, or
(ii) make any effort at collection of the Obligations from the Lessee, or (iii)
foreclose against or seek to realize upon any security now or hereafter
existing for the Obligations, including the Trust Estate or the Trust Indenture
Estate (as such term is defined in the Trust Indenture), or (iv) file suit or
proceed to obtain or assert a claim for personal judgment against any other
Person liable for the Obligations, or make any effort at collection of the
Obligations from any such other Person, or exercise or assert any other right
or remedy to which any Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, or (v) assert or file
any claim against the assets of the Lessee or any other guarantor or other
Person liable for the Obligations, or any part thereof, before or as a
condition of enforcing the liability of the Guarantor under this Guarantee or
requiring payment of said Obligations by the Guarantor hereunder, or at any
time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted
by law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be
prevented by applicable law from exercising its remedies (or any of them) under
Section 15 of the Lease, the Lessor (or any assignee thereof, including,
without limitation, the Indenture Trustee) shall be, nevertheless, entitled to
receive hereunder from the Guarantor, upon demand therefor the sums that would
otherwise have been due from the Lessee under the Lease had such remedies been
able to be exercised. The Guarantor hereby unconditionally waives, to the
fullest extent permitted by law, any requirement that, as a condition precedent
to the enforcement of the obligations of the Guarantor hereunder, the Lessee or
all or any one or more of any other guarantors of any of the Obligations be
joined as parties to any proceedings for the enforcement of any provision of
this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee
shall not be deemed to create any right in any Person except a Party and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest
extent permitted by law, all other demands or notices whatsoever,
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<PAGE> 5
other than the request for payment hereunder and notice provided for in Section
1 hereof. The obligations of the Guarantor shall be absolute and unconditional
and shall remain in full force and effect until satisfaction of all Obligations
hereunder and, without limiting the generality of the foregoing, to the extent
not prohibited by applicable law, shall not be released, discharged or
otherwise affected by the existence of any claims, set-off, defense or other
rights that the Guarantor may have at any time and from time to time against
any Party, whether in connection herewith or any unrelated transactions. This
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any Financial Obligation is rescinded or must
otherwise be returned by any Party upon the insolvency, bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding with respect to the Lessee or otherwise, all as though such
payment had not been made. The Guarantor, by virtue of any payment or
performance hereunder to a Party, shall be subrogated to such Party's claim
against the Lessee or any other Person relating thereto; provided, however,
that the Guarantor shall not be entitled to receive payment from the Lessee in
respect of any claim against the Lessee arising from a payment by the
Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim
by the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings relating to
the Lessee, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Lessee, whether or
not involving insolvency or bankruptcy proceedings, in which case the
Obligations shall be paid and performed in full before any payment in
respect of a claim by the Guarantor shall be made by or on behalf of
the Lessee.
4. AMENDMENTS, ETC. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless evidenced by an instrument in writing signed
by the Guarantor and each Party against whom such amendment, supplement,
waiver, modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
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<PAGE> 6
6. ASSIGNMENT OF GUARANTEE. As and to the extent
provided in the Trust Indenture, the Lessor will assign, and create a security
interest in, certain of its rights hereunder to and for the benefit of the
Indenture Trustee. From and after the execution and delivery of the Trust
Indenture, and until receipt by the Guarantor of a written notice from the
Indenture Trustee to the effect that the Trust Indenture has been fully
satisfied and discharged, no remedy or election hereunder may be exercised by
the Lessor or consent given by the Lessor, except by or with the prior written
consent of the Indenture Trustee, and the Guarantor will make payment of all
amounts hereunder that are assigned to the Indenture Trustee directly to the
Indenture Trustee, and such payments shall discharge the obligations of the
Guarantor to the Lessor to the extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly
existing in good standing pursuant to the laws of the State of
Delaware. It has all requisite corporate power and authority to own
and operate its properties, to carry on its business as presently
conducted and to enter into and perform its obligations under this
Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to
authorize the execution, delivery and performance (other than as
contemplated by the Operative Documents in the case of the performance
of the Non-Financial Obligations) by it of this Guarantee, or for the
legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation of
the transactions contemplated hereby, will conflict with or result in
any breach of, or constitute a default under, or result in any
creation or imposition of any Lien upon any of its property or assets
under, any applicable laws or any indenture, mortgage, deed of trust
or other instrument or agreement to which it is a party or by which it
may be bound or to which any of its property or assets may be subject,
or its Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
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<PAGE> 7
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any Party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038-4892, Attention: Managing Attorney, or such office of the
Guarantor in New York City as from time to time may be designated by the
Guarantor in writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to
the fullest extent permitted by applicable laws. The headings in this
Guarantee are for purposes of reference only, and shall not limit or otherwise
affect the meanings hereof.
10. NOTICES. All requests, notices or other
communications hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and
Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in or
pursuant to the Refunding Agreement.
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<PAGE> 8
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other or
further exercise of such right or remedy or the exercise of any other right or
remedy.
12. SURVIVAL. All representations and warranties
contained herein or made in writing by the Guarantor in connection herewith
shall survive the execution and delivery of this Guarantee regardless of any
investigation made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or any provision in any other
Operative Document, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND
SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK,
NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to
any Party any and all reasonable costs and expenses (including reasonable legal
fees and expenses) incurred by such Party in enforcing, or collecting under,
this Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
------------------------------------
Name: Thomas S. Schreier, Jr.
Title: Vice President - Finance and
Assistant Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
-----------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
-----------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1989 B]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[_________________], as Owner Participant
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1989 B]
THIS PARTICIPATION AGREEMENT [NW 1989 B] dated as of March 15, 1989,
among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws
of the State of Minnesota (herein called "Lessee"), (ii) the institution listed
in Schedule I hereto and identified therein as the "Owner Participant" which
executes and delivers a counterpart of this Agreement and of the Trust Agreement
(as hereinafter defined) (herein called the "Owner Participant"), (iii) the
institution listed in Schedule I hereto and identified therein as the "Original
Holder" which executes and delivers a counterpart of this Agreement (herein
called the "Original Holder"), (iv) The First National Bank of Boston, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee under the Trust Agreement
(herein, in such latter capacity, together with any successor owner trustee,
called the "Owner Trustee"), and (v) Meridian Trust Company, not in its
individual capacity except as expressly provided herein, but solely as trustee
under the Equipment Trust Agreement (as hereinafter defined) (herein, in such
latter capacity, together with any successor trustee, called the "Equipment
Trust Trustee");
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain Boeing 747-451 aircraft, one of which has been recently purchased from
the Manufacturer by Lessee and is the subject of this Agreement;
WHEREAS, Lessee purchased the Aircraft from the Manufacturer and
intends to sell such Aircraft to the Owner Trustee for immediate lease-back;
WHEREAS, subject to the terms and conditions of this Agreement, the
Owner Trustee agrees to purchase the Aircraft from Lessee;
WHEREAS, subject to the terms and conditions of this Agreement, the
Equipment Trust Trustee on behalf of the Holders from time to time of the
Certificates agrees to acquire security title to the Aircraft from the Owner
Trustee;
WHEREAS, concurrently with the delivery of the Aircraft to the Owner
Trustee,
<PAGE> 2
PARTICIPATION AGREEMENT NW 1989 B
(i) Lessee and the Owner Trustee will enter into
a Purchase Agreement Assignment [NW 1989 B], dated as of the date
hereof whereby Lessee will assign to the Owner Trustee rights and
interests of Lessee under the Purchase Agreement with respect to the
Aircraft; and
(ii) the Manufacturer will execute the Consent and
Agreement [NW 1989 B], substantially in the form attached to the
Purchase Agreement Assignment, with respect to the Purchase Agreement
Assignment;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1989 B],
dated as of the date hereof, with the Owner Trustee, pursuant to which Trust
Agreement the Owner Trustee agrees, among other things, to hold the Trust Estate
for the use and benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee, Lessee and the Equipment Trust Trustee, for the
benefit of the Original Holder and the other Holders from time to time of the
Certificates, are entering into the Equipment Trust Agreement [NW 1989 B], dated
as of the date hereof, whereby the Owner Trustee agrees, among other things, to
convey legal title to the Aircraft for security purposes only to the Equipment
Trust Trustee and to deposit, mortgage and pledge with the Equipment Trust
Trustee as part of the Estate all of the properties held in trust by the Owner
Trustee under the Trust Agreement (other than Excluded Payments), and to lease
the Aircraft back from the Equipment Trust Trustee and the Equipment Trust
Trustee agrees, among other things, to issue Equipment Trust Certificates as
evidence of the indebtedness to the Original Holder arising from the Original
Holder's making a loan to finance the acquisition of such rights to the
Aircraft, and to lease the Aircraft to the Owner Trustee;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1989 B], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "Lease", such term to
include, unless the context otherwise requires, the Lease Supplement referred to
below) whereby, subject to the terms and conditions set forth therein, the Owner
Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner
Trustee the Aircraft on the date (the "Delivery Date") the Aircraft is sold and
delivered by Lessee to the Owner Trustee under the Bill of Sale, and accepted by
the Owner Trustee for all purposes thereof, such acceptance to be evidenced by
the execution of the Trust Supplement covering the Aircraft, and such lease to
be evidenced
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<PAGE> 3
PARTICIPATION AGREEMENT NW 1989 B
by the execution and delivery of a Lease Supplement covering the Aircraft;
WHEREAS, the parties agree (i) that the sale of the Aircraft by Lessee
to the Owner Trustee is intended as a true sale of all right, title and interest
in and to the Aircraft for all purposes; (ii) that the sale of the Aircraft by
the Owner Trustee to the Equipment Trust Trustee is intended to convey legal
title to the Aircraft to the Equipment Trust Trustee for the sole purpose of
providing the Equipment Trust Trustee with a security interest in the Aircraft,
subject to the rights of Lessee under the Lease; (iii) that the lease-back of
the Aircraft by the Owner Trustee from the Equipment Trust Trustee is a lease in
legal form only which is intended to convey to the Owner Trustee all ownership
rights in the Aircraft subject only to the rights of the Equipment Trust Trustee
as a holder of legal title for security purposes; (iv) that the lease-back of
the Aircraft by Lessee from the Owner Trustee pursuant to the Lease is intended
as a true lease, conveying to Lessee rights as a lessee only; and (v) that for
all other purposes (including tax purposes) the Owner Trustee shall be the true
owner of the Aircraft;
WHEREAS, to induce Lessee, the Equipment Trust Trustee and the Owner
Trustee to enter into the transaction contemplated hereby, [___________], a
Delaware corporation and the parent corporation of the Owner Participant, has
issued the Parent Letter in favor of each of Lessee, the Equipment Trust
Trustee and the Owner Trustee;
WHEREAS, except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed to them in Annex A
to this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Participations in Lessor's Cost.
(a) Agreements to Participate. Subject to the terms and conditions of
this Agreement, on the Delivery Date for the Aircraft but in no event later than
March 31, 1989 (and time shall be of the essence):
(i) The Original Holder agrees to finance, in part, the
payment of Lessor's Cost for the Aircraft by making a secured loan in
an amount in Dollars equal to the amount set forth on Schedule I
opposite the name of the Original Holder (the "Holder's Commitment"),
by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York (ABA No. 02-100-1033), not later than 10:00
a.m., New York City time, in immediately
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<PAGE> 4
PARTICIPATION AGREEMENT NW 1989 B
available funds, the amount of the Holder's Commitment. The Owner
Trustee shall accept such funds on behalf of the Equipment Trust
Trustee, and such transfer of funds to the Owner Trustee shall be
deemed the receipt by the Equipment Trust Trustee of amounts payable to
it pursuant to Section 2.12 of the Equipment Trust Agreement.
(ii) The Owner Participant agrees to participate in the
payment of Lessor's Cost for the Aircraft by making an equity
investment in the beneficial ownership of the Aircraft in an amount in
Dollars equal to the amount set forth on Schedule I opposite the Owner
Participant's name (the "Owner Participant's Commitment"), by
transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York (ABA No. 02-100-1033), not later than 10:00
a.m., New York City time, in immediately available funds, the amount of
the Owner Participant's Commitment. The Owner Trustee shall accept such
funds on behalf of the Equipment Trust Trustee, and such transfer of
funds to the Owner Trustee shall be deemed the receipt by the Equipment
Trust Trustee of amounts payable to it by the Owner Trustee pursuant to
Section 5.03(a) of the Equipment Trust Agreement.
(b) [Intentionally omitted]
(c) General Provisions. The amount of the participation of the Original
Holder and the Owner Participant to be made as provided above in the payment of
Lessor's Cost for the Aircraft is hereinafter called such party's "Commitment"
for the Aircraft. In case the Original Holder or the Owner Participant shall
default in its obligation under the provisions of this Section 1, no other such
party shall have any obligation to make any portion of such defaulted amount
available or to increase the amount of its Commitment and the obligation of such
non-defaulting party shall remain subject to the terms and conditions set forth
in this Agreement. Upon receipt by the Owner Trustee of all amounts to be
furnished to it on the Delivery Date pursuant to this Section 1 and the
satisfaction of the conditions set forth in Section 4 hereof, Lessee shall
transfer title to, and deliver, the Aircraft to the Owner Trustee, the Owner
Trustee shall purchase and take title to and accept delivery of the Aircraft and
the Owner Trustee shall convey legal title to the Aircraft for security purposes
only to the Equipment Trust Trustee. In consideration for the transfer of title
to and delivery of the Aircraft to the Owner Trustee and the transfer of legal
title to the Aircraft to the Equipment Trust Trustee for security purposes only,
the following payment (which shall be made simultaneously with such transfer of
title and delivery) shall be made by the Owner Trustee on behalf of itself and
the Equipment Trust Trustee from the amounts so furnished it by the
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<PAGE> 5
PARTICIPATION AGREEMENT NW 1989 B
Original Holder and the Owner Participant: to Lessee, the Lessor's Cost of the
Aircraft.
SECTION 2. Delivery Date.
(a) Notice of Delivery Date. Lessee agrees to give the Owner
Participant, the Original Holder, the Equipment Trust Trustee and the Owner
Trustee telex or telegraphic or other written notice of the scheduled Delivery
Date for the Aircraft not later than the second Business Day preceding the
scheduled Delivery Date, which notice shall confirm the amount of Lessor's Cost
for the Aircraft, the amount of the Owner Participant's Commitment and Holders'
Commitment for the Aircraft and the date on which they shall be made available.
The making available by the Original Holder of the Holder's Commitment as
required by Section 1(a)(i) hereof shall be deemed a waiver of such notice by
the Original Holder. The making available by the Owner Participant of the Owner
Participant's Commitment as required by Section 1(a)(ii) hereof shall be deemed
a waiver of such notice by the Owner Participant and the Owner Trustee.
(b) Closing. The closing shall take place at 10:00 a.m., New York City
time, on the Delivery Date at the offices of Cadwalader, Wickersham & Taft, 100
Maiden Lane, New York, New York 10038.
(c) Postponement of Delivery Date. The scheduled Delivery Date may be
postponed from time to time (but no later than March 31, 1989) for any reason if
Lessee gives the Owner Participant, the Original Holder, the Equipment Trust
Trustee and the Owner Trustee telex or telecopy notice (or telephonic notice
confirmed in writing) of such postponement and notice of the date to which such
Delivery Date has been postponed, such notice of postponement to be received by
each party no later than 3:00 p.m., New York City time, on the originally
scheduled Delivery Date, and the term "Delivery Date" as used in this Agreement
shall mean any such postponed "Delivery Date".
SECTION 3. Sale, Purchase and Lease of Aircraft.
(a) Subject to the terms and conditions of this Agreement and the
Equipment Trust Agreement, the Owner Trustee and the Equipment Trust Trustee on
behalf of the Original Holder shall, upon receipt by the Owner Trustee of the
Owner Participant's Commitment and the Holder's Commitment, oral confirmation of
such receipt by the Owner Trustee and oral instructions of the Owner Participant
and the Original Holder, take the following actions concurrently on the Delivery
Date:
(i) The Owner Trustee shall purchase the Aircraft from Lessee
and pay to Lessee the Lessor's Cost of the Aircraft;
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PARTICIPATION AGREEMENT NW 1989 B
(ii) The Owner Trustee shall convey legal title to Aircraft;
the Aircraft for security purposes only to the Equipment Trust Trustee;
(iii) The Equipment Trust Trustee shall, pursuant to the terms
of the Equipment Trust Agreement, lease the Aircraft to the Owner
Trustee; and
(iv) The Owner Trustee shall, pursuant to the terms of the
Lease, lease the Aircraft to Lessee.
(b) To accomplish such transactions, the Owner Trustee (to the extent
it has not already done so) shall take the following actions with respect to the
Aircraft on the Delivery Date:
(i) authorize its representative or representatives (who
shall be an employee or employees, or an agent or agents, of Lessee
designated by Lessee) to accept delivery of the Aircraft on the
Delivery Date pursuant to this Agreement, the Equipment Trust Agreement
and the Bill of Sale;
(ii) accept from Lessee the Bill of Sale and the FAA Bill of
Sale for the Aircraft;
(iii) take such appropriate action as may be requested by
Lessee in connection with the application to the FAA for registration
of the Aircraft in the name of the Owner Trustee;
(iv) execute and deliver the Lease Supplement and the Trust
Supplement covering the Aircraft;
(v) execute and deliver the Owner Trustee's Bill of Sale for
the Aircraft;
(vi) execute and release for filing the Owner Trustee's FAA
Bill of Sale for the Aircraft; and
(vii) execute and deliver all other documents and certificates
and take such other actions as are required to be executed and
delivered or taken by the Owner Trustee on or before the Delivery Date
pursuant to any Operative Document.
(c) To accomplish such transactions, Lessee (to the extent that it has
not already done so) shall take the following actions with respect to the
Aircraft on the Delivery Date:
(i) execute and deliver the Bill of Sale for the Aircraft to
the Owner Trustee;
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PARTICIPATION AGREEMENT NW 1989 B
(ii) execute and release for filing the FAA Bill of Sale for
the Aircraft;
(iii) accept delivery of the Aircraft for purposes of the
Lease, and in accordance with the terms thereof (such acceptance to be
made by the employee or employees, or agent or agents, of Lessee who
are accepting delivery of the Aircraft for the Owner Trustee pursuant
to Section 3(b)(i) hereof);
(iv) execute and deliver the Lease Supplement; and
(v) execute and deliver all other documents and
certificates, and take such other actions as are required to be
executed and delivered or taken by Lessee on or before the Delivery
Date pursuant to any Operative Document.
(d) To accomplish such transactions, subject to the satisfaction or
waiver of the conditions precedent in Section 3.01 of the Equipment Trust
Agreement, the Equipment Trust Trustee on behalf of the Original Holder (to the
extent that it has not already done so) shall take the following actions with
respect to the Aircraft on the Delivery Date:
(i) authorize its representative or representatives (such
acceptance to be made by the employee or employees, or agent or agents,
of Lessee who are accepting delivery of the Aircraft for the Owner
Trustee pursuant to Section 3(b)(i) hereof) to accept delivery of the
Aircraft on the Delivery Date pursuant to this Agreement and the
Equipment Trust Agreement;
(ii) accept the Owner Trustee's Bills of Sale for the
Aircraft from the Owner Trustee; and
(iii) execute and deliver all other documents and certificates
and take such other actions as are required to be executed and
delivered or taken by the Equipment Trust Trustee on or before the
Delivery Date pursuant to any Operative Document.
SECTION 4. Conditions.
(a) Conditions Precedent to Participation. It is agreed that the
obligations of each of the Original Holder and the Owner Participant to
participate in the payment of Lessor's Cost and to make available the amount of
its respective Commitment are subject to the fulfillment to the satisfaction of,
or waiver by, the Original Holder and the Owner Participant prior to or on the
Delivery Date of the following conditions precedent except that paragraphs
(iii), (ix)(4) (insofar as it relates to the Original Holder), (xiv), (xx),
(xxi), (xxii) and (xxiii)
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PARTICIPATION AGREEMENT NW 1989 B
shall not be a condition precedent to the obligation of the Original Holder and
paragraphs (iv), (vii)(2) (insofar as it relates to the Owner Participant),
(ix)(2), (xiii) and (xxv) shall not be a condition precedent to the obligation
of the Owner Participant:
(i) The Original Holder and the Owner Participant shall have
received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing or
as provided in Section 2).
(ii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations or interpretations thereof by appropriate regulatory
authorities which, in the opinion of the Original Holder or the Owner
Participant, as the case may be, or its respective counsel, would make
it a violation of law or regulations for the Original Holder, the Owner
Participant or Lessee to participate in the transactions contemplated
by the Operative Documents.
(iii) In the case of the Owner Participant, the Original
Holder shall have made available the amount of its Commitment for the
Aircraft in accordance with Section 1(a)(i) hereof.
(iv) In the case of the Original Holder, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1(a)(ii) hereof.
(v) This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties hereto and thereto, shall be satisfactory in form and substance
to the Original Holder and the Owner Participant and shall be in full
force and effect and executed counterparts or a conformed copy, as
appropriate, shall have been delivered to the Original Holder and the
Owner Participant, or their respective special counsel; provided that
only the Original Holder shall receive executed copies of the
Certificates and the Guaranties and a certified copy of the Purchase
Agreement shall only be delivered to the Equipment Trust Trustee in
accordance with Section 8(ff) hereof and copies of the Tax Indemnity
Agreement shall only be delivered to Lessee and the Owner Participant
and their respective special counsel:
(1) the Purchase Agreement (insofar as it relates to the
Aircraft);
(2) the Purchase Agreement Assignment;
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PARTICIPATION AGREEMENT NW 1989 B
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Original Holder, the Owner Participant and
Lessee (herein called the "Acceptance Certificate") duly completed
and executed by the Owner Trustee or its agent (which may be a
representative of Lessee), by the Equipment Trust Trustee or its
agent (which may be a representative of Lessee), and by such
representative on behalf of Lessee;
(11) the Equipment Trust Agreement;
(12) the Owner Trustee's Bills of Sale;
(13) the Consent and Agreement;
(14) the Parent Letter; and
(15) the Certificates and the Guaranties.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "Operative Documents" and,
individually, as an "Operative Document".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Equipment Trust Agreement that are not covered by the recording
system established by the Federal Aviation Act, shall have been
executed and delivered by the Owner Trustee, and such financing
statement or statements shall have been duly filed in all places
necessary or advisable, and any additional Uniform Commercial Code
financing statements deemed advisable by the Owner Participant or the
Original Holder shall have been executed
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PARTICIPATION AGREEMENT NW 1989 B
and delivered by Lessee, the Owner Trustee or the Equipment Trust
Trustee and duly filed.
(vii) The Original Holder and the Owner 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
By-Laws of Lessee and a copy of resolutions of the board of directors
of Lessee, certified by a Vice President, the Secretary or an Assistant
Secretary of Lessee, duly authorizing the sale of the Aircraft and the
lease by Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the Bill of Sale,
the FAA Bill of Sale, the Purchase Agreement Assignment, the Lease, the
Lease Supplement covering the Aircraft, the Equipment Trust Agreement,
the Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on the Delivery Date in accordance
with the provisions hereof and thereof;
(2) a certified copy of the general authorizing resolutions
of the boards of directors of the Equipment Trust Trustee, the Owner
Trustee and the Owner Participant, certified as of the Delivery Date by
the Secretary or an Assistant Secretary of the Equipment Trust Trustee,
the Owner Trustee and the Owner Participant, respectively, which
authorize the execution, delivery and performance by the Equipment
Trust Trustee, the Owner Trustee and the Owner Participant of all of
the Operative Documents to which the Equipment Trust Trustee, the Owner
Trustee and the Owner Participant is a party, together with such other
documents and evidence with respect to Lessee, the Manufacturer, the
Owner Trustee, the Owner Participant, the Original Holder, the Parent,
and the Equipment Trust Trustee, as the Original Holder or the Owner
Participant, or their respective counsel, may reasonably request in
order to establish the authority of such parties to consummate the
transactions contemplated by this Agreement and the taking of all
corporate or other proceedings in connection therewith; and
(3) a certificate of Lessee as to the person or persons
authorized to execute and deliver this Agreement, the Purchase
Agreement Assignment, the Lease, the Lease Supplement covering the
Aircraft, the Equipment Trust Agreement and any other documents to be
executed on behalf of Lessee in connection with the
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PARTICIPATION AGREEMENT NW 1989 B
transactions contemplated hereby and as to the signatures of such
person or persons.
(viii) On the Delivery Date the following statements shall be
true, and the Original Holder and the Owner Participant shall have
received evidence satisfactory to it to the effect that:
(1) upon consummation of the transactions contemplated by
the Operative Documents the Equipment Trust Trustee has legal title for
security purposes only (subject to filing and recording of the
Manufacturer's Bill of Sale, the FAA Bill of Sale and the Owner
Trustee's FAA Bill of Sale with the Federal Aviation Administration) to
the Aircraft on the Delivery Date, free and clear of Liens other than
Permitted Liens;
(2) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and airworthiness in accordance with
the terms of the Lease;
(3) application for registration of the Aircraft in the
name of the Owner Trustee has been duly made with the Federal Aviation
Administration; and
(4) the Manufacturer's Bill of Sale, the FAA Bill of Sale,
the Owner Trustee's FAA Bill of Sale, the Trust Agreement, the
Equipment Trust Agreement and the Trust Supplement and the Lease and
the Lease Supplement have been duly filed for recordation (or are in
the process of being so filed for recordation) with the Federal
Aviation Administration pursuant to the Federal Aviation Act.
(ix) On the Delivery Date, the statements set forth below
shall be true and correct and the Original Holder, the Owner
Participant, the Owner Trustee and the Equipment Trust Trustee shall
have received:
(1) an Officer's Certificate of Lessee, dated the Delivery
Date, stating that (A) the representations and warranties of Lessee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement are true and accurate on and as of the Delivery
Date except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such
earlier date); (B) no event or condition has occurred and is
continuing, or would result from the consummation of the transaction
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<PAGE> 12
PARTICIPATION AGREEMENT NW 1989 B
contemplated by the Operative Documents to which it is a party, that
constitutes an Event of Default or with the giving of notice or passage
of time or both would constitute an Event of Default; (C) all covenants
and conditions required to be performed or fulfilled; by Lessee prior
to or on the Delivery Date have been performed and fulfilled; and (D)
each Operative Document to which Lessee is a party remains in full
force and effect with respect to Lessee;
(2) an Officer's Certificate of the Owner Participant, dated
the Delivery Date, stating that (A) the representations and warranties
of the Owner Participant contained in Section 8 of this Agreement are
true and accurate on and as of the Delivery Date except to the extent
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date); (B) all covenants
and conditions required to be performed or fulfilled by the Owner
Participant prior to or on the Delivery Date have been performed and
fulfilled; (C) no event or condition has occurred, or will result from
the consummation of the transactions contemplated by the Operative
Documents to which it is a party, with respect to the Owner Participant
that would constitute an ETA Default or an Event of Acceleration; and
(D) each Operative Document to which the Owner Participant is a party
remains in full force and effect with respect to the Owner Participant;
(3) an Officer's Certificate of each of the Owner Trustee and
the Equipment Trust Trustee, dated the Delivery Date, stating that (A)
the representations and warranties of the Owner Trustee or the
Equipment Trust Trustee, as the case may be, contained in Section 8 of
this Agreement are true and accurate on and as of the Delivery Date as
though made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date); (B) all covenants and
conditions required to be performed or fulfilled by the Owner Trustee
or the Equipment Trust Trustee, as the case may be, prior to or on the
Delivery Date have been performed and fulfilled; (C) in the case of the
Owner Trustee, no event or condition has occurred, or will result from
the consummation of the transactions contemplated by the Operative
Documents to which it is a party, with respect to the Owner Trustee
that would constitute an ETA Default or an Event of Acceleration; and
(D) each
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PARTICIPATION AGREEMENT NW 1989 B
Operative Document to which the Owner Trustee or the Equipment Trust
Trustee, as the case may be, is a party remains in fullT force and
effect with respect to the Owner Trustee or the Equipment Trust
Trustee, as the case may be;
(4) an Officer's Certificate of the Original Holder, dated the
Delivery Date, stating that (A) the representations and warranties of
the Original Holder contained in Section 8 of this Agreement are true
and accurate on and as of the Delivery Date except to the extent that
such representations and warranties relate solely to an earlier date
(in which case such representations and warranties shall have been true
and accurate on and as of such earlier date); (B) all covenants and
conditions required to be performed or fulfilled by the Original Holder
prior to or on the Delivery Date have been performed and fulfilled; and
(C) this Agreement is in full force and effect with respect to the
Original Holder; and
(5) an Officer's Certificate of the Parent, dated the Delivery
Date, stating that (A) the representations and warranties of the Parent
contained in the Parent Letter are true and accurate on and as of the
Delivery Date except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and
as of such earlier date); (B) all covenants and conditions required to
be performed or fulfilled by the Parent prior to or on the Delivery
Date have been performed and fulfilled; and (C) the Parent Letter
remains in full force and effect.
(x) (A) The Original Holder, the Owner Participant, the Owner
Trustee and the Equipment Trust Trustee shall have received a favorable
opinion from the General Counsel or Corporate Counsel of Lessee, in
substantially the form of Exhibit II-1 hereto, and covering such other
matters incident to the transactions contemplated hereby as they may
reasonably request.
(B) The Original Holder, the Owner Participant, the Owner
Trustee and the Equipment Trust Trustee shall have received a favorable
opinion from Cadwalader, Wickersham & Taft, special counsel for Lessee,
in substantially the form of Exhibit II-2 hereto, and covering such
other matters incident to the transactions contemplated hereby as they
may reasonably request.
(xi) The Original Holder, the Owner Participant, the Owner
Trustee, Lessee and the Equipment Trust Trustee
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PARTICIPATION AGREEMENT NW 1989 B
shall have received a favorable opinion from a counsel to the
Manufacturer, in substantially the form of Exhibit II-3 hereto.
(xii) The Original Holder, the Owner Participant, Lessee and
the Equipment Trust Trustee shall have received a favorable opinion
from Csaplar & Bok, counsel for the Owner Trustee, in substantially the
form of Exhibit II-4, and covering such other matters incident to the
transactions contemplated hereby as they may reasonably request.
(xiii) The Original Holder, the Owner Trustee, Lessee and the
Equipment Trust Trustee shall have received a favorable opinion from
Luce, Forward, Hamilton & Scripps, special counsel for the Owner
Participant and the Parent, in substantially the form of Exhibit II-5
hereto, and covering such other matters incident to the transactions
contemplated hereby as they may reasonably request.
(xiv) The Original Holder, the Owner Participant, the Owner
Trustee, Lessee and the Equipment Trust Trustee shall have received a
favorable opinion from Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, in substantially the form of Exhibit II-6
hereto, and covering such other matters incident to the transactions
contemplated hereby as they may reasonably request.
(xv) The Original Holder, the Owner Participant, the Owner
Trustee and Lessee shall have received a favorable opinion from (A)
Whitman & Ransom, special counsel for the Equipment Trust Trustee, in
substantially the form of Exhibit II-7A hereto, and covering such other
matters incident to the transactions contemplated hereby as they may
reasonably request and (B) Stevens & Lee, Pennsylvania counsel for the
Equipment Trust Trustee, in substantially the form of Exhibit II-7B
hereto, and covering such other matters incident to the transactions
contemplated hereby as they may reasonably request.
(xvi) The Owner Participant shall have received an opinion
from Avmark Inc., independent aircraft appraisers, in form and
substance satisfactory to the Owner Participant, to the effect that (1)
the fair market value of the Aircraft on the Delivery Date is not less
than Lessor's Cost and (2) the Aircraft will have, at the end of the
Basic Term, (i) at least 20% of its economic life remaining and (ii) a
fair market value of at least 20% of Lessor's Cost (without taking into
account any increase or decrease for inflation or deflation during the
Interim Term or Basic Term or the terms of any purchase option provided
in the Lease). Such appraisal shall also set forth a reasonable current
estimate of the fair market value on March 15, 2011 (taking into
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PARTICIPATION AGREEMENT NW 1989 B
account a reasonable estimate for inflation or deflation until such
date) which shall not be more than 61.98% of Lessor's Cost and shall
state that it will be commercially feasible for a third party to
utilize the Aircraft at the end of the Basic Term.
(xvii) The Original Holder and the Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to them, as to the due compliance with the terms
of Section 11 of the Lease relating to insurance with respect to the
Aircraft.
(xviii) On the Delivery Date it shall be true that no Event of
Loss (or event with which the passage of time would become an Event of
Loss) with respect to the Airframe or any Engine has occurred.
(xix) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(xx) The Owner Participant shall have received from Luce,
Forward, Hamilton & Scripps, special counsel to the Owner Participant,
a favorable opinion, in form and substance satisfactory to the Owner
Participant, with respect to certain Federal income tax aspects of the
transactions contemplated by the Operative Documents.
(xxi) In the opinion of the Owner Participant and its special
counsel, there shall have been, since January 1, 1989, no amendment,
modification, addition, or change in or to the provisions of the
Internal Revenue Code of 1986, as amended through such date (including
for this purpose, any non-Code provisions of legislation affecting the
Code such as transitional rules or effective date provisions), the
regulations promulgated under the Code (including temporary or proposed
regulations), Internal Revenue Service Revenue Procedures or Revenue
Rulings, or other administrative interpretations, applicable judicial
precedents or Executive Orders of the President of the United States,
all as in effect on January 1, 1989, the effect of which might preclude
the Owner Participant from obtaining any of the income tax benefits and
consequences assumed to be available to the Owner Participant as set
forth in Section 1 of the Tax Indemnity Agreement.
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PARTICIPATION AGREEMENT NW 1989 B
(xxii) In the opinion of special counsel to the Owner
Participant, there shall not have been any bill introduced in Congress
by a member of the House Ways and Means Committee or the Senate Finance
Committee or any legislation proposed by a member of the Executive
Branch of the Federal Government which is involved in a tax or policy
making position the enactment of which might preclude the Owner
Participant from obtaining any of the income tax benefits and
consequences assumed to be available to the Owner Participant as set
forth in Section 1 of the Tax Indemnity Agreement.
(xxiii) There shall have been, since January 1, 1989, no
pronouncement of the Financial Accounting Standards Board which in the
opinion of the Owner Participant would adversely affect the Owner
Participant's anticipated accounting treatment with respect to the
transactions contemplated by the Operative Documents.
(xxiv) 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 prior to
the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, authorizations, exemptions and approvals
shall be in full force and effect on the Delivery Date.
(xxv) The Original Holder shall have received from Messrs.
Shearman & Sterling, special counsel for the Original Holder, a
favorable opinion, satisfactory in substance and form to the Original
Holder, as to such matters incident to the transactions contemplated
hereby as the Original Holder may reasonably request.
Promptly upon the registration of the Aircraft and the recording of the
Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft
and the Trust Supplement covering the Aircraft pursuant to the Federal Aviation
Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Original Holder, the Owner Participant, the
Equipment Trust Trustee, the Owner Trustee and Lessee an opinion as to the
recording of the Manufacturer's Bill of Sale, the due and valid registration of
the Aircraft, the due recording of the FAA Bill of Sale, the Owner Trustee's FAA
Bill of Sale, the Equipment Trust Agreement, such Lease Supplement, such Trust
Supplement, the Lease and the Trust Agreement, the lack of filing of any
intervening documents with
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PARTICIPATION AGREEMENT NW 1989 B
respect to the Aircraft, and the perfection of the Equipment Trust Trustee's
security interest.
(b) Conditions Precedent to the Obligations of Lessee. It is agreed
that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee,
(B) to accept delivery of the Aircraft under the Lease and (C) to carry out its
other obligations under the Operative Documents, are all subject to the
fulfillment to the satisfaction of Lessee prior to or on the Delivery Date of
the following conditions precedent:
(i) Lessee shall have been paid Lessor's Cost for the
Aircraft.
(ii) The condition specified in Section 4(a)(xviii) hereof
shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) and such
other documents as have been reasonably requested by Lessee shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than Lessee) in the manner specified in Section 4(a)(v), shall each be
satisfactory in form and substance to Lessee, shall be in full force and effect
on the Delivery Date, and an executed counterpart of each thereof shall have
been delivered to Lessee or its special counsel.
(iv) Lessee shall have received a copy of the general
authorizing resolutions of the boards of directors of the Equipment Trust
Trustee, the Owner Trustee, the Owner Participant and the Parent, certified as
of the Delivery Date by the Secretary or an Assistant Secretary of the Equipment
Trust Trustee, the Owner Trustee, the Owner Participant and the Parent,
respectively, which authorize the execution, delivery and performance by the
Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent
of all of the Operative Documents to which the Equipment Trust Trustee, the
Owner Trustee, the Owner Participant and the Parent is a party, together with
such other documents and evidence with respect to the Equipment Trust Trustee,
the Owner Trustee, the Owner Participant and the Parent as Lessee or its special
counsel may reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all corporate or
other proceedings in connection therewith and compliance with the conditions
herein set forth.
(v) Lessee shall have received the certificates referred to in
Section 4(a)(ix) other than Lessee's own certificate.
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PARTICIPATION AGREEMENT NW 1989 B
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xi), 4(a)(xii), 4(a)(xiii), 4(a)(xiv) and 4(a)(xv), in
each case addressed to Lessee and dated the Delivery Date and in each
case in substantially the form of the applicable exhibit hereto, and
covering such other matters incident to the transactions contemplated
hereby as it may reasonably request.
(vii) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(viii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations by appropriate regulatory
authorities which, in the opinion of Lessee or its special counsel,
would make it a violation of law or regulations for the Original
Holder, the Owner Participant or Lessee to participate in the
transactions contemplated by the Operative Documents.
(ix) In the opinion of Lessee and its special counsel, there
shall have been, since January 1, 1989, no amendment, modification,
addition or change in or to the Internal Revenue Code of 1986, as
amended through such date (including for this purpose, any non-Code
provisions of legislation affecting the Code such as transitional rules
or effective date provisions), the regulations promulgated under the
Code (including temporary or proposed regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States, all as in effect on January 1,
1989, the effect of which might give rise to an indemnity obligation
under any of the Operative Documents or prevent or restrict the
pass-through of investment tax credit to Lessee or increase the Net
Present Value of Rents.
(x) In the opinion of special counsel to Lessee, there shall
have not been any bill introduced in Congress by a member of the House
Ways and Means Committee or the Senate Finance Committee or any
legislation proposed by a member of the Executive Branch of the Federal
Government which is involved in a tax or policy making position the
enactment of which might give rise to an indemnity obligation under any
of the Operative Documents or prevent or restrict the pass-through of
investment tax credit to Lessee.
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PARTICIPATION AGREEMENT NW 1989 B
(xi) There shall have been, since January 1, 1989, no
pronouncement of the Financial Accounting Standards Board which in the
opinion of Lessee would adversely affect Lessee's anticipated
accounting treatment with respect to the transactions contemplated by
the Operative Documents.
(xii) 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 prior to
the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, authorizations, exemptions and approvals
shall be in full force and effect on the Delivery Date.
(xiii) Lessee shall have received an opinion from a recognized
independent aircraft appraiser selected by Lessee to the effect that
(A) the Aircraft will have, at the end of the Basic Term, at least 25%
of its economic life remaining, (B) the fair market value of the
Aircraft on the Delivery Date is at least equal to Lessor's Cost and
(C) the fair market value of the Aircraft on March 15, 2011 (taking
into account a reasonable estimate for inflation during the Interim
Term and the Basic Term but without taking into account any purchase or
renewal options provided in the Lease) is equal to or less than 61.98%
of Lessor's Cost.
SECTION 5. [Intentionally Omitted]
SECTION 6. Extent of Interest of Holders. No Holder shall have any
further interest in, or other right with respect to, the Estate when and if the
principal of, premium, if any, and interest on all Certificates held by such
Holder and all other sums payable to such Holder hereunder, under the Equipment
Trust Agreement and under such Certificates shall have been paid in full. The
Original Holder agrees that it will look solely to the income and proceeds from
the Estate to the extent available for distribution to such Holder as provided
in Article 3 of the Equipment Trust Agreement and that none of the Owner
Participant, the Equipment Trust Trustee or the Owner Trustee shall be
personally liable to the Original Holder for any amounts payable under the
Certificates, the Equipment Trust Agreement or hereunder, except as expressly
provided in this Agreement or (in the case of the Equipment Trust Trustee and
the Owner Trustee) in the Equipment Trust Agreement.
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PARTICIPATION AGREEMENT NW 1989 B
SECTION 7. Lessee's Representations, Warranties and Indemnities.
(a) In General. Lessee represents, warrants and covenants that as of
the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is an "air
carrier" within the meaning of the Federal Aviation Act operating under
a certificate of public convenience and necessity issued by the Civil
Aeronautics Board (or the Department of Transportation); has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; and has the corporate
power and authority to own or hold under lease its properties wherever
located or used and to enter into and perform its obligations under
this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Purchase
Agreement Assignment, the Equipment Trust Agreement, the Lease, the
Lease Supplement covering the Aircraft, and the Tax Indemnity
Agreement;
(ii) the execution, delivery and performance by Lessee of this
Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Purchase
Agreement Assignment, the Equipment Trust Agreement, the Lease, the
Lease Supplement covering the Aircraft, and the Tax Indemnity Agreement
will, on the Delivery Date, have been duly authorized by all necessary
corporate action on the part of Lessee, do not require any stockholder
approval, or approval or consent of any trustee or holders of any
indebtedness or obligations of Lessee except such as have been duly
obtained or by the Delivery Date will have been duly obtained, and none
of such agreements contravenes any law, judgment, government rule,
regulation or order binding on Lessee or the certificate of
incorporation or by-laws of Lessee or contravenes the provisions of, or
constitutes a default under, or results in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee under, any
indenture, mortgage, contract or other agreement to which Lessee is a
party or by which it or its properties may be bound or affected;
(iii) neither the execution and delivery by Lessee of this
Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Purchase
Agreement Assignment, the Equipment Trust Agreement, the Lease, the
Lease Supplement covering the Aircraft, and the Tax Indemnity Agreement
nor the performance by Lessee of its obligations hereunder or
thereunder require the consent or approval of, the giving of
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PARTICIPATION AGREEMENT NW 1989 B
notice to, or the registration with, or the taking of any other action
in respect of any Federal, State or foreign government authority or
agency, except for (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee, which
orders, permits, waivers, exemptions, authorizations and approvals have
been duly obtained and are, or will on the Delivery Date be, in full
force and effect (other than a flying time wire, all steps to obtain
the issuance of which will have been, on the very Date, taken or caused
to be taken by Lessee), and the registration and filings referred to in
Section 7(a)(vi) and (B) any normal periodic and other reporting
requirements under the applicable rules and regulations of the Federal
Aviation Administration to the extent required to be given or obtained
only after the Delivery Date;
(iv) on the Delivery Date this Agreement, the Bill of Sale,
the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to
the Aircraft), the Purchase Agreement Assignment, the Equipment Trust
Agreement, the Lease, the Lease Supplement covering the Aircraft and
the Tax Indemnity Agreement will each constitute, legal, valid and
binding obligations of Lessee enforceable against Lessee in accordance
with the terms thereof (subject to the qualifications set forth in
clause (4) of the opinion of special counsel to Lessee attached as
Exhibit II-2 hereto);
(v) except as may have been disclosed prior to the date of
execution and delivery hereof to the Owner Participant and the Original
Holder in writing by a letter delivered to the Owner Participant and
the Original Holder prior to the execution and delivery hereof and
making reference to this Agreement, there are no pending or threatened
actions or proceedings before any court or administrative agency which
might materially adversely affect the ability of Lessee to perform its
obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft in the
name of the Owner Trustee pursuant to the Federal Aviation Act, (B) the
filing for recording pursuant to said Act of the Trust Agreement, the
Lease with the Lease Supplement covering the Aircraft, the Equipment
Trust Agreement and the Trust Supplement attached thereto and made a
part thereof, the Equipment Trust Agreement with the Trust Agreement
and the Trust Supplement attached thereto and made a part thereof, the
Manufacturer's Bill of Sale, the FAA Bill of Sale and the Owner
Trustee's FAA Bill of Sale for the Aircraft, (C) the filing of
financing statements (and continuation statements at periodic
intervals) with respect to the security and other interests created by
such
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PARTICIPATION AGREEMENT NW 1989 B
documents under the Uniform Commercial Code of Minnesota and
Massachusetts and such other States as may be specified in the opinion
of special counsel to Lessee attached as Exhibit II-2 hereto, and (D)
the taking of possession by the Equipment Trust Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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 Owner
Trustee's rights and interest in, and the legal title to and security
interest of the Equipment Trust Trustee in, the Aircraft as against
Lessee and any third parties in any applicable jurisdictions in the
United States;
(vii) on the Delivery Date, Lessee is solvent and will not be
rendered insolvent by the sale of the Aircraft; after the sale of the
Aircraft the capital of Lessee will not be unreasonably small for the
conduct of the business in which Lessee is engaged or is about to
engage; Lessee has no intention or belief that it is about to incur
debts beyond its ability to pay as they mature; and Lessee's sale of
the Aircraft is made without any intent to hinder, delay or defraud
either present or future creditors;
(viii) on the Delivery Date, the Equipment Trust Trustee will
be given legal title to the Aircraft for security purposes only to hold
in trust for the benefit of the Holders of the Certificates and the
Equipment Trust Trustee and the Owner Trustee will together receive
good and marketable title to the Aircraft free and clear of all Liens,
except Permitted Liens;
(ix) no part of the proceeds from the sale of the Certificates
or from the acquisition by the Owner Participant of its beneficial
interest in the Trust Estate will be used directly or indirectly by
Lessee to purchase or carry any "margin security" as such term is
defined in Regulation O of the Board of Governors of the Federal
Reserve System or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry such
margin security or for any other purpose which might cause the
transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning of Regulation X of the Board of Governors of
the Federal Reserve System;
(x) the statement of financial position of Lessee as of
December 31, 1987 and the related statements of earnings and changes in
financial position of Lessee for the period then ended, copies of which
have been furnished to
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PARTICIPATION AGREEMENT NW 1989 B
the Original Holder and the Owner Participant, fairly present the
financial condition of Lessee as at such date and the results of
operations of Lessee for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied and since December 31, 1987, there has been no material adverse
change in such condition or operations;
(xi) on the Delivery Date, Lessee shall not be in material
default in the performance of any term or condition of the Purchase
Agreement;
(xii) on the Delivery Date, no governmental approval of any
kind is required of the Owner Participant, the Owner Trustee or the
Equipment Trust Trustee for their respective execution of or
performance under this Agreement or any agreement contemplated hereby
by reason of any fact or circumstance of Lessee, the nature of the
Aircraft or Lessee's proposed operations or use of the Aircraft; and
(xiii) on the Delivery Date, all sales or use tax then due and
for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings (and for which
Lessee shall have established adequate reserves) so long as such
proceedings do not involve any danger of the sale, forfeiture or loss
of the Aircraft.
(b) General Tax Indemnity. [Intentionally Omitted]
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PARTICIPATION AGREEMENT NW 1989 B
(c) General Indemnity. [Intentionally Omitted]
24
<PAGE> 25
SECTION 8. Representations, Warranties and Covenants.
(a) The Owner Participant represents and warrants that it is acquiring
its interest in the Trust Estate for investment and not with a present intent as
to any resale or distribution thereof (subject nonetheless to any requirement of
law that the disposition of its properties shall at all times be and remain
within its control) and that neither it nor anyone acting on its behalf has
directly or indirectly offered any interest in the Trust Estate or any
Certificates or any similar securities for sale to, or solicited any offer to
acquire any of the same from, anyone. The Owner Participant covenants and
warrants that it will not transfer all or any portion of its interest in the
Trust Estate except in accordance with Section 8(n) of this Agreement.
(b) Lessee represents and warrants that neither Lessee nor anyone
acting on behalf of Lessee has directly or indirectly
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PARTICIPATION AGREEMENT NW 1989 B
offered any interest in the Trust Estate for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Owner Participant and not
more than 40 institutions believed capable of evaluating and bearing the risks
of investment in the transaction contemplated hereby. Lessee represents that
neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly
offered any Certificate or Certificates for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Original Holder and not more
than 10 institutions believed capable of evaluating and bearing the risks of
investment in the transaction contemplated hereby.
(c) Each of the Owner Participant and The First National Bank of
Boston, in its individual capacity, represents and warrants to the other parties
to this Agreement that it is, and on the Delivery Date will be, a "citizen of
the United States" as defined in Section 101(16) of the Federal Aviation Act.
The Owner Participant agrees, solely for the benefit of Lessee and the Holders,
that if (i) it shall cease to be a "citizen of the United States" within the
meaning of Section 101(16) of the Federal Aviation Act and (ii) the Aircraft
shall or would therefore become ineligible for registration in the name of the
Owner Trustee under the Federal Aviation Act and regulations then applicable
thereunder, then the Owner Participant shall (at its own expense and without any
reimbursement or indemnification from Lessee) promptly effect voting trust or
other similar arrangements or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft; provided, however, that during any period during which the Aircraft
shall be registered in a country other than the United States pursuant to
Section 8(f) hereof the Owner Participant shall take the actions referred to in
this sentence only if, and promptly after being, directed to do so by Lessee
upon Lessee's determination to re-register the Aircraft in the United States. It
is understood that: (A) the Owner Participant shall be liable to any of the
other parties hereto and any Holder for any damages suffered by any such other
party or any Holder as the result of the representation and warranty of the
Owner Participant in the first sentence of this Section 8(c) proving to be
untrue as of the Delivery Date; and (B) the Owner Participant shall be liable to
Lessee, any Sublessee and the Holders for any damages which may be suffered by
Lessee, any Sublessee or the Holders as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole expense
of the Owner Participant, to cooperate with the Owner Participant in complying
with its obligations under the provisions of the second sentence of this Section
8(c). The First National Bank of Boston, in its individual capacity, agrees that
if at any time a Responsible Officer or responsible employee
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PARTICIPATION AGREEMENT NW 1989 B
of the Corporate Trust Department of The First National Bank of Boston shall
obtain Actual Knowledge that The First National Bank of Boston has ceased to be
a "citizen of the United States" within the meaning of Section 101(16) of the
Federal Aviation Act, it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Holders, Lessee or the
Owner Participant), effective upon the appointment of a successor Owner Trustee
in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant
or The First National Bank of Boston, in its individual capacity, does not
comply with the requirements of this Section 8(c), the Owner Trustee, the
Equipment Trust Trustee and the Owner Participant hereby agree that an Event of
Default (or an event which would constitute an Event of Default but for lapse of
time or the giving of notice or both) shall not have occurred and be continuing
under the Lease due to non-compliance by Lessee with the registration
requirements in the Lease.
(d) The First National Bank of Boston in its individual capacity
represents and warrants that both the principal place of business of the Owner
Trustee and the place where its records concerning the Aircraft and all of its
interest in, to and under the Operative Documents to which it is a party are
kept is Boston, Massachusetts. The First National Bank of Boston in its
individual capacity agrees that it will not change the location of such office
to a location outside of Boston, Massachusetts without prior written notice to
all parties to this Agreement. The First National Bank of Boston in its
individual capacity further represents and warrants that (A) on the Delivery
Date the Owner Trustee shall have received whatever title to the Aircraft as was
conveyed to it by Lessee, and (B) the Trust Agreement, and, assuming due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant, this Agreement, the Equipment Trust Agreement, the Trust
Supplement, the Lease, the Lease Supplement covering the Aircraft, the
Guaranties, and the Purchase Agreement Assignment, when executed and delivered,
shall have been duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such instruments on behalf of the Owner
Trustee. The First National Bank of Boston in its individual capacity represents
that it has not offered any interest in the Trust Estate or any Certificate or
Certificates for sale to, or solicited any offer to acquire the same from,
anyone, and that no responsible officer or responsible employee of the Corporate
Trust Department of The First National Bank of Boston has knowledge of any such
offer or solicitation except as described in Section 8(b).
(e) The Owner Trustee shall, promptly upon receipt of monies from the
Equipment Trust Trustee pursuant to Section 7.01 of the Equipment Trust
Agreement, pay an amount equal to such
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PARTICIPATION AGREEMENT NW 1989 B
monies to Lessee as a rebate of the Rent theretofore paid under the Lease.
(f) Each of the Original Holder, the Owner Participant and the
Equipment Trust Trustee agrees that, at any time on or after the fifth
anniversary of the Delivery Date, but subject to the matters set forth in this
Section 8(f), including the second paragraph hereof, Lessee at its expense and
with the prior written consent of the Owner Participant, may register the
Aircraft in a country other than the United States in the name of the Owner
Trustee (or, if appropriate, in the name of Lessee or a Sublessee as a "lessee"
or a "sublessee"). Upon receipt of such request and consent, the Owner
Participant shall instruct the Owner Trustee to, and the Equipment Trust Trustee
shall, take whatever action is necessary or appropriate to effectuate such
change of registration, if prior thereto the Original Holder, the Owner
Participant and the Equipment Trust Trustee shall have received:
(i) a written request by the Company for such change of
registration;
(ii) (A) a statement in writing of Standard & Poor's
Corporation, Moody's Investors Service, Inc. or other rating agency of
recognized national standing, to the effect that on any date not
earlier than 60 days prior to such change of registration, the
Certificates were rated not less than BBB/Baa2 or equivalent rating,
and (B) a statement of any such rating agency (which may but need not
be the same rating agency furnishing the statement referred to in the
immediately preceding clause (A)) to the effect that after giving
effect to such change in registration, the Certificates will be rated
not less than the rating thereof in effect immediately prior to such
change of registration;
(iii) an Officer's Certificate of Lessee to the effect that
(A) Lessee will be in compliance with the insurance provisions of the
Lease immediately after giving effect to such change of registration,
(B) Lessee will pay all expenses of the Owner Participant, the Owner
Trustee and the Equipment Trust Trustee in connection therewith, and
(C) such new country of registry imposes aircraft maintenance standards
not materially different from those of the FAA;
(iv) an Opinion of Counsel to the effect that such change of
registration will not (A) expose the Owner Participant, the Original
Holder, the Owner Trustee or the Equipment Trust Trustee to any risk
(other than the risk of imposition of any tax) which they are not
indemnified against under Section 7(c) of this Agreement (as in effect
at such time or as proposed to be amended in connection therewith), (B)
affect the lien of the Equipment Trust
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PARTICIPATION AGREEMENT NW 1989 B
Agreement as a first priority lien on the Aircraft and on the amounts
of Rent payable under the Lease which are assigned as security to the
Equipment Trust Trustee, or (C) result in the imposition of, or
increase in the amount of, any Tax for which Lessee is not required to
indemnify an Indemnitee pursuant to Section 7(b) of this Agreement (as
in effect at such time or as proposed to be amended in connection
therewith) or pursuant to the Tax Indemnity Agreement; and
(v) a favorable opinion, of counsel reasonably satisfactory to
the Original Holder, the Owner Participant and the Equipment Trust
Trustee in the proposed jurisdiction of registry, to the effect that
(A) the terms (including, without limitation, the governing-law,
service-of-process and jurisdiction-submission provisions thereof) of
the Lease and the Equipment Trust Agreement are legal, valid, binding
and enforceable in such country, (B) it is not necessary for the Owner
Participant, the Owner Trustee, the Holders or the Equipment Trust
Trustee to register or qualify to do business in such country, (C)
there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such country (it being understood
that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is obtained
to cover such risk), and (D) to such further effect with respect to
such other matters as the Owner Participant may reasonably request.
If the Owner Participant shall not have determined, acting reasonably,
that the proposed country of registration would not provide substantially
equivalent protection for the rights of owner participants and lessors in
similar transactions as provided under United States law, the Owner Participant
shall not unreasonably withhold its consent to such change of registration,
provided that, in addition to the matters referred to in (i) through (v) above,
(I) the Opinion of Counsel referred to in clause (iv) above
shall be satisfactory to the Owner Participant;
(II) unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of such jurisdiction so long as the Aircraft is registered
under the laws of such jurisdiction, the Opinion of Counsel referred to
in clause (v) above shall also be to the effect that the laws of such
jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United States
Dollars
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PARTICIPATION AGREEMENT NW 1989 B
for the loss of use of the Aircraft in the event of the requisition by
such government of such use; and
(III) it is understood that, in making its determinations
under this Section 8(f), the Owner Participant shall be entitled to
take into consideration the relative creditworthiness of the government
of the proposed country of registration.
(g) The Owner Participant represents and warrants as follows:
(i) the Owner Participant is a corporation duly organized and
validly existing in good standing under the laws of the State of
California, and has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties
and to enter into and perform its obligations under this Agreement, the
Tax Indemnity Agreement and the Trust Agreement;
(ii) this Agreement, the Tax Indemnity Agreement and the Trust
Agreement have been duly authorized by all necessary corporate action
on the part of the Owner Participant, do not require any approval not
already obtained of stockholders of the Owner Participant or any
approval or consent not already obtained of any trustee or holders of
any indebtedness or obligations of the Owner Participant, and have been
duly executed and delivered by the Owner Participant, and neither the
execution and delivery thereof by the Owner Participant, nor the
consummation of the transactions contemplated thereby by the Owner
Participant, nor compliance by the Owner Participant with any of the
terms and provisions thereof will contravene any United States Federal
or state law, judgment, governmental rule, regulation or order
applicable to or binding on the Owner Participant (it being understood
that no representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules, or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, corporate charter, by-law or
other agreement or instrument to which the Owner Participant is a party
or by which it or its properties may be bound or affected;
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PARTICIPATION AGREEMENT NW 1989 B
(iii) each of this Agreement, the Tax Indemnity Agreement and
the Trust Agreement constitutes a legal, valid and binding obligation
of the Owner Participant enforceable against the Owner Participant in
accordance with the terms thereof (subject to the qualifications on
enforceability set forth in the opinion of special counsel to the Owner
Participant and the Parent attached as Exhibit II-5 hereto);
(iv) except as may have been disclosed prior to the date of
execution and delivery hereof to the Original Holder and Lessee in
writing by a letter delivered to the Original Holder and Lessee prior
to the execution and delivery hereof and making reference to this
Agreement, there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the ability of the Owner Participant to perform its obligations under
this Agreement, the Tax Indemnity Agreement and the Trust Agreement;
and
(v) on the Delivery Date, there will be no Lessor Liens
attributable to the Owner Participant (including for this purpose Liens
that would be Lessor Liens but for the proviso to the definition of
Lessor Liens), and, upon the acquisition by the Owner Trustee of title
to the Aircraft, there will be no Lessor Liens attributable to the
Owner Participant affecting the title of the Owner Trustee to the
Aircraft or any part of the Trust Estate or the Estate.
(h) Each of The First National Bank of Boston in its individual
capacity and the Owner Participant covenants and agrees that it shall not cause
or permit to exist a Lessor Lien attributable to it with respect to the Aircraft
or any other portion of the Trust Estate or the Estate. Each of The First
National Bank of Boston in its individual capacity and the Owner Participant
agrees that it will promptly, at its own expense, take such action as may be
necessary duly to discharge such Lessor Lien attributable to it. Each of The
First National Bank of Boston in its individual capacity and the Owner
Participant agrees to make restitution to the Trust Estate or the Estate for any
actual diminution of the assets of the Trust Estate or the Estate, as the case
may be, resulting from such Lessor Liens attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate or the Estate for any
actual diminution of the assets of the Trust Estate or the Estate, as the case
may be, resulting from any Taxes or Expenses (as such terms are defined in
Section 7 hereof) imposed on the Trust Estate or the Estate against which Lessee
is not required to indemnify the Trust Estate, the Estate or the Original Holder
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PARTICIPATION AGREEMENT NW 1989 B
pursuant to Section 7 hereof, except for taxes referred to in Sections
7(b)(ii)(13) and (14).
(i) Meridian Trust Company in its individual capacity covenants and
agrees that it shall not cause or permit to exist any Trustee's Liens with
respect to the Trust Estate or the Estate. Meridian Trust Company in its
individual capacity agrees that it will promptly, at its own expense, take such
action as may be necessary duly to discharge such Trustee's Liens. Meridian
Trust Company in its individual capacity agrees to make restitution to the
Estate for any actual diminution of the assets of the Trust Estate or the Estate
resulting from such Trustee's Liens.
(j) The Owner Participant represents and warrants that it has a Net
Worth in excess of $50,000,000 on the Delivery Date and covenants and agrees
that it shall maintain a Net Worth in excess of $50,000,000 until such time as
it shall have satisfied all of its obligations under the Operative Documents.
The Owner Participant further covenants and agrees that it shall deliver to the
Lessee, within 45 days after the end of each quarter of each fiscal year of the
Owner Participant, a certificate of a financial officer of the Owner Participant
which shall certify as to the Net Worth of the Owner Participant as of the end
of such quarter and shall notify the Lessee if at any time the Owner
Participant's Net Worth is less than $50,000,000, provided that no such notice
shall be required where the Parent has complied with the corresponding notice
requirements set forth in the Parent Letter. If at any time the Owner
Participant or, if the Owner Participant is a Partnership Transferee (as defined
in Section 8(n)), [__________________], has Actual Knowledge that its Net Worth
is less than $50,000,000, the Owner Participant or [__________________], as
applicable, covenants and agrees that it shall immediately transfer all of its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement to a "Transferee" meeting the requirements of clause (A) or (B)
of the definition of "Transferee" in Section 8(n) which is not an Affiliate of
the Owner Participant or [__________________], as applicable, and which meets
all of the other requirements of Section 8(n), provided that the Owner
Participant or [__________________], as applicable, shall not be required to
make such transfer for a period of up to 60 days from the date it has such
Actual Knowledge if and so long as the Owner Participant or
[__________________], as applicable, is proceeding with due diligence to comply
with the requirements of the first sentence of this Section 8(j). "Net Worth"
shall mean the excess of total assets over total liabilities, determined in
accordance with generally accepted accounting principles consistently applied.
(k) The Owner Trustee shall, on any Redemption Date, pay to Lessee, as
a rebate of the Rent theretofore paid, the
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PARTICIPATION AGREEMENT NW 1989 B
amount, if any, by which the estimated premium paid by Lessee exceeds the actual
premium due in the case of a redemption pursuant to Section 6.01(B), (C) or (E)
of the Equipment Trust Agreement.
(l) Lessee or any Affiliate of Lessee shall not, directly or
indirectly, purchase any outstanding Certificates; provided, however, that
during the period between any Lease Period Date and the next succeeding Lease
Period Date, Lessee may purchase Certificates maturing on such next succeeding
Lease Period Date; provided, further, however, that any and all such
Certificates so purchased shall be surrendered for cancellation on such Lease
Period Date, as provided in Section 3(c) of the Lease. Lessee represents and
warrants that in the event that Lessee exercises its purchase option pursuant to
Section 19(d) of the Lease and does not assume pursuant to Section 8(x) of the
Participation Agreement and Section 11.01(6) of the Equipment Trust Agreement
all of the obligations of Lessor under the Equipment Trust Agreement and the
Guaranties, the purchase price of 61.98% of Lessor's Cost, together with any
installment of Basic Rent due on the date the Aircraft is purchased pursuant to
Section 19(d) (if Basic Rent is payable in arrears on such date as indicated on
Exhibit B), will be at least sufficient to pay in full any payments then
required to be made on account of the principal of and interest on the
Certificates.
(m) The Equipment Trust Trustee in its individual capacity represents
and warrants to and covenants and agrees with Lessee, the Owner Trustee, the
Original Holder and the Owner Participant as follows:
(i) it is a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act, will notify promptly all
parties to this Agreement if in its reasonable opinion its status as a
"citizen of the United States" is likely to change and that it will
resign as Equipment Trust Trustee as provided in Section 9.08 of the
Equipment Trust Agreement if it should cease to be a "citizen of the
United States";
(ii) it is a Pennsylvania trust company duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation and has the corporate power and authority to enter
into and perform its obligations under the Equipment Trust Agreement
and this Agreement and to issue the Certificates to be delivered on the
Delivery Date;
(iii) the Equipment Trust Agreement and this Agreement, and
the issuance of the Certificates to be delivered on the Delivery Date
have been duly authorized by all necessary corporate action on its
part, and neither the
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PARTICIPATION AGREEMENT NW 1989 B
execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or Pennsylvania law or
regulation relating to its trust powers or contravene or result in any
breach of, or constitute any default under its charter or by-laws or
the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it or its properties may be bound or
affected; and
(iv) each of the Certificates to be delivered on
the Delivery Date, the Equipment Trust Agreement, the Trust Supplement
and this Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, the Certificates to be
delivered on the Delivery Date, the Equipment Trust Agreement, the
Trust Supplement and this Agreement is the legal, valid and binding
obligation of the Equipment Trust Trustee, enforceable in accordance
with its terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights.
(n) The Owner Participant will not sell, assign, convey or otherwise
transfer any of its right, title or interest in and to this Agreement, the Trust
Estate or the Trust Agreement to any person or entity, unless (i) the Owner
Participant is not in default in the performance of any of its obligations
hereunder or under the Trust Agreement, (ii) the proposed transferee is a
"Transferee" (as defined below), (iii) the Owner Participant shall have
delivered to the Owner Trustee, Lessee and the Equipment Trust Trustee an
opinion of counsel reasonably satisfactory to Lessee to the effect that such
transfer does not violate any Federal securities law then in effect and is
otherwise permitted by this Section 8(n), and that each agreement to be
delivered pursuant to this Section 8(n) is the legal, valid and binding
obligation of the Transferee, any guarantor, the Parent and
[__________________], as applicable, subject to the qualification on
enforceability set forth in the opinion of the Owner Participant's counsel
attached as Exhibit II-5 hereto, and (iv) Lessee shall have (1) received an
opinion (in form and substance satisfactory to Lessee in its reasonable
judgment) of counsel to the Owner Participant (who shall be reasonably
satisfactory to Lessee) to the effect that such transfer will not result in a
material risk of loss of tax benefits (including, without limitation, recapture
of investment tax credit) to or a material increase in the tax liability of
Lessee and (2) received from the Owner Participant so seeking to transfer such
right, title or interest reasonably satisfactory indemnification for any loss of
tax benefits to or increase in the tax liability of Lessee. A "Transferee" shall
mean any of (A) a bank or other financial institution with a combined capital,
surplus and
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PARTICIPATION AGREEMENT NW 1989 B
undivided profits of at least $50,000,000 or a corporation whose net worth is at
least $50,000,000 determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution or
corporation, provided that such bank, financial institution or corporation
furnishes to the Owner Trustee, the Equipment Trust Trustee and Lessee a
guaranty satisfactory to the Owner Trustee, Lessee, and the Equipment Trust
Trustee with respect to the Transferee's obligations as Owner Participant, in
the case of the Owner Trustee, under the Trust Agreement and, in the case of the
Equipment Trust Trustee and Lessee, the Owner Participant's obligations
hereunder including, but not limited to, Section 8(c) and Section 8(h) hereof,
or (C) any direct or indirect wholly-owned subsidiary of the Parent, provided
that the Parent furnishes to the Owner Trustee, the Equipment Trust Trustee and
Lessee a letter in the form of the Parent Letter reasonably satisfactory to the
Owner Trustee, the Equipment Trust Trustee and Lessee with respect to the
Transferee, or (D) a limited partnership provided that (i) [__________________]
is the sole general partner of such limited partnership and no other partner of
such limited partnership is of a type described in the final proviso to this
sentence, (ii) [____________________] satisfies the requirements of clause
(A) above, and (iii) the Parent furnishes to the Owner Trustee, the Equipment
Trust Trustee and Lessee a letter in the form of the Parent Letter satisfactory
to the Owner Trustee and Lessee with respect to [__________________] in its
individual capacity and as general partner of such Transferee; provided,
however, that without the prior written consent of Lessee, any Transferee shall
not be an airline, a commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or other similar person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person. Each such transfer to a Transferee shall be subject to the conditions
that (M) upon giving effect to such transfer, the Transferee or, if the
Transferee is a Partnership Transferee (as hereinafter defined), each partner of
such Transferee, is a "citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation Act, and has full power and authority to
enter into the transactions contemplated hereby, (N) the Transferee has the
requisite power and authority to enter into and carry out the transactions
contemplated hereby, (O) the Transferee enters into an agreement or agreements,
in form and substance reasonably satisfactory to the Owner Trustee, the
Equipment Trust Trustee and Lessee, whereby the Transferee confirms that it
shall be deemed a party to this Agreement and a party to the Trust Agreement and
agrees to be bound by all the terms of, and to undertake all of the obligations
of the transferor Owner Participant contained in, the Trust Agreement, the Tax
Indemnity Agreement and this Agreement
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PARTICIPATION AGREEMENT NW 1989 B
(to the extent of the participation so transferred to it), (P) such transfer
does not violate any provision of the Federal Aviation Act, or any rules or
regulations promulgated thereunder or create a relationship which would be in
violation thereof or violate any provisions of the Securities Act of 1933, as
amended, the Trust Indenture Act, or any other applicable law, (Q) the
transferor Owner Participant assumes the risk of any loss of Interest
Deductions, California Depreciation Deductions, Amortization Deductions, FSC
Benefits and ACRS Deductions and the risk of any Inclusion Event (each as
defined in the Tax Indemnity Agreement) resulting from such transfer, and (R)
the transferor Owner Participant pays all of the reasonable expenses (including,
without limitation, fees and expenses of counsel) incurred by the transferor
Owner Participant, the Transferee the Owner Trustee, Lessee and the Equipment
Trust Trustee in connection with such transfer. In addition to the foregoing
conditions, each such transfer to a Transferee described in clause (D) above (a
"Partnership Transferee") shall be subject to the additional conditions that (I)
each of the Partnership Transferee and [__________________] in its individual
capacity enter into such amendments to this Agreement, the Trust Agreement and
the Tax Indemnity Agreement, in form and substance reasonably satisfactory to
the Owner Trustee and Lessee, as Lessee shall require to take into account the
Owner Participant's status as a limited partnership and not a corporation and to
make [__________________] a party thereto in its individual capacity, provided
that Lessee shall not be required to bear any increased or additional risks or
to pay any increased or additional amounts as a result of any such amendment
over those it would bear if the Owner Participant were to continue to be a
corporation, such amendments, to include, without limitation, (a) undertakings
by each of the Partnership Transferee and [__________________] in its individual
capacity that [ ] shall remain the sole general partner of
the Partnership Transferee and shall not transfer any of its right, title or
interest as general partner in the Partnership Transferee at any time while this
Agreement remains in effect, it shall not remove [__________________] as general
partner or admit any additional general partners to the Partnership Transferee,
it shall not amend or modify the limited partnership agreement, certificate of
limited partnership or any other governing instruments of the Partnership
Transferee (except for the admission of limited partners), without the prior
written consent of Lessee, which consent shall not be unreasonably withheld
provided that such amendment or modification does not violate or conflict with
the terms of this Section 8(n), it shall not admit to the Partnership Transferee
as a limited partner any Person which does not satisfy the requirements of
clause (III) of this Section 8(n) and it shall cause each limited partner of the
Partnership Transferee to enter into an agreement or agreements as provided in
clause (III) of this Section 8(n), (b) an amendment to the definition of "Lessor
Liens" to include any Liens attributable to the Partnership
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PARTICIPATION AGREEMENT NW 1989 B
Transferee or any partner thereof and (c) a guaranty by [ ]
in its individual capacity with respect to the obligations of the Partnership
Transferee under this Agreement, the Trust Agreement and the Tax Indemnity
Agreement, as so amended, (II) [ ] transfers 100% of the
Owner Participant's right, title and interest hereunder to such Partnership
Transferee and (III) each limited partner of the Partnership Transferee shall
(a) have a net worth in excess of $50,000,000, determined in accordance with
generally accepted accounting principles and not be of a type described in the
final proviso to the second sentence of this Section 8(n) and (b) execute and
deliver an agreement or agreements reasonably satisfactory to Lessee pursuant to
which such limited partner agrees (i) to perform and comply with any obligations
which a limited partner may have pursuant to Section 7(c) of this Agreement and
the Tax Indemnity Agreement (as amended pursuant to this Section 8(n)), (ii) to
not cause or permit to exist a Lessor Lien attributable to it with respect to
the Aircraft or any other portion of the Trust Estate or the Estate and to
promptly, at its own expense, take such action as may be necessary duly to
discharge such Lessor Lien attributable to it, (iii) that the provisions of
Section 8(c) of this Agreement are applicable to it as if it were the Owner
Participant and to be liable for any damages suffered as a result of its failure
to comply with its obligations pursuant to such Section 8(c) and (iv) to
withhold consent or approval to any action inconsistent with clause (I)(a) above
and not to transfer any of its right, title or interest in the Partnership
Transferee at any time while this Agreement remains in effect except to a Person
which becomes a limited partner of the Partnership Transferee and satisfies the
requirements of this clause (III).
Upon any such transfer by the Owner Participant as above provided, the
Transferee shall be deemed the Owner Participant for all purposes hereof and of
the other Operative Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be to the Transferee
and the transferor Owner Participant shall be relieved of all its obligations
arising under the Operative Documents after the date of such transfer except to
the extent fairly attributable to acts or events occurring on or prior thereto
and not assumed by the transferee Owner Participant (in each case, to the extent
of the participation so transferred) provided that any reference in this Section
8(n) to "[ ]" shall continue to be a reference to
"[ ]" only and shall not be deemed a reference to any
Transferee.
(o) Notwithstanding the provisions of Section 8(x) hereof, Lessee shall
not be entitled to assume the Guaranties on a Termination Date or on the date
for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such
Termination
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PARTICIPATION AGREEMENT NW 1989 B
Date or such date pursuant to Section 19(d) of the Lease an Event of Default
shall have occurred and be continuing or any condition or event shall exist
which, with the passage of time or giving of notice or both, would become such
an Event of Default.
(p) The First National Bank of Boston and Meridian Trust Company, each
in its individual capacity, agrees for the benefit of the Owner Participant and
Lessee to comply with the terms of the Equipment Trust Agreement which it is
required to comply with in its individual capacity.
(q) (A) Each of the Original Holder and the Owner Participant
represents and warrants that it is not acquiring its interest in the Trust
Estate, any Certificate or any interests represented thereby with the assets of
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan"
within the meaning of Section 4975(e)(1) of the Code. After the Delivery Date,
each of the Original Holder and the Owner Participant agrees that it shall not
take any action with respect to its participation in the transactions
contemplated hereby that would result in a prohibited transaction under Section
406 or 407 of ERISA or Section 4975 of the Code.
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement, (ii) the initial purchase by the
Original Holder of the Certificates, and (iii) the initial acquisition by the
Owner Participant of its beneficial interest in the Trust Estate will involve
any prohibited transaction within the meaning of Section 406(a) of ERISA or
Section 4975(c)(1)(A) through (D) of the Code (such representation being made in
reliance upon and subject to the accuracy of the representations contained in
subparagraph (A) of this Section 8(q)).
(r) The Owner Participant, the Owner Trustee and the Equipment Trust
Trustee agree for the benefit of the Manufacturer and Lessee that they will use
reasonable care not to disclose or suffer to be disclosed the terms of the
Purchase Agreement to any third party except (A) as may be required by any
applicable statute, court or administrative order or decree or governmental
ruling or regulation, (B) in connection with the financing of the Aircraft and
the other transactions contemplated by the Operative Documents (including any
transfer of Certificates or the Owner Participant's beneficial interest in the
Trust Estate and any exercise of remedies under the Lease and the Equipment
Trust Agreement), (C) with the prior written consent of the Manufacturer and
Lessee, or (D) in the case of the Owner Trustee, so much of the Purchase
Agreement as has been assigned to it under the Purchase Agreement Assignment and
not specifically reserved to Lessee under Section 1 thereof, to bona fide
potential purchasers of the Aircraft. Any disclosure as
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PARTICIPATION AGREEMENT NW 1989 B
contemplated by clause (B) or (D) of the preceding sentence, including
disclosure to counsel for the Owner Participant, the Owner Trustee or the
Equipment Trust Trustee, shall include a requirement that the entity to which
such information is disclosed shall make undertakings substantially the same as
those contained herein. For the purposes of this Section 8(r), disclosure to any
counsel or other agent of the Owner Participant, the Owner Trustee or the
Equipment Trust Trustee by the Manufacturer or Lessee or counsel for either of
them in connection with the transactions contemplated hereby shall be deemed to
be disclosure to such Participant, the Owner Trustee or the Equipment Trust
Trustee, as the case may be.
(s) The Owner Trustee and the Owner Participant severally, not jointly,
represent and warrant that none of the funds provided by the Original Holder
pursuant to Section l(a) hereof will be used for the purpose of purchasing or
carrying any "margin security" as defined in Regulation G of the Board of
Governors of the Federal Reserve System or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve
assuming that the proceeds are applied as contemplated by the provisions of this
Agreement.
(t) The Original Holder represents and warrants that neither it nor
anyone acting in its behalf has offered any Certificates for sale to, or
solicited any offer to buy any Certificate from, any person or entity. The
Original Holder represents and warrants and covenants and agrees: (i) that this
Agreement has been duly authorized, executed and delivered by the Original
Holder and this Agreement constitutes a legal, valid and binding obligation of
the Original Holder enforceable against the Original Holder in accordance with
its terms except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that the
Original Holder is a duly organized and validly existing banking institution
under the laws of the Netherlands acting through its Cayman Islands branch; and
(iii) that the Original Holder has full power, authority and legal right to
execute, deliver and carry out the terms of this Agreement. The Original Holder
represents and warrants that the Certificates to be issued to it pursuant to the
Equipment Trust Agreement are being acquired by it for investment and not with a
view to distribution (it being understood that the Original Holder may pledge or
assign as security its interest in each Certificate issued to it), provided that
the disposition of its property shall at all times be and
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PARTICIPATION AGREEMENT NW 1989 B
remain within its control, and subject to the right of the Original Holder to
sell, transfer or otherwise dispose of any Certificate or any portion thereof,
or to grant participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended.
The Original Holder covenants and agrees that it shall not cause or
permit to exist an Original Holder Lien attributable to it with respect to the
Aircraft or any other portion of the Trust Estate. The Original Holder agrees
that it will promptly, at its own expense, take such other action as may be
necessary duly to discharge any Original Holder Lien. The Original Holder agrees
to make restitution to the Trust Estate for any actual diminution of the assets
of the Trust Estate resulting from such Original Holder Lien attributable to it.
(u) The Owner Participant and the Owner Trustee will elect to treat
Lessee as having acquired the Aircraft pursuant to Section 48(d) of the Code so
as to permit Lessee to claim any available investment tax credit with respect to
the Aircraft. The Owner Participant, the Owner Trustee and Lessee each agree, to
file timely with all parties and with the Internal Revenue Service the
appropriate statements required by Treas. Reg. Section 1.48-4(f) with respect to
such election, in the manner reasonably prepared by Lessee. The Owner
Participant and the Owner Trustee each agrees that it has not made nor will it
make any representation with respect to the accuracy of the information set
forth in paragraphs 5 or 6 of such election.
(v) The First National Bank of Boston in its individual capacity
represents and warrants that:
(i) the lien of the Equipment Trust Agreement on the
collateral purported to be created thereby will be free and clear of
Lessor Liens attributable to The First National Bank of Boston in its
individual capacity, and there are no Liens affecting the title of the
Owner Trustee to the Aircraft or any part of the Trust Estate or the
Estate resulting from any act or claim against The First National Bank
of Boston in its individual capacity arising out of any event or
condition not related to the ownership, leasing, use or operation of
the Aircraft or to any other transaction contemplated by this Agreement
or any of the Operative Documents, including any Lien resulting from
the nonpayment by The First National Bank of Boston in its individual
capacity of any Taxes (as defined in Section 7(b)(i) hereof) imposed or
measured by its net income;
(ii) there has not occurred any event which constitutes (or to
the best of its knowledge would, with the passage of time or the giving
of notice or both, constitute) an Event of Acceleration which has been
caused by or relates
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PARTICIPATION AGREEMENT NW 1989 B
to The First National Bank of Boston in its individual capacity and
which is presently continuing;
(iii) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States
of America and has full power and authority to enter into and perform
its obligations under each Operative Document to which it is a party
and to execute and deliver the Guaranties to be delivered on the
Delivery Date;
(iv) each Operative Document to which it is a party has been
duly authorized by all necessary action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate the charter or by-laws of the First
National Sank of Boston in its individual capacity, any Federal or
Massachusetts law or regulation relating to its banking or trust powers
or contravene or result in any breach of, or the provisions of any
indenture, mortgage, contract or other agreement to which it is a party
or by which it or its properties may be bound or affected or any
judgment or order binding on it;
(v) each Operative Document to which it is a party has been
duly executed and delivered by it and, assuming that each such
agreement is the legal, valid and binding obligation of each other
party thereto, each of this Agreement, the Trust Agreement, the Lease,
the Lease Supplement covering the Aircraft, the Equipment Trust
Agreement, the Trust Supplement covering the Aircraft and the
Guaranties to be delivered on the Delivery Date is the legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights; and
(vi) there are no pending or, to the knowledge of the Owner
Trustee, in its individual capacity, threatened actions or proceedings
against the Owner Trustee, in its individual capacity, before any court
or administrative agency which, if determined adversely to the Owner
Trustee, in its individual capacity, would materially adversely affect
the ability of the Owner Trustee, in its individual capacity or as
trustee, to perform its obligations under each of the Operative
Documents to which it is or will be a party.
(w) The Owner Participant covenants and agrees that if (i) Lessee has
elected pursuant to Section 9(a) of the Lease to
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PARTICIPATION AGREEMENT NW 1989 B
terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c)
of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the
Lease, given to Lessee written notice of Lessor's election to retain title to
the Aircraft and (iii) the Owner Trustee has failed to make, on or before the
Termination Date, any payment required to be made by the Owner Trustee pursuant
to Section 9(c) of the Lease in connection with its retention of title to the
Aircraft, the Owner Participant will indemnify Lessee for any losses, damages,
costs or expenses of any kind (including any excess of the highest bid received
on or before the Termination Date over the price for which the Aircraft may
subsequently be sold, any additional Rents paid by Lessee and any fees and
expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by the Owner Trustee. The Owner Participant further
covenants and agrees to pay those costs and expenses specified to be paid by the
Owner Participant pursuant to Exhibit F to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Equipment
Trust Trustee, and Lessee covenants and agrees that if Lessee elects (a) to
terminate the Lease pursuant to Section 9(a) of the Lease and to purchase the
Aircraft pursuant to Section 9(b) of the Lease, (b) to purchase the Aircraft
pursuant to Section 19(b) of the Lease, or (c) to terminate the Lease and
purchase the Aircraft pursuant to Section 19(d) of the Lease, each of the
parties will execute and deliver appropriate documentation transferring all
their right, title and interest in the Aircraft to Lessee (including, without
limitation, such bills of sale and other instruments and documents as Lessee
shall reasonably request to evidence (on the public record or otherwise) such
transfer and the vesting of all right, title and interest in and to the Aircraft
in Lessee). In addition, if Lessee elects to assume the obligations of the Owner
Trustee pursuant to the Equipment Trust Agreement and the Guaranties, each of
the parties will execute and deliver appropriate documentation permitting Lessee
to assume such obligations on the basis of full recourse to Lessee, maintaining
the security interest in the Aircraft created by the Equipment Trust Agreement,
amending the Equipment Trust Agreement to provide for the lease of the Aircraft
and the Engines thereunder by the Equipment Trust Trustee to Lessee on terms and
conditions no less favorable to the Equipment Trust Trustee and the Holders than
those of the Lease as originally executed (including, without limitation, the
terms and conditions contained in Sections 6, 7, 8, 9, 10, 11 and 12 of the
Lease (as originally executed), assigning all of the rights and obligations of
the Owner Trustee under the Purchase Agreement Assignment to Lessee, subject to
the Lien of the Equipment Trust Agreement (together with an assumption by Lessee
of all of the Owner Trustee's obligations under the Purchase Agreement
Assignment), releasing the Owner Participant and the Owner Trustee from all
future obligations in respect of the Certificates, the Guaranties and the
Equipment
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PARTICIPATION AGREEMENT NW 1989 B
Trust Agreement, and will take all such other actions as are reasonably
necessary to permit such assumption by Lessee. It shall be a condition to such
assumption by Lessee that (x) the Holders and the Equipment Trust Trustee shall
not be materially adversely affected by the actions taken pursuant to the
preceding sentence, (y) Lessee is solvent at the time of such assumption and (z)
Lessee shall deliver to the Equipment Trust Trustee an Opinion of Counsel to the
effect that (A) the protections of Section 1110 of the Federal Bankruptcy Code
(or any successor provision) afforded to the Equipment Trust Trustee by said
section will not be less than such protections immediately prior to such
assumption by Lessee, (B) the conditions set forth in the preceding sentence
have been met and (C) the Equipment Trust Agreement will comply with the Trust
Indenture Act following such assumption. Lessee agrees that if it so elects to
purchase the Aircraft pursuant to Section 9(b) of the Lease and assume the
obligations of the Owner Trustee pursuant to the Equipment Trust Agreement and
the Guaranties, the Aircraft will not thereafter be the subject of any
leveraged-lease or sale and lease-back transaction in which Lessee or any
Affiliate of Lessee is the lessee, a sublessee or a guarantor of the obligations
of any lessee or sublessee.
(y) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer
or lease substantially all of the assets of Lessee as an entirety shall
be a citizen of the United States as defined in Section 101(16) of the
Federal Aviation Act and shall be a United States certificated air
carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Equipment
Trust Trustee and the Owner Participant an agreement in form and
substance reasonably satisfactory to the Owner Participant and the
Owner Trustee, containing an assumption by such successor corporation
or Person of the due and punctual performance and observance of each
covenant and condition of this Agreement, the Equipment Trust
Agreement, the Lease, the Purchase Agreement Assignment, and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Event of Default under the Lease shall have occurred and be continuing;
and
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PARTICIPATION AGREEMENT NW 1989 B
(iv) Lessee shall have delivered to the Owner Trustee, the
Equipment Trust Trustee and the Owner Participant a certificate signed
by the President or any Vice President and by the Secretary or an
Assistant Secretary of Lessee, and an opinion of counsel reasonably
satisfactory to the Owner Participant and the Owner Trustee, each
stating that such consolidation, merger, conveyance, transfer or lease
and the assumption agreement mentioned in clause (ii) above comply with
this Section 8(y) and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer or lease
of substantially all of the assets of Lessee as an entirety in accordance with
this Section 8(y), the successor corporation or Person formed by such
consolidation or into which Lessee is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Agreement with the same
effect as if such successor corporation or Person had been named as Lessee
herein. No such conveyance, transfer or lease of substantially all of the assets
of Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this Section 8(y) from its liability hereunder.
(z) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and re-filing of the
Lease, the Lease Supplement, the Trust Agreement, the Equipment Trust Agreement
and the Trust Supplement and any financing statements or other instruments as
are necessary to maintain, so long as the Equipment Trust Agreement or the Lease
is in effect, the perfection of the security interest created by the Equipment
Trust Agreement (including title solely for security purposes) and any security
interest that may be claimed to have been created by the Lease and the ownership
interest of the Owner Trustee in the Aircraft or will furnish to the Owner
Trustee and the Equipment Trust Trustee timely notice of the necessity of such
action, together with such instruments, in execution form, and such other
information as may be required to enable them to take such action.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner
Participant hereby agrees to make such recalculations as and when contemplated
by the Lease and subject to all the terms and conditions of the Lease and
promptly to take such further actions as may be necessary or desirable to give
effect to and to cause the Owner
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PARTICIPATION AGREEMENT NW 1989 B
Trustee to give effect to the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees to notify Lessee or cause
Lessee to be notified by telex or telegram not later than 2:00 P.M., New York
time, on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
amount in full by 10:30 A.M., New York time, on the due date.
(cc) The Owner Participant hereby agrees with Lessee that it will pay,
or cause to be paid, all costs and expenses that are for the account of the
Owner Trustee pursuant to Section 5(d) of the Lease.
(dd) The Original Holder agrees to notify each of the Equipment Trust
Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual
interest expected to accrue on the Certificates during each Interest Period
promptly after the commencement of such Interest Period and after the occurrence
of any event that would cause such actual interest expected to accrue during
such Interest Period to change from the amount previously notified.
(ee) The Owner Participant hereby agrees with Lessee, and only with
Lessee, and not for the benefit of any other party to this Agreement, that it
promptly will pay the Owner Trustee any funds necessary to enable the Owner
Trustee promptly to pay to Lessee the full amount of any Reimbursement Amount
owed to Lessee.
(ff) Lessee shall deliver a copy of the Purchase Agreement (insofar as
it relates to the Aircraft) to the Equipment Trust Trustee upon the request of
the Equipment Trust Trustee during any period when an Event of Default shall
have occurred and be continuing.
(gg) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Participant becomes, a debtor subject to the reorganization
provisions of the Bankruptcy Reform Act of 1978 or any successor provision, (ii)
pursuant to such reorganization provisions the Owner Trustee (in its individual
capacity) or the Owner Participant is required, by reason of the Owner Trustee
(in its individual capacity) or the Owner Participant being held to have
recourse liability to the Holder(s) of the Certificates or to the Equipment
Trust Trustee, directly or indirectly (other than the recourse liability of the
Owner Participant under this Participation Agreement), to make payment on
account of any amount payable as principal or interest on the Certificates and
(iii) any Holder(s) of the Certificates which are parties to this Agreement or
the Equipment Trust Trustee actually receives any Excess Payment (as hereinafter
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PARTICIPATION AGREEMENT NW 1989 B
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of (ii) above, then such Holder(s)
or the Equipment Trust Trustee, as the case may be, shall promptly refund to the
Owner Trustee or the Owner Participant (whichever shall have made such payment)
such Excess Payment. For purposes of this Section 8(gg), "Excess Payment" means
the amount by which such payment exceeds the amount which would have been
received by the Holder(s) of the Certificates or the Equipment Trust Trustee if
the Owner Trustee (in its individual capacity) or the Owner Participant has not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 8(gg) shall prevent the Holder of a Certificate or the
Equipment Trust Trustee from enforcing any personal recourse obligation (and
retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under this Participation Agreement or the
Equipment Trust Agreement (and any exhibits or annexes thereto).
SECTION 9. Lessee's Right of Quiet Enjoyment. Each party to this
Agreement acknowledges notice of, and consents in all respects to, the terms of
the Lease, and expressly, severally and as to its own actions only, agrees that,
notwithstanding any of the provisions of any of the Operative Documents, so long
as no Event of Default has occurred and is continuing, it shall not take or
cause to be taken any action contrary to Lessee's rights under the Lease,
including without limitation, the right to possession and use of the Aircraft
(it being understood that the foregoing shall not be deemed to have modified in
any respect the obligations of Lessee pursuant to Section 20 of the Lease, which
obligations are absolute and unconditional).
SECTION 10. Other Documents. Each of the Owner Participant and the
Owner Trustee hereby (A) agrees with Lessee, the Holders and the Equipment Trust
Trustee to comply with all of the terms of the Trust Agreement (as the same may
hereafter be amended or supplemented from time to time in accordance with the
terms thereof) applicable to it; and (B) agrees with Lessee, the Holders and the
Equipment Trust Trustee not to amend, supplement or otherwise modify any
provision of the Trust Agreement in a manner adversely effecting such party
without the prior written consent of such party. The Equipment Trust Trustee and
the Owner Trustee agree to promptly furnish to Lessee copies of any supplement,
amendment, waiver or modification of any of the Operative Documents to which
Lessee is not a party. Notwithstanding anything to the contrary contained
herein, in the Trust Agreement or in any other Operative Document, the Owner
Participant will not consent to or direct a change in the situs of the Trust
Estate without the prior written consent of Lessee which consent shall not be
unreasonably withheld.
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PARTICIPATION AGREEMENT NW 1989 B
SECTION 11. Certain Covenants of Lessee. Lessee covenants and agrees
with each of the Original Holder, the Owner Participant, the Equipment Trust
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and delivered
all and every such further acts, conveyances and assurances as the Owner
Trustee, the Equipment Trust Trustee or the Owner Participant 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 Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall use its best efforts to cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or shall
furnish to the Owner Trustee such information as may be required to enable the
Owner Trustee to make application for such registration, and shall promptly
furnish to the Owner Trustee such information as may be required to enable the
Owner Trustee to timely file any reports required to be filed by it as the
lessor under the Lease or as the owner of the Aircraft with any governmental
authority.
(b) Lessee will cause the Lease, all Lease Supplements, all amendments
to the Lease, the Equipment Trust Agreement, and all supplements and amendments
to the Equipment Trust Agreement 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. Upon the execution and delivery of the
Manufacturer's Bill of Sale, the FAA Bill of Sale, and the Owner Trustee's FAA
Bill of Sale, the Lease Supplement covering the Aircraft and the Trust
Supplement, the Lease and the Equipment Trust Agreement there shall be filed for
recording with the Federal Aviation Administration the following documents in
the following order of priority; first, the Manufacturer's Bill of Sale, the FAA
Bill of Sale, and the Owner Trustee's FAA Bill of Sale, second, the Equipment
Trust Agreement, with the Trust Agreement and the Trust Supplement attached, and
third, the Lease, with the Lease Supplement covering the Aircraft, the Equipment
Trust Agreement and the Trust Supplement attached. Lessee agrees to furnish the
Owner Participant, the Owner Trustee and the Equipment Trust Trustee with copies
of certified copies of the foregoing documents as promptly as practicable
following the issuance of same by the Federal Aviation Administration.
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PARTICIPATION AGREEMENT NW 1989 B
SECTION 12. Owner for Federal and State Tax Purposes. It is hereby
agreed among the Equipment Trust Trustee, Lessee, the Original Holder, the Owner
Participant and the Owner Trustee that for Federal and State income tax purposes
the Owner Participant will be the owner of the Aircraft to be delivered under
the Lease and Lessee will be the lessee thereof, and each party hereto agrees to
characterize the Lease as a lease for Federal and State income tax purposes.
SECTION 13. Definitions; Notices; Consent to Jurisdiction.
(a) Unless the context otherwise requires, all capitalized terms used
herein shall have the meanings set forth in Annex A hereto for all purposes of
this Agreement.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage prepaid, or by prepaid Telex, TWX or telegram (with messenger
delivery specified in the case of a telegram), or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 13(b). Unless
otherwise specified by any party hereto in a notice sent or delivered to each
other party hereto in accordance with the foregoing provisions of this Section
13(b), notices, demands, instructions and other communications in writing shall
be given to or made upon the respective parties hereto at their respective
addresses (or to their respective Telex, TWX or telecopier numbers) as follows:
(A) if to Lessee, the Owner Trustee, the Equipment Trust Trustee, the Original
Holder or the Owner Participant, to the respective addresses set forth below the
signatures of such parties at the foot of this Agreement or (B) if to a
subsequent Owner Participant, addressed to such subsequent Owner Participant at
such address as such subsequent Owner Participant shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Agreement, the Lease, the
Tax Indemnity Agreement or any other Operative Document, the subject matter of
any thereof or any of the transactions contemplated hereby or thereby brought by
any party or parties thereto, or their successors or assigns, and (B) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, to
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PARTICIPATION AGREEMENT NW 1989 B
the extent permitted by applicable law, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document or the subject matter of any thereof
or any of the transactions contemplated hereby or thereby may not be enforced in
or by such courts. Lessee hereby generally consents to service of process at
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of Lessee in New York City as from
time to time may be designated by Lessee in writing to the Owner Participant,
the Owner Trustee, and the Equipment Trust Trustee. The agreement set forth in
this Section 13(c) is given solely for the benefit of the parties, their
permitted successors and assigns, and is not intended to and shall not inure to
the benefit of any other person.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes (as
defined in Section 7(b) hereof) for which it is indemnified pursuant to Section
7(b) hereof and if, as a consequence thereof, Lessee should request that the
situs of the trust be moved to another state in the United States from the state
in which it is then located, the situs of the trust may be moved with the
written consent of the Owner Participant (which consent shall not be
unreasonably withheld) and the Owner Participant will take whatever action may
be reasonably necessary to accomplish such removal; provided that (A) Lessee
shall provide such additional tax indemnification as the Owner Participant may
reasonably request, (B) the rights and obligations under the Operative Documents
of the Owner Participant shall not be altered as a result of the taking of such
action, (C) the lien of the Equipment Trust Agreement on the Estate shall not be
adversely affected by such action, (D) the Owner Participant shall have received
an opinion or opinions of counsel satisfactory to the Owner Participant, in
scope, form and substance satisfactory to the Owner Participant to the effect
that (I) the trust, as thus removed, shall remain a validly established trust,
(II) any amendments to the Trust Agreement necessitated by such removal shall
have been duly authorized, executed and delivered by the parties thereto and
shall constitute the valid and binding obligations of such parties, enforceable
in accordance with their terms, (III) such removal will not result in the
imposition of, or increase in the amount of, any Tax for which Lessee is not
required to indemnify the Owner Participant, the Owner Trustee, the Equipment
Trust Trustee or the Trust Estate pursuant to Section 7(b) hereof (taking into
account any additional indemnification provided by Lessee pursuant to clause (A)
of this sentence), (IV) such removal will not result in any Loss of Interest
Deductions or ACRS Deductions or an Inclusion Event (as defined in the Tax
Indemnity Agreement) with respect to which Lessee is not required to indemnify
the
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PARTICIPATION AGREEMENT NW 1989 B
Owner Participant pursuant to Section 4 of the Tax Indemnity Agreement (taking
into account any additional indemnification provided by Lessee pursuant to
clause (A) of this sentence), (V) if such removal involves the replacement of
the Owner Trustee, substantially covering the matters described in the opinion
of counsel delivered pursuant to Section 4(a)(xii) hereof and (VI) covering such
other matters as the Owner Participant may reasonably request, and (E) Lessee
shall indemnify and hold harmless the Owner Participant and the Owner Trustee on
a net after-tax basis against any and all reasonable and actual costs and
expenses including counsel fees and disbursements, registration fees, recording
or filing fees and taxes incurred by the Owner Trustee and the Owner Participant
in connection with such change of situs.
SECTION 15. Miscellaneous.
(a) The Owner Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner Trustee,
as Lessor, under the terms of the Lease which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Owner Trustee, the Equipment Trust Trustee, the Original Holder and
the Owner Participant provided for in this Agreement, and Lessee's, the Owner
Trustee's, the Equipment Trust Trustee's, the Original Holder's and the Owner
Participant's obligation under any and all thereof, shall survive the making
available of the Holders' Commitment and the Owner Participant's Commitment, the
delivery or return of the Aircraft, the transfer of any interest by the Owner
Participant in the Trust Estate, and the expiration or other termination of this
Agreement or any other Operative Document.
(c) 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 party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Equipment Trust
Trustee and the Owner Trustee. The terms of this Agreement shall be binding
upon, and inure to the benefit of, Lessee and its successors and assigns, the
Owner Participant and its successors and assigns, each Holder and its successors
and registered assigns, the Equipment Trust Trustee and its successors as
Equipment Trust Trustee under the Equipment Trust
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PARTICIPATION AGREEMENT NW 1989 B
Agreement and the Owner Trustee and its successors as Owner Trustee under the
Trust Agreement. This Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York, including all
matters of construction, validity and performance. This Agreement is being
delivered in the State of New York.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement or
such other agreements against the Owner Trustee in its individual capacity or
against any institution or person which becomes a successor trustee or cotrustee
or any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this Agreement
and the other Operative Documents.
SECTION 16. Expenses.
(a) Invoices and Payment. Each of the Owner Trustee, the Equipment
Trust Trustee, the Original Holder, the Owner Participant, and Lessee shall
promptly submit to the Owner Trustee for its prompt approval (which shall not be
unreasonably withheld) copies of invoices of the Transaction Expenses for which
it is responsible for providing information as they are received (but in no
event later than April 20, 1989). If the Aircraft is delivered, accepted and
leased, the Owner Participant agrees to transfer to the Owner Trustee no later
than May 5, 1989 such amount as shall be necessary in order to enable the Owner
Trustee to pay Transaction Expenses. To the extent of funds received by it, the
Owner Trustee agrees to pay all invoices of Transaction Expenses that have been
approved by it promptly upon receipt thereof.
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PARTICIPATION AGREEMENT NW 1989 B
(b) Payment of Other Expenses. Notwithstanding the provisions of
Section 16(a), Lessee agrees to pay the fees, expenses and disbursements of
Messrs. Cadwalader, Wickersham & Taft, special counsel for Lessee, and the Owner
Participant agrees to pay the fees, expenses and disbursements of Messrs. Luce,
Forward, Hamilton & Scripps, special counsel to the Owner Participant and the
Parent, in connection with the preparation, execution and delivery of the
Operative Documents and the closings of the transactions contemplated thereby
which do not constitute Transaction Expenses.
(c) Payment by the Owner Participant and Lessee. Notwithstanding the
provisions of Section 16(a), if the Aircraft shall not be delivered, accepted
and leased, the Owner Participant shall pay its own Transaction Expenses and
Lessee shall pay its own Transaction Expenses and those of the Owner Trustee and
the Equipment Trust Trustee.
(d) Certain Payments by Lessee. If the aggregate amount of Transaction
Expenses determined pursuant to Section 16(a) exceeds 0.75% of Lessor's Cost,
then Lessee shall reimburse any party hereto for Transaction Expenses incurred
by it in such amounts as Lessee shall determine in its discretion up to an
aggregate amount equal to the lesser of (i) such excess and (ii) $50,000. Any
payments made by Lessee pursuant to this Section 16(d) shall satisfy the
obligation to pay Transaction Expenses pursuant to Section 16(a) to the extent
paid but shall not be considered paid by Lessor for purposes of Section 3(d)(ii)
of the Lease.
SECTION 17. Optional Redemption of Certificates.
(a) In the event that at any time Lessee shall have given written
notice to the Owner Participant, the Owner Trustee and the Equipment Trust
Trustee that there be effected a voluntary redemption of the Certificates as
part of a refunding or refinancing operation, the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refunding or refinancing operation (including the terms of any
debt to be issued in connection with such refunding or refinancing operation)
and upon such agreement:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee and the
Equipment Trust Trustee a certificate of an authorized representative
of the Owner Participant (the "Refinancing Certificate") setting forth
(i) the proposed date on which the outstanding Certificates will be
redeemed, which date shall give sufficient time for any notice of
redemption to be given to Holders of the Certificates, any new debt
will be issued and the other aspects of such refunding or
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PARTICIPATION AGREEMENT NW 1989 B
refinancing operation will be consummated (such date, the "Refinancing
Date") and (ii) the following information calculated pursuant to the
provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted
Debt/Equity Ratio, (B) the principal amount of debt to be issued on the
Refinancing Date, (C) the amount, if any, by which the Owner
Participant's aggregate investment in the beneficial interest in the
Aircraft is to be decreased and (D) the proposed revised schedules of
Basic Rent percentages, debt amortization, Stipulated Loss Value
percentages and Termination Value percentages. The Refinancing
Certificate shall not provide for a Debt/Equity Ratio of more than 4:1.
Within fourteen days of its receipt of the Refinancing Certificate,
Lessee may demand a verification pursuant to Exhibit F to the Lease of
the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in
the Refinancing Certificate (or the determination pursuant to such
verification procedures) as to the Debt/Equity Ratio, the principal
amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised schedules of Basic Rent percentages, debt
amortization, Stipulated Loss Value percentages and Termination Value
percentages (such information, whether as so set forth or as so
determined, the "Refinancing Information"), the appropriate parties
will take the actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into a financing or
loan agreement (which may involve an underwriting agreement in
connection with a public offering of such debt or the sale of the Owner
Trustee's interest in the Trust Estate and/or the Aircraft and its
resale to the Owner Trustee) with the institution or institutions to be
named therein providing for (i) the issuance and sale by the Owner
Trustee and/or the Equipment Trust Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information which amount
shall be at least equal to the aggregate principal amount of all
Certificates outstanding on the Refinancing Date (such debt securities,
the "New Debt"), (ii) the application of the proceeds of the sale of
the New Debt to the redemption of all such Certificates on the
Refinancing Date and (iii) the payment of the excess, if any, of such
proceeds over the amounts necessary to effect such redemption to the
Owner Trustee;
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PARTICIPATION AGREEMENT NW 1989 B
(3) Lessee and the Owner Trustee will amend the Lease to
provide that (i) Basic Rent payable in respect of the period from and
after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the refunding date shall be
as provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide
for the securing thereunder of the New Debt in like manner as the
Certificates and will enter into such amendments and supplements to the
Equipment Trust Agreement (or a new equipment trust agreement,
indenture or other security agreement) as may be necessary to effect
such refunding or refinancing;
(5) unless otherwise agreed by the Owner Participant, Lessee
shall pay or reimburse all of the expenses of such refunding or
refinancing (including the fees and expenses of counsel); and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner
Participant's Net Economic Return, (B) minimizes the Net Present Value
of Rents to Lessee and minimizes the Stipulated Loss Value and
Termination Value percentages to the extent possible consistent with
clause (A), (C) is consistent with the provisions of Section 3 of the
Lease and (D) uses the same methodology and assumptions used by the
Owner Participant in determining Basic Rent, Excess Amounts, Stipulated
Loss Values and Termination Values on the Delivery Date (except to the
extent such assumptions have been altered since the Delivery Date in
connection with an adjustment to Rents pursuant to Section 3(d) of the
Lease or such assumptions are the subject of the recalculations being
conducted by the Owner Participant).
(b) In the case of a refunding or refinancing involving a public
offering of the New Debt, Lessee shall have the right to purchase such debt
securities and apply such securities as a credit against its obligation to pay
Rent to the extent provided for in Section 8(1) hereof, provided that in
connection with such refunding or refinancing Lessee shall have agreed to
indemnify the Owner Participant with respect to such right in a manner
reasonably satisfactory to the Owner Participant.
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PARTICIPATION AGREEMENT NW 1989 B
(c) The Certificates shall not be subject to voluntary redemption by
the Owner Trustee or the Equipment Trust Trustee without the consent of Lessee.
(d) Unless otherwise agreed to in writing by the Owner Participant,
only three such refunding or refinancing operations shall be permitted. Unless
otherwise agreed, any refinancing shall not change the amount of the Owner
Participant's Commitment and shall be for all Outstanding Certificates.
(e) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Operative Documents, the Original Holder, the
Owner Participant, the Owner Trustee, the Equipment Trust Trustee and Lessee
agree that in connection with the first refunding or refinancing operation under
this Section 17, if such operation involves the offering and sale pursuant to a
registration statement filed with the SEC of Certificates issued under the
Equipment Trust Agreement (the "Public Certificates"), the provisions of this
Section 17(e) shall govern such refunding or refinancing to the exclusion of the
other provisions of this Section 17:
(1) not later than the effective date of the registration
statement filed with the SEC which relates to the Public Certificates
(the "Effective Date"), the Owner Participant shall prepare and submit
to Lessee revised schedules of Basic Rent and Excess Amount
percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages for attachment to the Lease Amendment
referred to in clause 7 below, which schedules shall be based on the
principal amounts, maturities, and interest rates of the Public
Certificates (as such principal amounts and maturities shall have been
specified by the Owner Participant), and Lessee shall have verified
such calculations in accordance with this Agreement;
(2) on the closing date for the issuance and sale of the
Public Certificates (the "Closing Date"), the Equipment Trust Trustee
shall redeem all of the outstanding Certificates by payment to the
Holders thereof in accordance with Section 6.01(c) of the Equipment
Trust Agreement of an amount equal to the unpaid principal of and
accrued and unpaid interest on the Certificates as provided in clause 3
below plus the additional amount set forth in clause 4 below and shall
authenticate and deliver the Public Certificates in an initial
aggregate principal amount which shall equal or exceed the principal
amount of the Certificates being redeemed, and the Owner Trustee shall
execute and deliver the Guaranties relating to the Public Certificates;
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PARTICIPATION AGREEMENT NW 1989 B
(3) the Equipment Trust Trustee shall pay the unpaid principal
amount of the Certificates being redeemed with the proceeds from the
sale of the Public Certificates and shall pay the accrued and unpaid
interest on such Certificates from amounts provided to the Equipment
Trust Trustee by the Owner Trustee as ETA Rent, which amounts shall be
paid to the Owner Trustee by the Owner Participant, in the event that
the Closing Date occurs on or prior to the Commencement Date, which
amounts the Owner Participant agrees to pay to Lessor in immediately
available funds on the Closing Date, or from amounts paid to the Owner
Trustee by Lessee as advance Rent under the Lease, in the event that
the Closing Date occurs after the Commencement Date, which amount
Lessee agrees to pay to the Owner Trustee in immediately available
funds on the Closing Date and for which Lessee shall be entitled to a
credit against future payments of Basic Rent due under the Lease;
(4) Lessee shall pay to the Owner Trustee as Supplemental Rent
under the Lease in immediately available funds an amount equal to any
Funding Loss Amount due and payable on the Certificates being redeemed
on the Closing Date pursuant to Section 6.01(C) of the Equipment Trust
Agreement and the Owner Trustee shall pay such Funding Loss Amount to
the Equipment Trust Trustee as ETA Rent under the Equipment Trust
Agreement;
(5) not later than the Closing Date, the parties hereto shall
execute and deliver a refunding agreement in the form attached as
Exhibit I to this Agreement (the "Refunding Agreement") and shall
perform their obligations as expressly provided therein;
(6) not later than the Closing Date, the Owner Trustee, the
Equipment Trust Trustee and Lessee shall execute and deliver an
amendment to the Equipment Trust Agreement in the form attached as an
exhibit to the Refunding Agreement;
(7) not later than the Closing Date, the Owner Trustee and
Lessee shall execute and deliver an amendment to the Lease Agreement in
the form attached as an exhibit to the Refunding Agreement;
(8) not later than the Closing Date, the parties hereto shall
execute and deliver such other amendments to the Operative Documents
which shall be required pursuant to the terms of the Refunding
Agreement; and
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PARTICIPATION AGREEMENT NW 1989 B
(9) on the Closing Date, the Owner Participant shall pay to
the Owner Trustee for reimbursement to Lessee an amount equal to the
underwriting discounts and commissions payable in connection with the
sale of the Public Certificates. Such payment shall be made by the
Owner Participant in immediately available funds and paid by the Owner
Trustee to Lessee upon receipt by the Owner Trustee, and shall
constitute "Transaction Expenses" as defined in Annex A hereto.
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PARTICIPATION AGREEMENT NW 1989 B
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, NC.,
Lessee
By:
-----------------------------------------
Title: Vice President
Address: Minneapolis/St. Paul
International Airport
St. Paul, Minnesota 55111
Attn: Chief Financial Officer
Telex No. 29-7024
Answerback: NWAIR STP A
[_______________________],
Owner Participant
By:
-----------------------------------------
Title: President
By:
-----------------------------------------
Title:
Address:
Telecopy No:
<PAGE> 59
SCHEDULE I
[NW 1989 B]
Commitments
<TABLE>
<CAPTION>
Commitment
----------
<S> <C>
</TABLE>
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1989 B]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1989 B],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ], a [
] corporation (the "OWNER PARTICIPANT"), as successor to [
], a [ ] corporation (the "ORIGINAL OWNER
PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in
its individual capacity except as otherwise expressly provided herein, but
solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined
below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, the "PASS THROUGH Trustee") under each of the four separate Pass
Through Trust Agreements (as defined below), (v) STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and
(vi) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as
Indenture Trustee (the "INDENTURE TRUSTEE") under the Trust Indenture (as
defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Original Owner Participant, [
] as Original Holder (the "ORIGINAL LOAN PARTICIPANT"), The First National Bank
of Boston, as owner trustee (the "ORIGINAL OWNER TRUSTEE"), and Meridian Trust
Company, as Equipment Trust Trustee (the "EQUIPMENT TRUST TRUSTEE") entered into
the Participation Agreement [NW 1989 B], dated as of March 15, 1989 (the
"ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one
Boeing 747-451 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee, the Lessee and the
Equipment Trust Trustee entered into the Equipment Trust Agreement [NW 1989 B],
dated as of March 15, 1989, as supplemented by Equipment Trust Agreement and
Trust Agreement Supplement No. 1 [NW 1989 B], dated March 16, 1989
(collectively, the "ORIGINAL EQUIPMENT TRUST AGREEMENT"), pursuant to which the
Original Owner Trustee issued to the Original Loan Participant Series BB
Certificates substantially in the form set forth in Exhibit A thereto (the
"ORIGINAL CERTIFICATES") as evidence of the loan then being made by the Original
Loan Participant in participating in the payment of Lessor's Cost;
<PAGE> 2
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and Lessee entered
into the Lease Agreement [NW 1989 B] relating to the Aircraft, dated as of March
15, 1989, as supplemented by Lease Supplement No. 1 [NW 1989 B] dated March 16,
1989 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set
forth therein, the Original Owner Trustee agreed to lease to Lessee, and Lessee
agreed to lease from such Original Owner Trustee, the Aircraft commencing on the
Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Participant and the
Original Owner Trustee entered into the Trust Agreement [NW 1989 B], dated as of
March 15, 1989 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner
Trustee agreed, among other things, to hold the Trust Estate defined in Section
1.01 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Participant entered into a
Tax Indemnity Agreement [NW 1989 B] relating to the Aircraft, dated as of March
15, 1989 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Lessee, the Owner Trustee and the
Indenture Trustee entered into a Purchase Agreement Assignment [NW 1989 B],
dated as of March 15, 1989, and the Manufacturer entered into a Consent and
Agreement [NW 1989 B], dated as of March 15, 1989 (collectively, the "ORIGINAL
PURCHASE AGREEMENT ASSIGNMENT");
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance, dated May 16, 1996, the Owner Trustee
succeeded to all of the estates, properties, rights, powers, duties and trusts
of the Original Owner Trustee under the Trust Agreement and the other Operative
Documents to which the Original Owner Trustee was a party;
WHEREAS, pursuant to an Assignment and Assumption Agreement
dated as of December 19, 1991 (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"),
between and among the Original Owner Participant, the Owner Participant and
[ ] ("[ ]") as parent of the
Owner Participant, the Original Owner Participant transferred to the Owner
Participant all of its right, title and interest in the Trust Estate, the
Aircraft and the Operative Documents;
WHEREAS, concurrently with the execution and delivery of the
Assignment and Assumption Agreement, [ ] entered into a
Guaranty (the "PARENT GUARANTY") under which [ ] guaranteed to
Lessee, the Original Owner Trustee, the Equipment Trust Trustee and the Original
Owner Participant obligations of the Owner Participant;
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<PAGE> 3
WHEREAS, the Original Equipment Trust Agreement was amended by
the First Amendment to Equipment Trust Agreement [NW 1989 B] dated as of
December 19, 1991 (as so amended, the "EQUIPMENT TRUST AGREEMENT");
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Certificates as part of a
refinancing operation, Section 3(d) of the Original Lease contemplates the
adjustment of Rent in the event of such a refinancing operation, and Lessee has
given its written notice to the Owner Participant, the Owner Trustee and the
Equipment Trust Trustee pursuant to such Section 17 of its desire to implement
such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1989 B], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have entered into the
Trust Indenture and Security Agreement [NW 1989 B], dated as of the date hereof
(the "INDENTURE"), under which Indenture the Owner Trustee shall issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"SECURED CERTIFICATES") in four series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the Amended and
Restated Lease Agreement [NW 1989 B], dated as of June 3, 1996 (the "LEASE")
amending and restating the Original Lease;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1989 B] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee and the
Indenture Trustee will enter into the First Amendment to Purchase Agreement
Assignment [NW 1989 B], dated as of the Refinancing Date, and the Manufacturer
will enter into the First Amendment to Consent and Agreement [NW 1989 B], dated
as of the Refinancing Date (collectively, the "PAA AMENDMENT NO. 1"; the
Original Purchase Agreement Assignment, as amended by the PAA Amendment No. 1,
the "PURCHASE AGREEMENT ASSIGNMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Guarantor has entered into the Guarantee [NW 1989 B] (the
"GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the
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<PAGE> 4
Refunding Agreement), four separate grantor trusts (collectively, the "PASS
THROUGH TRUSTS" and, individually, a "PASS THROUGH TRUST") will be created to
facilitate certain of the transactions contemplated hereby, including, without
limitation, the issuance and sale by each Pass Through Trust of pass through
certificates pursuant thereto (collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Secured Certificates bearing the same
interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust (other than Northwest Airlines 1996-1D
Pass Through Trust) with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR
AGREEMENT"); and
WHEREAS, the Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
SECTION 1. AMENDMENT OF PREMISES OF THE ORIGINAL PARTICIPATION
AGREEMENT. The last WHEREAS clause of the Original Participation Agreement is
hereby amended in its entirety to read as follows:
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof.
SECTION 2. AMENDMENT OF SECTION 4(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. The last sentence of Section 4(a)(v) of the Original
Participation Agreement is hereby deleted in its entirety.
SECTION 3. AMENDMENT OF SECTION 7(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. (a) Section 7(b)(i) of the Original Participation
Agreement is hereby amended by (i) deleting all of the words and punctuation
through the end of the first parenthetical clause in the first sentence and
substituting therefor the following:
Indemnity. Except as provided in Section 7(b)(ii)
hereof, Lessee shall pay, and on written demand shall
indemnify and hold harmless each of (i) the Owner Participant,
the Owner Trustee, both in its individual capacity and as
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<PAGE> 5
trustee under the Trust Agreement, the Trust Estate and the
Indenture Trustee, (ii) the respective Affiliates, successors
and permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate
(each of the entities described in clauses (i), (ii) and
(iii), referred to as an "INDEMNITEE").
(ii) replacing the words "or Estate" at the end of clause (i)(F) with the word
"and", (iii) deleting clause (D) of Section 7(b)(i) in its entirety and
substituting therefor the following:
any or all of the Operative Documents, the Refunding Agreement
or the issuance of the certificates issued pursuant to the
Original Trust Indenture, the Secured Certificates, the Pass
Through Certificates or the refinancing thereof and any other
documents contemplated hereby or thereby and amendments and
supplements hereto and thereto or the execution, delivery or
performance of any thereof or the issuance, acquisition,
holding or subsequent transfer thereof,
and (iii) deleting clause (E) of Section 7(b)(i) in its entirety and
substituting therefor the following:
the payment of the principal of, or interest or premium on, or
other amounts payable with respect to the Certificates or the
Secured Certificates,
(b) Section 7(b)(ii) of the Original Participation Agreement
is hereby amended by (i) adding the words "and (iii) Taxes imposed by
withholding on or with respect to the Secured Certificates or any payments in
connection therewith" after the word "jurisdiction" in clause 7(b)(ii)(1), (ii)
deleting the words and punctuation "Commonwealth of Massachusetts, the State of
California" and substituting therefor the words and punctuation "State of Utah,
the State of Delaware" in clause 7(b)(ii)(2), (iii) substituting the words,
punctuation and numbers "Section 7(b)(ii)(1)(ii) or (iii)" for the words,
punctuation and numbers "Section 7(b)(ii)(1)(ii)" in the last parenthetical of
Section 7(b)(ii)(2), (iv) adding the words "or (D) in connection with any
refinancing (including pursuant to the Refunding Agreement), provided that this
clause (4) shall not apply to the transfer by The First National Bank of Boston
to the First Security Bank of Utah, National Association" at the end of clause
7(b)(ii)(4), (v) deleting the words "Original Holder, the Equipment Trust
Trustee or the Estate" in the second line of clause 7(b)(ii)(5) and substituting
therefor the words "Indenture Trustee and the Trust Indenture Estate", (vi)
deleting the words "Equipment Trust Trustee" in clause 7(b)(ii)(7) and
substituting therefor the words "Indenture Trustee" and (vii) deleting the words
"Original Holder" in clauses 7(b)(ii)(13) and 7(b)(ii)(14) and substituting
therefor the words "Indenture Trustee or Trust Indenture Estate".
SECTION 4. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is
hereby amended by (i) deleting the first sentence thereof, (ii) deleting the
word "and" between the words "expenses" and "Transaction Expenses" in the second
parenthetical phrase of the first paragraph thereof and substituting a comma
therefor, (iii) inserting after the phrase "to Section 16" in such
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<PAGE> 6
second parenthetical phrase the words "and Refinancing Expenses to the extent
not required to be paid by the Owner Trustee or the Owner Participant pursuant
to Section 11(a) of the Refunding Agreement", (iv) inserting the words and
punctuation "and, only in the case of an Indemnitee who is the Subordination
Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words
"the terms thereof" in clause (1) of the first paragraph thereof, (v) inserting
the word "Secured" before the word "Certificates" and by adding the words "the
Pass Through Trust Certificates (and any replacements thereof) and the
certificates issued pursuant to the Original Trust Indenture (and any
replacements thereof)" after the word "Certificates" in clause (4) of the first
paragraph thereof and by inserting the word "Secured" before the word
"Certificates" in the fourth paragraph thereof, (vi) deleting the word "or"
prior to clause (5) of the first paragraph thereof and substituting a comma
therefor and adding the following clause (6) after the end of such clause (5):
"or (6) arising from the application of Part 4 or Part 5 of Subtitle B of Title
I of ERISA or Section 4975 of the Code", (vii) adding the words and punctuation
"the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust
Agreements" after the words "Operative Documents" in each of clauses (A) and (B)
of the proviso in the first paragraph thereof, (viii) deleting the words
"Original Holder Lien" and "Trustee's Liens" in clause (B) of the proviso in the
first paragraph of Section 7(c) and substituting therefor the words "Loan
Participant Liens" and "Indenture Trustee's Liens", respectively, (ix) adding
the words and punctuation ", the Indenture" after the word "Lease" in the second
parenthetical of clause (D) of the proviso in the first paragraph of Section
7(c) and by adding the words "and other than the transfer from The First
National Bank of Boston to First Security Bank of Utah, National Association" at
the end of such parenthetical after the words "Equipment Trust Agreement"), (x)
deleting all of the words in such clause (D) appearing after the word "Lease"
the second time such word appears therein and before the semicolon, (xi) adding
the words and punctuation ", provided, that this clause (E) shall not be deemed
to exclude Taxes, penalties, interest or charges of any nature whatsoever
imposed under Section 4975 of the Code or Section 502(i) or Section 502(l) of
ERISA" at the end of clause (E) of the proviso to the first paragraph thereof,
(xii) adding the words "other than any transfer from The First National Bank of
Boston to First Security Bank of Utah, National Association" at the end of
clause (G) of the proviso to the first paragraph of Section 7(c), (xiii)
deleting the words "Equipment Trust Trustee" and "Equipment Trust Agreement" in
clause (H) of the proviso in the first paragraph of Section 7(c) and
substituting therefor the words "Indenture Trustee" and "Trust Indenture",
respectively, (xiv) deleting the words "Section 9.07 of the Equipment Trust
Agreement" in the seventh paragraph of Section 7(c) and substituting therefor
the words "Section 5.03 or 7.01 of the Trust Indenture", and (xv) deleting the
words "Equipment Trust Trustee" in the last paragraph of Section 7(c) and
substituting therefor the words "Indenture Trustee".
SECTION 5. AMENDMENT OF SECTION 8(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. The second, third, fourth, fifth and sixth sentences of
Section 8(c) of the Original Participation Agreement are hereby amended in their
entirety to read as follows:
The Owner Participant agrees, solely for the benefit
of Lessee and the Certificate Holders, that if (i) it shall
cease to be, or believes itself likely to cease to be, a
Citizen of the United States and (ii) the Aircraft shall or
would
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<PAGE> 7
therefore become ineligible for registration in the name of
the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner
Participant shall (at its own expense and without any
reimbursement or indemnification from Lessee) promptly effect
a voting trust, voting powers agreement or other similar
arrangements or take any other action as may be necessary to
prevent any deregistration and to maintain the United States
registration of the Aircraft; provided, however, that during
any period during which the Aircraft shall be registered in a
country other than the United States pursuant to Section 8(f)
hereof, the Owner Participant shall take the actions referred
to in this sentence only if, and promptly after being,
directed to do so by Lessee upon Lessee's determination to
re-register the Aircraft in the United States. It is agreed
that: (A) the Owner Participant shall be liable to pay on
request to each of the other parties hereto and to each holder
of a Secured Certificate for any damages suffered by any such
other party or holder as the result of the representation and
warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery
Date; and (B) the Owner Participant shall be liable to pay on
request to Lessee, any Sublessee and the Loan Participants for
any damages which may be incurred by Lessee, any Sublessee or
the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second
sentence of this Section 8(c). Each party hereto agrees, upon
the request and at the sole expense of the Owner Participant,
to cooperate with the Owner Participant in complying with its
obligations under the provisions of the second sentence of
this Section 8(c). First Security Bank of Utah, National
Association, in its individual capacity, agrees that if at any
time a responsible officer or responsible employee of the
Corporate Trust Department of First Security Bank of Utah,
National Association, shall obtain actual knowledge that First
Security Bank of Utah, National Association, has ceased to be
a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement, it will
promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in
effect at such time or, if it is not necessary, if and so long
as the Owner Trustee's citizenship would have any material
adverse effect on the Certificate Holders, Lessee or the Owner
Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or First Security Bank of
Utah, National Association, in its individual capacity, does
not comply with the requirements of this Section 8(c), the
Owner Trustee, the Indenture Trustee and the Participants
hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the
giving of notice or both) shall not have occurred and be
continuing under the Lease due to non-compliance by Lessee
with the registration requirements in the Lease.
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<PAGE> 8
SECTION 6. AMENDMENT OF SECTION 8(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. The first and second sentences of Section 8(d) of the
Original Participation Agreement are hereby amended in their entirety to read as
follows:
First Security Bank of Utah, National Association in
its individual capacity represents and warrants that both the
principal place of business of the Owner Trustee and the place
where its records concerning the Aircraft and all of its
interest in, to and under the Operative Documents in which it
is a party are kept is Salt Lake City, Utah. First Security
Bank of Utah, National Association, in its individual
capacity, agrees that it will not change the location of its
principal place of business or the place where its records
concerning the Aircraft and all of its interest in, to and
under the Operative Documents to which it is a party to are
kept to a location outside of Salt Lake City, Utah, without
the prior written notice to all parties.
SECTION 7. AMENDMENT OF SECTION 8(e) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(e) of the Original Participation Agreement is
hereby deleted in its entirety.
SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
Each of the Owner Participant and the Indenture
Trustee agrees that, at any time on or after the fifth
anniversary of the Delivery Date, but subject to the matters
set forth in this Section 8(f), including the second paragraph
hereof, Lessee at its expense and with the prior written
consent of the Owner Participant, may register the Aircraft in
a country other than the United States in the name of the
Owner Trustee (or, if appropriate, in the name of Lessee or a
Sublessee as a "lessee" or a "sublessee"). Upon receipt of
such request and consent, the Owner Participant shall instruct
the Owner Trustee to, and the Indenture Trustee shall, take
whatever action is necessary or appropriate to effectuate such
change of registration, if prior thereto the Owner Participant
and the Indenture Trustee shall have received:
(i) a written request by the Company
for such change of registration;
(ii) an officer's certificate of Lessee
to the effect that (A) Lessee will be in compliance
with the insurance provisions of the Lease
immediately after giving effect to such change of
registration, (B) Lessee will pay all expenses of the
Owner Participant, the Owner Trustee and the
Indenture Trustee in connection therewith, and (C)
such new country of registry imposes aircraft
maintenance standards not materially different from
those of the FAA;
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<PAGE> 9
(iii) an opinion of counsel (which may be
the General Counsel or an Associate General Counsel
of Lessee, Cadwalader, Wickersham & Taft or a
successor firm, or other counsel designated by Lessee
and reasonably satisfactory to the Owner Participant)
to the effect that such change of registration will
not (A) expose the Owner Participant, the Owner
Trustee or the Indenture Trustee to any risk (other
than the risk of imposition of any tax) which they
are not indemnified against under Section 7(c) of
this Agreement (as in effect at such time or as
proposed to be amended in connection therewith), (B)
affect the lien of the Trust Indenture as a first
priority lien on the Aircraft and on the amounts of
Rent payable under the Lease which are assigned as
security to the Indenture Trustee, or (C) result in
the imposition of, or increase in the amount of, any
Tax for which Lessee is not required to indemnify an
Indemnitee pursuant to Section 7(b) of this Agreement
(as in effect at such time or as proposed to be
amended in connection therewith) or pursuant to the
Tax Indemnity Agreement; and
(iv) a favorable opinion, of counsel
reasonably satisfactory to the Owner Participant in
the proposed jurisdiction of registry, to the effect
that (A) the terms (including, without limitation,
the governing-law, service-of-process and
jurisdiction-submission provisions thereof) of the
Lease and the Trust Indenture are legal, valid,
binding and enforceable in such country, (B) it is
not necessary for the Owner Participant, the Owner
Trustee or the Indenture Trustee to register or
qualify to do business in such country, (C) there is
no tort liability of the owner of an aircraft not in
possession thereof under the laws of such country (it
being understood that, in the event such latter
opinion cannot be given in a form satisfactory to the
Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner
Participant is obtained to cover such risk), and (D)
to such further effect with respect to such other
matters as the Owner Participant may reasonably
request.
If the Owner Participant shall not have determined,
acting reasonably, that the proposed country of registration
would not provide substantially equivalent protection for the
rights of owner participants and lessors in similar
transactions as provided under United States law, the Owner
Participant shall not unreasonably withhold its consent to
such change of registration, provided that, in addition to the
matters referred to in (i) through (iv) above,
(I) the opinion of counsel referred to
in clause (iii) above shall be satisfactory to the
Owner Participant;
(II) unless Lessee shall have agreed to
provide insurance covering the risk of requisition of
use of the Aircraft by the government
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<PAGE> 10
of such jurisdiction so long as the Aircraft is
registered under the laws of such jurisdiction, the
opinion of counsel referred to in clause (iv) above
shall also be to the effect that the laws of such
jurisdiction require fair compensation by the
government of such jurisdiction payable in currency
freely convertible into United States Dollars for the
loss of use of the Aircraft in the event of the
requisition by such government of such use; and
(III) it is understood that, in making
its determinations under this Section 8(f), the Owner
Participant shall be entitled to take into
consideration the relative creditworthiness of the
government of the proposed country of registration.
SECTION 9. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
Each of First Security Bank of Utah, National
Association, in its individual capacity and the Owner
Participant covenants and agrees that it shall not cause or
permit to exist a Lessor Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each
of First Security Bank of Utah, National Association, in its
individual capacity and the Owner Participant agrees that it
will promptly, at its own expense, take such action as may be
necessary duly to discharge such Lessor Lien attributable to
it. Each of First Security Bank of Utah, National Association,
in its individual capacity and the Owner Participant agrees to
make restitution to the Trust Estate for any actual diminution
of the assets of the Trust Estate resulting from such Lessor
Liens attributable to it. The Owner Participant agrees to make
restitution to the Trust Estate for any actual diminution of
the assets of the Trust Estate resulting from any Taxes or
Expenses (as such terms are defined in Section 7 hereof)
imposed on the Trust Estate against which Lessee is not
required to indemnify the Trust Estate pursuant to Section 7
hereof but excluding Taxes referred to in Section 7(b)(ii)(3)
hereof.
SECTION 10. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is
hereby amended in its entirety to read as follows:
State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not
cause or permit to exist any Lien with respect to the Aircraft
or any other portion of the Trust Estate arising as a result
of (A) claims against the Indenture Trustee not related to its
interest in the Aircraft or the administration of the Trust
Estate pursuant to the Trust Indenture, (B) acts of the
Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the
Operative Documents to
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<PAGE> 11
the extent such acts arise or such failure arises from or
constitute gross negligence or willful misconduct, (C) claims
against the Indenture Trustee relating to Taxes or Expenses
(as such terms are defined in Section 7 hereof) which are
excluded from the indemnification provided by Section 7
pursuant to said Section 7, or (D) claims against the
Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft,
the Trust Estate, the Trust Indenture Estate or the Operative
Documents other than a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or Article IV or V of the
Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is
continuing and prior to the time that the Indenture Trustee
has received all amounts due pursuant to the Trust Indenture.
SECTION 11. AMENDMENT OF SECTION 8(k) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(k) of the Original Participation Agreement is
hereby deleted in its entirety.
SECTION 12. AMENDMENT OF SECTION 8(l) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(l) of the Original Participation Agreement is
hereby deleted in its entirety.
SECTION 13. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by deleting the words "Equipment Trust Trustee" each time they
appear and replacing them with the words "Indenture Trustee".
SECTION 14. AMENDMENT OF SECTION 8(o) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(o) of the Original Participation Agreement is
hereby amended by (i) adding after the comma in the second line thereof the
words and punctuation "unless waived by the Certificate Holders," and (ii)
deleting the word "Guaranties" and substituting therefor the words "Secured
Certificates".
SECTION 15. AMENDMENT OF SECTION 8(p) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(p) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its
individual capacity, agrees for the benefit of Lessee and the
Owner Participant to comply with the terms of the Trust
Indenture which it is required to comply with in its
individual capacity.
SECTION 16. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
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<PAGE> 12
The Owner Participant represents and warrants that it
is not acquiring its interest in the Trust Estate, any Secured
Certificate or any interests represented thereby with the
assets of any "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of
Section 4975(e)(1) of the Code. Each Loan Participant, by its
acceptance of a Secured Certificate, agrees that it will not
transfer any Secured Certificate (or any part thereof) to any
entity (except pursuant to Section 2.14 of the Trust
Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer
that either no part of the funds to be used by it for the
purchase of such Secured Certificate (or any part thereof)
constitutes assets of any "employee benefit plan" or that such
transfer will not result in a prohibited transaction (as
defined in Section 4975 of the Code and Section 406 of ERISA);
provided, that no such transfer shall be effective, and the
Indenture Trustee shall not register any Secured Certificate
until the intended transferee has made, or is deemed to have
made, one of the representations referred to above. The Owner
Participant agrees that it will not transfer any of its right,
title or interest in and to this Agreement, the Trust Estate
or the Trust Agreement or any proceeds therefrom to any entity
unless such entity makes (or is deemed to have made) a
representation and warranty as of the date of transfer that
either no part of the funds to be used by it for the purchase
of such right, title and interest (or any part thereof)
constitutes assets of any "employee benefit plan" or that such
transfer will not result in a prohibited transaction (as
defined in Section 4975 of the Code and Section 406 of ERISA);
provided, that no such transfer shall be effective and any
attempt by the Owner Participant to make such a transfer shall
be null and void and of no effect until the intended
transferee has made, or is deemed to have made, one of the
representations referred to in this sentence. The Pass Through
Trustee agrees that it will not agree to any amendment,
modification or waiver of Section 1.01(e)(i) of the initial
supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass
Through Trust Agreement without the prior written consent of
the Owner Participant.
SECTION 17. AMENDMENT OF SECTION 8(r) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(r) of the Original Participation Agreement is
hereby amended by (i) deleting the words "Equipment Trust Trustee" each time it
appears and substituting therefor the words "Indenture Trustee", and (ii)
deleting the words "Equipment Trust Agreement" in the first parenthetical
thereof and substituting therefor the words "Trust Indenture".
SECTION 18. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants
and agrees that if Lessee
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<PAGE> 13
elects to purchase the Aircraft pursuant to Section 9(b),
Section 19(b) or Section 19(d) of the Lease, then each of the
parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to
Lessee (including, without limitation, such bills of sale and
other instruments and documents as Lessee shall reasonably
request to evidence (on the public record or otherwise) such
transfer and the vesting of all right, title and interest in
and to the Aircraft in Lessee), and if Lessee, in connection
with such purchase pursuant to Section 9(b) or 19(d) of the
Lease, elects to assume the obligations of the Owner Trustee
pursuant to the Trust Indenture and the Secured Certificates
each of the parties will execute and deliver appropriate
documentation permitting Lessee to assume such obligations on
the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture,
releasing the Owner Participant and the Owner Trustee from all
future obligations in respect of the Secured Certificates, the
Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such
assumption by Lessee. Lessee agrees that if it so elects to
purchase the Aircraft pursuant to Section 9(b) of the Lease
and assume the obligations of the Owner Trustee pursuant to
the Trust Indenture and the Secured Certificates, the Aircraft
will not thereafter be the subject of any leveraged lease or
sale and lease-back transaction in which Lessee or any
Affiliate of Lessee is the lessee, a sublessee or a guarantor
of the obligations of any lessee or sublessee.
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section1110.
SECTION 19. AMENDMENT OF SECTION 8(y) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "citizen of the United
States as defined in Section 101(16) of the Federal Aviation Act and shall be a
United States certificated air carrier" in Section 8(y)(i) and replacing them
with the words "Certificated Air Carrier", (ii) deleting the words "Equipment
Trust Trustee" in Sections 8(y)(ii) and 8(y)(iv) and substituting therefor the
words "Indenture Trustee", (iii) deleting the words "Equipment Trust Agreement"
in Section 8(y)(ii) and substituting therefor the words "Trust Indenture", and
(iv) inserting in Section 8(y)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement".
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<PAGE> 14
SECTION 20. AMENDMENT OF SECTION 8(z) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(z) is hereby amended to read in its entirety
as follows:
Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing,
re-recording and refiling of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture, the Trust Supplement
and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests
created by the Trust Indenture and any security interest that
may be claimed to have been created by the Lease and the
interest of the Owner Trustee in the Aircraft or will furnish
to the Owner Trustee and the Indenture Trustee timely notice
of the necessity of such action, together with such
instruments, in execution form, and such other information as
may be required to enable them to take such action. Lessee
will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief
executive office (as such term is used in Article 9 of the
Uniform Commercial Code) promptly after making such change or
in any event within the period of time necessary under
applicable law to prevent the lapse of perfection (absent
refiling) of financing statements filed under the Operative
Documents.
SECTION 21. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
is hereby deleted in its entirety.
SECTION 22. AMENDMENT OF SECTION 8(ee) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(ee) of the Original Participation Agreement
is hereby deleted in its entirety.
SECTION 23. AMENDMENT OF SECTION 8(ff) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(ff) of the Original Participation Agreement
is hereby amended by deleting the words "Equipment Trust Trustee" each time they
appear and substituting therefor the words "Indenture Trustee".
SECTION 24. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
is hereby amended by (i) deleting the words "Equipment Trust Trustee" each time
they appear and substituting therefor the words "Indenture Trustee", (ii)
deleting the words and punctuation "Holder(s) of Certificates" and the word and
punctuation "Holder(s)" each time they appear and in each case substituting
therefor the words "Certificate Holders", (iii) deleting the words "the Holder
of a Certificate" in the last sentence of Section 8(gg) and substituting
therefor the words "any Certificate Holder", and (iv) deleting the word
"Certificates" in clause (ii) of the first sentence thereof and substituting
therefor the words "Secured Certificates".
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<PAGE> 15
SECTION 25. AMENDMENT OF SECTION 8 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8 of the Original Participation Agreement is
hereby amended by adding the following new subsections at the end thereof:
(hh) Each Loan Participant represents, warrants,
covenants and agrees as to itself: (i) that this Agreement
constitutes a legal, valid and binding obligation of such Loan
Participant enforceable against such Loan Participant in
accordance with its terms except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law); (ii) that such Loan Participant is duly
organized and validly existing under the laws of its
jurisdiction of incorporation; and (iii) that such Loan
Participant has full power, authority and legal right to
execute, deliver and carry out the terms of this Agreement.
(ii) Each Loan Participant represents and
warrants that the Secured Certificate to be issued to it
pursuant to the Trust Indenture and held for it by the
Subordination Agent is being acquired by it without a view to
resale or distribution (it being understood that such Loan
Participant may pledge or assign as security its interest in
each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may
sell, transfer or otherwise dispose of any Secured Certificate
or any portion thereof, or grant participations therein, in a
manner which in itself does not violate the registration
requirements under the Securities Act of 1933, as amended.
(jj) State Street Bank and Trust Company
represents, warrants and covenants, in its individual
capacity, to Lessee, the Owner Trustee and each Participant as
follows:
(i) it is a Citizen of the United
States without making use of any voting trust, voting
powers trust agreement or other similar arrangement,
will notify promptly all parties to this Agreement if
in its reasonable opinion its status as a Citizen of
the United States without making use of any voting
trust, voting powers trust agreement or other similar
arrangement is likely to change and will resign as
Indenture Trustee as provided in Section 8.02 of the
Trust Indenture if it should cease to be a Citizen of
the United States without making use of any voting
trust, voting powers trust agreement or other similar
arrangement;
(ii) it is a Massachusetts trust company
duly organized and validly existing in good standing
under the laws of the Commonwealth of Massachusetts
and has the requisite corporate power, authority and
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<PAGE> 16
legal right under the laws of the Commonwealth of
Massachusetts and the United States pertaining to its
banking, trust and fiduciary powers to execute and
deliver each of this Agreement and the Refunding
Agreement and to enter into and perform its
obligations under the Trust Indenture, this
Agreement, the Refunding Agreement and each other
Operative Document to which it is a party or by which
it is bound and to authenticate the Secured
Certificates to be delivered on the Closing Date;
(iii) the execution and delivery, or the
assumption of rights and obligations, by the
Indenture Trustee of or under the Trust Indenture,
this Agreement, the Refunding Agreement and each
other Operative Document to which it is a party or by
which it is bound and the authentication of the
Secured Certificates to be delivered on the Closing
Date have been duly authorized by all necessary
corporate action on its part, and neither such
execution and delivery or assumption nor its
performance of any of the terms and provisions
thereof will violate any Federal or state law or
governmental rule or regulation relating to its
banking or trust powers or contravene or result in
any breach of, or constitute any default under, its
charter or by-laws or the provisions of any
indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties
may be bound or affected;
(iv) each of the Trust Indenture, the
Refunding Agreement and the Participation Agreement
has been duly executed and delivered by State Street
Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto,
is the legal, valid and binding obligation of State
Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be,
enforceable against State Street Bank and Trust
Company, in its individual capacity or as Indenture
Trustee, as the case may be, in accordance with its
terms except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or
equitable principles of general application to or
affecting the enforcement of creditors' rights;
(v) there are no pending or, to its
knowledge, threatened actions or proceedings against
the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or
administrative agency which, if determined adversely
to it, would materially adversely affect the ability
of the Indenture Trustee, in its individual capacity
or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents
to which it is a party or by which it is bound; and
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<PAGE> 17
(vi) there are no Indenture Trustee's
Liens on the Aircraft or any portion of the Trust
Estate.
(kk) First Security Bank of Utah, National
Association, and State Street Bank and Trust Company, National
Association, each in its individual capacity, agree for the
benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its
individual capacity.
(ll) Each Loan Participant covenants and agrees
that it shall not cause or permit to exist a Loan Participant
Lien attributable to it with respect to the Aircraft or any
other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such
other action as may be necessary duly to discharge such Loan
Participant Lien attributable to it. Each Loan Participant
agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from
such Loan Participant Lien attributable to it.
(mm) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not
cause or permit to exist any Indenture Trustee's Liens with
respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense,
take such action as may be necessary duly to discharge such
Indenture Trustee's Liens. State Street Bank and Trust
Company, in its individual capacity, agrees to make
restitution to the Trust Estate for any actual diminution of
the assets of the Trust Indenture Estate or the Trust Estate
resulting from such Indenture Trustee's Liens.
(nn) Each Loan Participant and the Subordination
Agent hereby represents, warrants and agrees that it shall not
permit the transfer of any interest in any Secured Certificate
unless and until the transferee agrees in writing (copies of
which shall be provided by the Indenture Trustee to Lessee,
the Owner Trustee and the Owner Participant) to make the
representations contemplated to be made by a Loan Participant
in this Agreement and to be bound by the terms of this
Agreement and the Trust Indenture (including, without
limitation, the representations and covenants set forth in
Sections 8(q)(A), 8(gg), 8(hh), 8(ii) and 8(ll) hereof and
this Section 8(nn) and Sections 2.03, 2.14 and 4.03 of the
Trust Indenture).
SECTION 26. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Equipment Trust Trustee" in the three
places in which it appears and substituting therefor the words "Indenture
Trustee", (ii) inserting the word "Certificate" before the word "Holders" in the
two places in which it appears, and (iii) adding the following at the end of the
first sentence thereof:
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<PAGE> 18
; and (C) agrees with Lessee and the Loan Participants not to
revoke the Trust Agreement without the prior written consent
of Lessee, such consent not to be unreasonably withheld, and,
so long as the Trust Indenture is in effect, the Loan
Participants.
SECTION 27. AMENDMENT OF SECTION 11 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 11 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Equipment Trust Trustee" in each place
in which it appears and substituting therefor the words "Indenture Trustee",
(ii) deleting the words "Original Holder" in the first sentence and substituting
therefor the words "Loan Participants" and (iii) deleting the words and
punctuation "the Equipment Trust Agreement, and all supplements to the Equipment
Trust Agreement" in the second line of Section 11(b) and substituting therefor
the words and punctuation ", the Trust Indenture, all supplements to the Trust
Indenture".
SECTION 28. AMENDMENT OF SECTION 12 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 12 of the Original Participation Agreement is
hereby amended by inserting the words and punctuation "the Indenture Trustee,"
following the word "among" in the first line thereof.
SECTION 29. AMENDMENT OF SECTION 13(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT
Capitalized terms used herein without definition shall have
the meanings set forth in the Lease.
SECTION 30. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by (i) inserting the words and punctuation "the Indenture
Trustee," immediately before the word "Lessee" in clause (A) of the second
sentence thereof, and (ii) deleting the words "at the foot of this Agreement" in
clause(A) of the second sentence thereof and substituting therefor the words "on
the signature pages to the Refunding Agreement".
SECTION 31. AMENDMENT OF SECTION 13(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(c) of the Original Participation Agreement
is hereby amended by deleting the words "Equipment Trust Trustee" in the
penultimate sentence thereof and substituting therefor the words "the Indenture
Trustee".
SECTION 32. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT therefor the words "Trust Indenture" and (ii) deleting
the words "Equipment Trust Trustee" in clause (D)(III) thereof and substituting
therefor the words "Indenture Trustee".
SECTION 33. AMENDMENT OF SECTION 15(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(b) of the Original Participation Agreement
is hereby amended by (i)
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<PAGE> 19
inserting the words and punctuation "the Indenture Trustee, the Loan
Participant," before the word "Lessee" in the second line thereof and (ii)
inserting the words and punctuation "the Indenture Trustee's, the Loan
Participant's" before the word "Lessee's" in the fourth line thereof.
SECTION 34. AMENDMENT OF SECTION 15(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(c) of the Original Participation Agreement
is hereby amended by (i) deleting the words "Equipment Trust Trustee" in the
second sentence thereof and substituting therefor the words "Indenture Trustee",
(ii) inserting the words and punctuation ", the Indenture Trustee and its
successors as Indenture Trustee under the Trust Indenture" after the words
"Equipment Trust Agreement" in the third sentence thereof, and (iii) adding the
word "Certificate" before the word "Holder" in the third sentence thereof.
SECTION 35. AMENDMENT OF SECTION 17 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
(a) Lessee shall have the right to refinance the
Secured Certificates no more than three times by giving
written notice to the Owner Participant and the Owner Trustee
that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner
Participant agrees to negotiate promptly in good faith to
conclude an agreement with Lessee as to the terms of such
refinancing (including the terms of any debt to be issued in
connection with such refinancing); provided that no such
refinancing shall require an increase in the amount of the
Owner Participant's investment in the beneficial ownership of
the Aircraft.
Upon such agreement:
(1) within ten Business Days after the reaching
of such agreement, the Owner Participant will deliver to
Lessee a certificate of an authorized representative of the
Owner Participant (the "REFINANCING CERTIFICATE") setting
forth (i) the proposed date on which the outstanding Secured
Certificates will be redeemed, any new debt will be issued and
the other aspects of such refinancing will be consummated
(such date, the "REFINANCING DATE") and (ii) the following
information calculated pursuant to the provisions of paragraph
(6) of this Section 17(a): (A) subject to the limitations set
forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the
Owner Trustee on the Refinancing Date, (C) the amount, if any,
by which the Owner Participant's aggregate investment in the
beneficial interest in the Aircraft is to be decreased and (D)
the proposed revised schedules of Basic Rent percentages, debt
amortization, Stipulated Loss Value percentages and
Termination Value percentages. The Refinancing Certificate
shall not provide for a debt/equity ratio of more than 4:1.
Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification
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<PAGE> 20
pursuant to Exhibit F to the Lease of the information set
forth in the Refinancing Certificate. Upon the acceptance by
Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such
verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date and the revised Basic Rent percentages,
debt amortization, Stipulated Loss Value percentages and
Termination Value percentages (such information, whether as
set forth or as so determined, the "REFINANCING INFORMATION")
the appropriate parties will take the actions specified in
paragraphs (2) through (5) below;
(2) the appropriate parties will enter into
appropriate documentation (which may involve an underwriting
agreement in connection with a public offering of such debt to
be issued by the Owner Trustee or the sale of the Owner
Trustee's interest in the Trust Estate and/or the Aircraft and
its resale to the Owner Trustee) with the institution or
institutions to be named therein providing for (i) the
issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an
aggregate principal amount specified in the Refinancing
Information which amount shall be equal to the aggregate
principal amount of all Secured Certificates outstanding on
the Refinancing Date (such debt securities, the "NEW DEBT"),
(ii) the application of the proceeds of the sale of the New
Debt to the redemption of all such Secured Certificates on the
Refinancing Date and (iii) the payment of the excess, if any,
of such proceeds over the amounts necessary to effect such
redemption to the Owner Trustee;
(3) Lessee shall give the notice to the
Indenture Trustee pursuant to Section 2.11 of the Trust
Indenture, and Lessee and the Owner Trustee will amend the
Lease to provide that (i) Basic Rent payable in respect of the
period from and after the Refinancing Date shall be as
provided in the Refinancing Information and (ii) amounts
payable in respect of Stipulated Loss Value and Termination
Value from and after the Refinancing Date shall be as provided
in the Refinancing Information;
(4) the Owner Trustee will enter into an
agreement to provide for the securing thereunder of the New
Debt in like manner as the Secured Certificates and will enter
into such amendments and supplements to the Trust Indenture
(or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) unless otherwise agreed by the Owner
Participant, Lessee shall pay or reimburse all of the expenses
of such refunding or refinancing (including fees and expenses
of counsel);
(6) when calculating any of the information
required to be set forth
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<PAGE> 21
in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner
Participant's Net Economic Return, (B) minimizes the Net
Present Value of Rents to Lessee and minimizes the Stipulated
Loss Value and Termination Value percentages to the extent
possible consistent with clause (A), (C) is consistent with
the provisions of Section 3 of the Lease and (D) uses the same
methodology and assumptions used by the Owner Participant in
determining Basic Rent, Excess Amounts, Stipulated Loss Values
and Termination Values on the Delivery Date (except to the
extent such assumptions have been altered since the Delivery
Date in connection with an adjustment to Rents pursuant to
Section 3(d) of the Lease or such assumptions are the subject
of the recalculations being conducted by the Owner
Participant); and
(7) in connection with any proposed refinancing,
if, on the date which is two Business Days prior to the last
date on which notice of revocation of redemption may be given
pursuant to Section 2.12(b) of the Trust Indenture, the Owner
Participant is not satisfied in its sole discretion that such
refinancing will occur on the date specified for such
refinancing in the notice provided pursuant to Section 2.11 of
the Trust Indenture, then Lessee shall not effect such
proposed refinancing and shall provide notice to such effect
to the Indenture Trustee pursuant to Section 2.12(b) of the
Indenture.
(b) The Secured Certificates shall not be
subject to voluntary redemption by the Owner Trustee without
the consent of Lessee except as set forth in Section 2.14 of
the Trust Indenture.
SECTION 36. DELETION OF ANNEX A TO THE ORIGINAL PARTICIPATION
AGREEMENT. The Original Participation Agreement is hereby amended by deleting
Annex A thereto in its entirety.
SECTION 37. AMENDMENT OF SCHEDULE I TO THE ORIGINAL
PARTICIPATION AGREEMENT. Schedule I to the Original Participation Agreement is
hereby amended by deleting paragraph 1 thereof in its entirety and substituting
"Payments made to the Owner Participant shall be made to [
].
SECTION 38. DELETION OF EXHIBIT I TO THE ORIGINAL
PARTICIPATION AGREEMENT. The Original Participation Agreement is hereby amended
by deleting Exhibit I thereto in its entirety.
SECTION 39. RATIFICATION; EFFECTIVENESS. Except as hereby
modified, the Original Participation Agreement shall continue in full force and
effect as originally executed. The amendments to the Original Participation
Agreement set forth herein shall be effective as of the date hereof. From and
after the date of this Amendment, each and every reference in the Participation
Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or
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<PAGE> 22
similar words or phrases referring to the Participation Agreement or any word or
phrase referring to a section or provision of the Participation Agreement is
deemed for all purposes to be a reference to the Participation Agreement or such
section or provision as amended pursuant to this Amendment.
SECTION 40. MISCELLANEOUS. (a) Each of the parties hereto
agrees that the transactions contemplated hereby and by the Refunding Agreement
shall constitute one of the three refinancing operations permitted in Section 17
of the Original Participation Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any event or condition which occurred
or existed prior to the Closing, (ii) the Purchaser is making no representations
or warranties other than those set forth therein or in the Refunding Agreement,
and (iii) the Purchaser has no liability or obligation under any covenant in any
of such agreements for any period prior to the Closing.
(c) This Amendment may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: ___________________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Loan Participant
By: ___________________________________
Name:
Title:
-23-
<PAGE> 24
[ ],
as Owner Participant
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By: ___________________________________
Name:
Title:
-24-
<PAGE> 25
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
4. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1D,
dated as of June 12, 1996.
<PAGE> 1
REFUNDING AGREEMENT
[NW 1989 B]
This REFUNDING AGREEMENT [NW 1989 B], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iv)
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the four separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Indenture Trustee (the "INDENTURE
TRUSTEE") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease (as
defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, [ ] as the owner participant
(the "ORIGINAL OWNER PARTICIPANT"), as the Original Holder (the "ORIGINAL LOAN
PARTICIPANT"), The First National Bank of Boston as the owner trustee (the
"ORIGINAL OWNER TRUSTEE"), and Meridian Trust Company as the equipment trust
trustee (the "EQUIPMENT TRUST TRUSTEE") entered into the Participation Agreement
[NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Original Owner Trustee, the Lessee and the
Equipment Trust Trustee, entered into the Equipment Trust Agreement [NW 1989 B],
dated as of March 15, 1989, as supplemented by Equipment Trust Agreement and
Trust Agreement Supplement No. 1 [NW 1989 B], dated March 16, 1989
(collectively, the "ORIGINAL EQUIPMENT TRUST AGREEMENT"), pursuant to which the
Original Owner Trustee issued to the Original Loan Participant Series BB
Certificates substantially in the form set forth in Exhibit A thereto (the
"ORIGINAL CERTIFICATES") as evidence of the loan then being made by the Original
Loan Participant in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Original Owner Trustee and the Lessee entered into
the Lease Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15,
1989, as supplemented by Lease Supplement No. 1 [NW 1989 B] dated March 16, 1989
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Original Owner Trustee agreed to lease to the Lessee, and the
Lessee agreed to lease from such Original Owner Trustee, the Aircraft commencing
on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Original Owner Participant and the Original Owner
Trustee entered into the Trust Agreement [NW 1989 B], dated as of March 15, 1989
(the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed,
among other things, to hold the Trust Estate defined in Section 1.01 thereof for
the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Original Owner Participant entered into a Tax
Indemnity Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15,
1989 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
<PAGE> 2
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Lessee, the Owner Trustee and the Indenture Trustee
entered into a Purchase Agreement Assignment [NW 1989 B], dated as of March 15,
1989, and the Manufacturer entered into a Consent and Agreement [NW 1989 B],
dated as of March 15, 1989 (collectively, the "ORIGINAL PURCHASE AGREEMENT
ASSIGNMENT");
WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment,
Assumption and Acceptance among the Owner Participant, the Original Owner
Trustee and the Owner Trustee, dated May 16, 1996 (the "INSTRUMENT OF
TRANSFER"), the Owner Trustee succeeded to all of the estates, properties,
rights, powers, duties and trusts of the Original Owner Trustee under the Trust
Agreement and the other Operative Documents to which the Original Owner Trustee
was a party;
WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of
December 19, 1991 (the "ASSIGNMENT AND ASSUMPTION AGREEMENT") by and among the
Original Owner Participant, the Owner Participant and [ ]
as parent of the Owner Participant, the Original Owner Participant transferred
to the Owner Participant all of its right, title and interest in the Trust
Estate, the Aircraft and the Operative Documents;
WHEREAS, concurrently with the execution and delivery of the Assignment
and Assumption Agreement, [ ] entered into a Guaranty (the
"PARENT GUARANTY") under which [ ] guaranteed to Lessee, the
Original Owner Trustee, the Equipment Trust Trustee and the Original Owner
Participant obligations of the Owner Participant;
WHEREAS, the Original Equipment Trust Agreement was amended by the
First Amendment to Equipment Trust Agreement [NW 1989 B] dated as of December
19, 1991 (as so amended, the "EQUIPMENT TRUST AGREEMENT");
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Certificates as part of a
refinancing operation, Section 3(d) of the Original Lease contemplates the
adjustment of Rent in the event of such a refinancing operation, and the Lessee
has given its written notice to the Owner Participant, the Owner Trustee and the
Equipment Trust Trustee pursuant to such Section 17 of its desire to implement
such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will enter into the Trust Indenture and Security Agreement [NW
1989 B], dated as of the Refinancing Date (the "INDENTURE"), under which
Indenture the Owner Trustee will issue new secured certificates substantially in
the form set forth in Section 2.01 thereof (the "SECURED CERTIFICATES") in four
series;
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the Amended and
Restated Lease Agreement [NW 1989 B], dated as of the date hereof (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended and restated by the Lease
Amendment No. 1, the "LEASE"), containing amendments, modifications and
additions necessary to give effect to the transactions described herein;
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into the First Amendment to Trust Agreement [NW 1989 B], dated as of
the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust
Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST
AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and the Lessee entered into the First Amendment
to Tax Indemnity Agreement [1989 B], dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
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<PAGE> 3
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1989 B], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee and the
Indenture Trustee will enter into the First Amendment to Purchase Agreement
Assignment [NW 1989 B], dated as of the Refinancing Date, and the Manufacturer
will enter into the First Amendment to Consent and Agreement [NW 1989 B], dated
as of the Refinancing Date (collectively, the "PAA AMENDMENT NO. 1"; the
Original Purchase Agreement Assignment, as amended by the PAA Amendment No. 1,
the "PURCHASE AGREEMENT ASSIGNMENT");
WHEREAS, at the Closing, the Guarantor will enter into the Guarantee
[NW 1989 B] (the "GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, four separate grantor
trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS
THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Secured Certificates bearing the same interest rate as the
Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust (other than
Northwest Airlines 1996-1D Pass Through Trust), with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Refinancing
Date (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF SECURED CERTIFICATES; REFUNDING. (a) Subject to
the satisfaction or waiver of the conditions set forth herein, on June 12, 1996
or on such other date agreed to by the parties hereto (the "REFINANCING DATE"):
(i) immediately prior to the Closing, the Lessee shall pay to the
Owner Trustee, as a payment of Basic Rent under the Lease, an amount
equal to the unpaid interest on the Original Certificates accrued up to
but not including the Refinancing Date, and as Supplemental Rent on an
after tax basis any Funding Loss Amount (as defined in the Equipment
Trust Agreement) payable in respect of the Original Certificates;
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<PAGE> 4
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the Secured
Certificates being issued to such Pass Through Trustee as set forth in
clause (vii) below;
(iii) provided that the Owner Trustee receives sufficient monies
pursuant to Sections 1(a)(i) and (ii) hereof or from the Lessee as a
payment of Supplemental Rent (which Supplemental Rent shall be paid on
an after tax basis) under the Lease, the Owner Trustee shall pay to the
Equipment Trust Trustee for the benefit of the holders of Original
Certificates an amount equal to the aggregate principal amount of
Original Certificates outstanding on the Refinancing Date, together
with accrued and unpaid interest on the Original Certificates and
Funding Loss Amount, if any, up to but not including the Refinancing
Date, and all other amounts payable to the holders of Original
Certificates under the Equipment Trust Agreement and the Original
Participation Agreement;
(iv) pursuant to the Equipment Trust Agreement, the Equipment
Trust Trustee shall disburse to the holders of the Original
Certificates the amounts of principal and interest, Funding Loss
Amount, and other amounts, if any, described in clause (iii) above,
owing to them on the Refinancing Date with respect to the Original
Certificates as a prepayment of the Original Certificates;
(v) simultaneously with the disbursement by the Equipment
Trust Trustee of amounts described in clause (iv) above to the holders
of the Original Certificates, (a) the Equipment Trust Trustee shall
receive the Original Certificates for cancellation and (b) the Owner
Trustee shall obtain from the Equipment Trust Trustee, pursuant to
Section 10.01 of the Equipment Trust Agreement, proper instruments
acknowledging satisfaction and discharge of the Equipment Trust
Agreement and a full warranty bill of sale for the Aircraft, executed
by the Equipment Trust Trustee in favor of the Owner Trustee (the "BILL
OF SALE"), together with any other documents required to be executed
upon expiration of the ETA Lease Term (as defined by reference in the
Original Participation Agreement) pursuant to Section 5.02 of the
Equipment Trust Agreement (including UCC termination statements and
termination and discharge instruments in due form for filing with the
FAA);
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture;
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Secured Certificates of
the maturity and aggregate principal amount, bearing the interest rate
and for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust;
(viii) appropriate UCC termination statements and termination
instruments evidencing the termination and discharge of the Equipment
Trust Agreement and the release of the liens created thereby shall be
duly filed with the FAA and in all necessary or advisable state or
local jurisdictions; and
(ix) the Owner Trustee shall use the excess of the amounts
received by it pursuant to clauses (i) and (ii) above over the amount
paid by it pursuant to clause (iii) above to pay the Refinancing
Expenses pursuant to Section 11(a) hereof up to an amount equal to
1.0049% of Lessor's Cost.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
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<PAGE> 5
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Secured Certificates pursuant to Section 1(a) above on or prior to
June 12, 1996 or such other date as shall be agreed in writing by the parties
hereto, the written notice given by the Lessee pursuant to Section 17 of the
Original Participation Agreement shall be deemed never to have been given, none
of the Owner Participant, the Owner Trustee nor the Lessee shall have any
obligation to pay to the holders of Original Certificates any amount in respect
of the prepayment of the Original Certificates, the Original Certificates shall
remain outstanding and in full force and effect, and the actions contemplated by
Sections 1(a), 5, 6 and 7 hereof shall not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated the
date hereof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. SECURED CERTIFICATES. The Secured Certificates shall be
payable as to principal in accordance with the terms of the Indenture, and the
Secured Certificates shall provide for a fixed rate of interest per annum and
shall contain the terms and provisions provided for the Secured Certificates in
the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Secured Certificates bearing the interest rate set
forth opposite the name of such Pass Through Trust on Schedule II hereto, which
Secured Certificates in the aggregate shall be in the principal amounts set
forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through
Trust Agreements and of the other Operative Documents, all such Secured
Certificates shall be dated and authenticated as of the Refinancing Date and
shall bear interest therefrom, shall be registered in such names as shall be
specified by the Subordination Agent and shall be paid in the manner and at such
places as are set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Secured Certificates to
the Indenture Trustee for authentication, and the Indenture Trustee shall have
authenticated such Secured Certificates and shall have tendered the Secured
Certificates to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents, and any such documents provided to the Owner
Participant pursuant to this Section 3(b) shall be reasonably satisfactory in
form and substance to the Owner Participant:
(1) this Agreement;
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<PAGE> 6
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. l;
(5) each of the Pass Through Trust Agreements;
(6) the Intercreditor Agreement;
(7) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts;
(8) the Guarantee;
(9) the PAA Amendment No. 1;
(10) the Trust Agreement Amendment No. 1;
(11) an instrument of termination evidencing and effecting the
satisfaction, discharge and termination of the Equipment
Trust Agreement and transfer of title to the Aircraft (the
"ETA TERMINATION"); and
(12) the Bill of Sale.
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the TIA Amendment No. 1,
the Pass Through Trust Agreements, the PAA Amendment No. 1, the
Guarantee and any other documents to be executed on behalf of the
Lessee or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
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<PAGE> 7
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale and the Original Lease have been
duly recorded, and the Original Trust Agreement has been duly
filed, with the FAA pursuant to the sections of Title 49, United
States Code, relating to aviation (the "FEDERAL AVIATION ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d)) relate solely to an earlier date (in
which case such representations and warranties were correct on and
as of such earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the PAA Amendment
No. 1, the Pass Through Trust Agreements and any other documents to
be executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby and the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
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<PAGE> 8
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1, the PAA Amendment No. 1, the Instrument of
Transfer, the Trust Agreement Amendment No. 1 and any other
documents to be executed on behalf of the Owner Trustee in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal
department, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from [ ], special
counsel for the Owner Participant, and an opinion addressed to it from corporate
counsel to the Owner Participant, in each case in form and substance
satisfactory to each of them.
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<PAGE> 9
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel to the Liquidity Provider and of in-house German counsel
to the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Secured Certificates to be
purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the ETA Termination, the Lease
Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the
Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture
Trustee, the Owner Participant and the Owner Trustee an opinion as to the due
recording of the ETA Termination, the Lease Amendment No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE, ETC. (a) The obligations of the Lessee and the Guarantor to participate
in the transactions contemplated by this Agreement and to execute and deliver
each of the Pass Through Trust Agreements, the PAA Amendment No. 1, the
Guarantee and the PA Amendment No. 1 are subject to the receipt by the Lessee
and the Guarantor of (i) each opinion referred to in subsections (j) through (n)
of Section 3, addressed to the Lessee and the Guarantor or accompanied by a
letter from counsel rendering such opinion authorizing the Lessee and the
Guarantor to rely on such opinion as if it were addressed to the Lessee and the
Guarantor, (ii) each certificate referred to in subsections (e) through (g) of
Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment
No. 1 and the Trust Agreement Amendment No. 1, and (iv) such other documents and
evidence with respect to each other party hereto as the Lessee, the Guarantor or
their counsel may reasonably request in order to establish the due consummation
of the transactions contemplated by this Agreement, the taking of all necessary
corporate action in connection therewith and compliance with the conditions
herein set forth.
(b) The respective obligations of each of the Lessee, the Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee to
participate in the transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Refinancing Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the
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Pass Through Trustee, in form and substance satisfactory to each of them, and
(iii) such other documents and evidence with respect to each other party hereto
as it may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
SECTION 5. EXECUTION AND DELIVERY OF THE INDENTURE. Subject to the
satisfaction or waiver of the conditions precedent set forth herein, the Owner
Participant by execution and delivery hereof, requests, authorizes and directs
the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee
and the Indenture Trustee, by execution and delivery hereof, agree to execute
and deliver the Indenture. The Lessee and the Guarantor, by execution and
delivery hereof, consent to such execution and delivery of the Indenture. The
Indenture shall be effective as of the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE AND THE ORIGINAL PURCHASE
AGREEMENT ASSIGNMENT. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and
the Owner Participant, by execution and delivery hereof, consent to the
amendment to the Original Lease effected by, and request and instruct the Owner
Trustee to execute and deliver the Lease Amendment No. 1 and the PAA Amendment
No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery
hereof, to execute and deliver, the Lease Amendment No. 1 and the PAA Amendment
No. 1. The Lease Amendment No. 1 and the PAA Amendment No. 1 shall be effective
as provided therein. The execution and delivery by the Owner Trustee and the
Owner Participant of the Lease Amendment No. 1 and the TIA Amendment No. 1 shall
not be deemed to constitute satisfaction of a waiver by the Owner Participant or
the Owner Trustee of the conditions precedent set forth herein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the
Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree
to execute and deliver the PA Amendment No. 1. Upon the execution and delivery
of the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 7A. AMENDMENT OF THE ORIGINAL TRUST AGREEMENT. The Lessee
consents to the Trust Agreement Amendment No. 1.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the PAA
Amendment No. 1, the TIA Amendment No. 1 and the other Operative
Documents to which it is a party and (ii) in the case of the Guarantor,
this Agreement, the Pass Through Trust Agreements, the Guarantee, the
Underwriting Agreement and the other Operative Documents to which it is
a party, and is duly qualified to do business as a foreign corporation
in each state in which its operations or the nature of its business
requires other than failures to so qualify which would not have a
material adverse effect on the condition (financial or otherwise),
consolidated business or properties of it and its subsidiaries
considered as one enterprise or the ability of the Lessee or the
Guarantor to perform their respective obligations under the Operative
Documents;
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<PAGE> 11
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Guarantee, the
PAA Amendment No. 1, the TIA Amendment No. 1, the Underwriting
Agreement and each other Operative Document to which the Lessee or the
Guarantor (as the case may be) is a party, and the performance of the
obligations of the Lessee or the Guarantor (as the case may be) under
this Agreement, the Participation Agreement, the Tax Indemnity
Agreement, the Lease, the Pass Through Trust Agreements, the Guarantee,
the Underwriting Agreement, the Purchase Agreement Assignment and each
other Operative Document to which the Lessee or the Guarantor (as the
case may be) is a party, have been duly authorized by all necessary
corporate action on the part of the Lessee or the Guarantor, do not
require any stockholder approval, or approval or consent of any trustee
or holder of any material indebtedness or material obligations of the
Lessee or the Guarantor, except such as have been duly obtained and are
in full force and effect, and do not contravene any law, governmental
rule, regulation, judgment or order binding on the Lessee or the
Guarantor (as the case may be) or the certificate of incorporation or
by-laws of the Lessee or the Guarantor (as the case may be), or
contravene the provisions of, or constitute a default under, or result
in the creation of any Lien (other than Permitted Liens) upon the
property of the Lessee or the Guarantor (as the case may be) under, any
indenture, mortgage, contract or other agreement to which the Lessee or
the Guarantor (as the case may be) is a party or by which it may be
bound or affected which contravention, default or Lien, individually or
in the aggregate, would be reasonably likely to have a material adverse
effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise or the ability of the Lessee or the Guarantor to perform
their respective obligations under the Operative Documents;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Guarantee, the PAA Amendment No. 1, the TIA Amendment No. 1, the
Underwriting Agreement or any other Operative Document to which the
Lessee or the Guarantor (as the case may be) is a party, nor the
performance of the obligations of the Lessee or the Guarantor (as the
case may be) hereunder or under the Participation Agreement, the Tax
Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the
Guarantee, the Underwriting Agreement, the Purchase Agreement
Assignment or the other Operative Documents to which the Lessee or the
Guarantor (as the case may be) is a party, nor the consummation by the
Lessee or the Guarantor (as the case may be) of any of the transactions
contemplated hereby or thereby, requires the consent or approval of,
the giving of notice to, the registration with, or the taking of any
other action in respect of, the Department of Transportation, the FAA,
or any other federal, state or foreign governmental authority having
jurisdiction, other than (i) the registration of the Certificates under
the Securities Act of 1933, as amended, and under the securities laws
of any state in which the Certificates may be offered for sale if the
laws of such state require such action, (ii) the qualification of the
Pass Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, pursuant to an order of the Securities and Exchange
Commission, (iii) the consents, approvals, notices, registrations and
other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the
Participation Agreement, (iv) the registrations and filings referred to
in Section 8(f), and (v) authorizations, consents, approvals, actions,
notices and filings required to be obtained, taken, given or made
either only after the date hereof or the failure of which to obtain,
take, give or make would not be reasonably likely to have a material
adverse effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise or the ability of the Lessee or the Guarantor to perform its
respective obligations under any of the Operative Documents to which it
is a party and upon the occurrence of the Closing, the registrations,
filings, qualifications, consents, approvals, notices and other
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<PAGE> 12
actions referred to in clause (i) through (iv) above will have been
duly made, obtained, given, taken or effected;
(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement, the Purchase Agreement Assignment and the Lease, when the PA
Amendment No. 1, the TIA Amendment No. 1, the PAA Amendment No. 1 and
the Lease Amendment No. 1 shall have been executed and delivered by
each of the parties thereto, will constitute, the legal, valid and
binding obligations of the Lessee or the Guarantor (as the case may be)
enforceable against the Lessee or the Guarantor (as the case may be) in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in
the case of the Lease, as limited by applicable laws which may affect
the remedies provided in the Lease, which laws, however, do not make
the remedies provided in the Lease inadequate for practical realization
of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture, the ETA Termination and the Lease Amendment No. 1, no
further action, including the 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 under the laws of the United States of America or any State
thereof in order to perfect the Owner Trustee's rights and interest in
the Aircraft as against the Lessee and any third parties, or to perfect
the security interest in favor of the Indenture Trustee in the Owner
Trustee's interest in the Aircraft (with respect to such portion of the
Aircraft as is covered by the recording system established by the FAA
pursuant to 49 U.S.C. Section 44107) and in the Lease in any applicable
jurisdiction in the United States other than (i) the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease and the Lease Amendment No. 1 (to the extent the Lease
constitutes chattel paper), (ii) the filing of financing statements
with respect to the security interests created by the Indenture under
the Uniform Commercial Code of Utah and (iii) the filing of
continuation statements at periodic intervals with respect to the
Uniform Commercial Code financing statements in effect on the
Refinancing Date covering the security interests created by the
Indenture or describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Secured Certificates or the
Certificates for sale to any Person other than in a manner permitted by
the Securities Act of 1933, as amended, and by the rules and
regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
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<PAGE> 13
(a) The Owner Trustee, in its individual capacity (except as
provided in clauses (3) and (7) below) and (but only as provided in clauses (3)
and (7) and, to the extent that it relates to the Owner Trustee, clauses (2),
(9) and (11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a
national banking association duly organized and validly existing in
good standing under the laws of the United States, has full
corporate power and authority to carry on its business as now
conducted, has, or had on the respective dates of execution
thereof, the corporate power and authority to execute and deliver
the Instrument of Transfer and to carry out the terms of the
Original Trust Agreement, and has, or had on the respective dates
of execution thereof or assumption of rights and obligations
thereunder (assuming the authorization, execution and delivery of
the Assignment and Assumption Agreement by the Owner Participant),
as Owner Trustee, and to the extent expressly provided herein or
therein, in its individual capacity, the corporate power and
authority to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Secured Certificates, the Lease, the
PA Amendment No. 1, the Trust Agreement Amendment No. 1, the PAA
Amendment No. 1 and each other Operative Document (other than the
Trust Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to the
extent expressly provided herein, in its individual capacity, has
duly authorized, executed and delivered this Agreement and
(assuming the due authorization, execution and delivery of the
Assignment and Assumption Agreement by the Owner Participant), this
Agreement constitutes and each of the Participation Agreement, when
the PA Amendment No. 1 shall have been entered into, the Indenture,
when entered into, the Lease, when the Lease Amendment No. 1 shall
have been entered into, the Purchase Agreement Assignment, when the
PAA Amendment No. 1 shall have been entered into, and the Trust
Agreement, when the Trust Agreement Amendment No. 1 shall have been
entered into, will constitute, a legal, valid and binding
obligation of the Owner Trustee, in its individual capacity, or as
Owner Trustee, as the case may be, enforceable against it in its
individual capacity or as Owner Trustee, as the case may be, in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(3) assuming the due authorization, execution and delivery
of the Assignment and Assumption Agreement by the Owner
Participant, the Owner Trustee has duly authorized, and on the
Refinancing Date shall have duly issued, executed and delivered to
the Indenture Trustee for authentication, the Secured Certificates
pursuant to the terms and provisions hereof and of the Indenture,
and each Secured Certificate on the Refinancing Date will
constitute the valid and binding obligation of the Owner Trustee
and will be entitled to the benefits and security afforded by the
Indenture in accordance with the terms of such Secured Certificate
and the Indenture;
(4) neither the execution and delivery by the Owner Trustee,
in its individual capacity or as Owner Trustee, as the case may be,
of this Agreement, the Instrument of Transfer, the PA Amendment No.
1, the Indenture, the Lease Amendment No. 1, the PAA Amendment No.
1, the Trust Agreement Amendment No. 1, the Secured Certificates or
any other Operative Document to which it is a party, nor the
consummation by the Owner Trustee, in its individual capacity or as
Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the
case may be, 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 it, or (B) violates or will
violate its articles of association or by-laws, or contravenes or
will contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of, or
results or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sale contract, bank loan or credit
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<PAGE> 14
agreement, license or other agreement or instrument to which it is
a party or by which it is bound, or contravenes or will contravene
any law, governmental rule or regulation of the United States of
America or the State of Utah governing the trust powers of the
Owner Trustee, or any judgment or order applicable to or binding on
it;
(5) no consent, approval, order or authorization of, giving
of notice to, or registration with, or taking of any other action
in respect of, any Utah state or local governmental authority or
agency or any United States federal governmental authority or
agency regulating the trust powers of the Owner Trustee in its
individual capacity is required for the execution and delivery of,
or the carrying out by, the Owner Trustee, in its individual
capacity or as Owner Trustee, as the case may be, of any of the
transactions contemplated hereby or by the Trust Agreement, the
Participation Agreement, the Indenture, the Lease, the Secured
Certificates or any other Operative Document to which it is a
party, or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action as
has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor Lien (including for this purpose
Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to the Owner Trustee, in
its individual capacity, other than any Lessor Liens (including for
this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) (A) the existence of which poses
no material risk of the sale, forfeiture or loss of the Aircraft,
Airframe or any Engine or any interest therein, (B) the existence
of which does not interfere in any way with the use or operation of
the Aircraft by the Lessee (or any Sublessee), (C) the existence of
which does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner Trustee
is diligently contesting by appropriate proceedings and (E) the
existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance
with the Indenture of Rent assigned to the Indenture Trustee for
the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose
Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to the Owner Trustee, as
lessor under the Lease, other than any Lessor Liens (including for
this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) (A) the existence of which poses
no material risk of the sale, forfeiture or loss of the Aircraft,
Airframe or any Engine or any interest therein, (B) the existence
of which does not interfere in any way with the use or operation of
the Aircraft by the Lessee (or any Sublessee), (C) the existence of
which does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner Trustee
is diligently contesting by appropriate proceedings and (E) the
existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance
with the Indenture of Rent assigned to the Indenture Trustee for
the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either
in its individual capacity or as Owner Trustee, imposed by the
State of Utah or any political subdivision thereof in connection
with the redemption of the Original Certificates or the issuance of
the Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any
of the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the Trust
Estate were not located in the State of Utah and First Security
Bank of Utah, National Association had not (a) had its principal
place of business in, (b) performed (in its individual capacity or
as Owner Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to the
transactions contemplated by the Operative Documents in, the State
of Utah;
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<PAGE> 15
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, to
perform its obligations under any of the instruments referred to in
clauses (1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where
its records concerning the Aircraft and all its interests in, to
and under all documents relating to the Trust Estate, are located
in Salt Lake City, Utah.
(11) the Owner Trustee has not, in its individual capacity
or as Owner Trustee, directly or indirectly offered any Secured
Certificate or Certificate or any interest in or to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, anyone other
than the Pass Through Trustee, the Original Loan Participant and
the Owner Participant; and the Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in arranging
and proposing the refinancing contemplated hereby and agreed to
herein by the Owner Trustee, the Lessee has not acted as agent of
the Owner Trustee) to offer directly or indirectly any Secured
Certificate, any Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
to solicit any offer to acquire any of the same from, any person;
and
(12) it is a Citizen of the United States (without making
use of a voting trust agreement, voting powers agreement or similar
arrangements).
(b) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of [ ] and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has, or had on the
respective dates of execution thereof or assumption of rights and
obligations thereunder, as the case may be, the corporate power and
authority to enter into and to perform its obligations under this
Agreement, the Original Participation Agreement, the Original Tax
Indemnity Agreement, the Assignment and Assumption Agreement, the
Original Trust Agreement, the PA Amendment No. 1, the TIA Amendment
No. 1 and the Trust Agreement Amendment No. 1; and this Agreement
and the assumption of obligations under the Original Participation
Agreement, the Original Tax Indemnity Agreement and the Original
Trust Agreement have been duly authorized, executed and delivered
by it; and this Agreement constitutes, and each of the
Participation Agreement when the PA Amendment No. 1 shall have been
entered into, the Tax Indemnity Agreement when the TIA Amendment
No. 1 shall have been entered into and the Trust Agreement when the
Trust Agreement Amendment No. 1 shall have been entered into, will
constitute, the legal, valid and binding obligations of the Owner
Participant enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1, the Trust Agreement Amendment No. 1 or any other
Operative Document to which it is a party nor (B) compliance by it
with all of the provisions hereof or thereof, (x) will contravene
any law or order of any court or governmental authority or agency
applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect
to laws, rules or regulations relating to aviation or to the nature
of the equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements of
the Owner Participant under
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<PAGE> 16
applicable law), or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default under,
its certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which the
Owner Participant is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by it of
this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or
the Trust Agreement Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened
actions or proceedings before any court or administrative agency or
arbitrator which would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Participation Agreement, the Tax Indemnity Agreement
and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by
it to act on its behalf (it being understood that in proposing,
facilitating and otherwise taking any action in connection with the
refinancing contemplated hereby and agreed to herein by the Owner
Participant, the Lessee has not acted as agent of the Owner
Participant) has directly or indirectly offered any Secured
Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person;
the Owner Participant's interest in the Trust Estate and the Trust
Agreement was acquired for its own account and was purchased for
investment and not with a view to any resale or distribution
thereof;
(6) on the Refinancing Date, the Trust Estate shall be free
of Lessor Liens attributable to the Owner Participant other than
any Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens)
(A) the existence of which poses no material risk of the sale,
forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in
any way with the use or operation of the Aircraft by the Lessee (or
any Sublessee), (C) the existence of which does not affect the
priority or perfection of, or otherwise jeopardize, the Lien of the
Indenture, (D) which the Owner Participant is diligently contesting
by appropriate proceedings and (E) the existence of which does not
result in actual interruption in the receipt and distribution by
the Indenture Trustee in accordance with the Indenture of Rent
assigned to the Indenture Trustee for the benefit of the
Certificate Holders; and
(7) it is a Citizen of the United States (without making use
of a voting trust agreement, voting powers agreement or similar
arrangement).
(c) The Pass Through Trustee represents, warrants and covenants
that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the full corporate power, authority and
legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary
powers to execute and deliver each of the Pass Through Trust
Agreements, the Intercreditor Agreement, the PA Amendment No. 1 and
this Agreement and to perform its obligations under this Agreement,
the Pass Through Trust Agreements, the Intercreditor Agreement and
the Participation Agreement;
(2) this Agreement has been, and when executed and delivered
by the Pass Through Trustee, each of the Pass Through Trust
Agreements, the Intercreditor Agreement and the PA Amendment No. 1
will have been, duly authorized, executed and delivered by the Pass
Through
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<PAGE> 17
Trustee; this Agreement constitutes, and when executed and
delivered by the Pass Through Trustee, each of the Pass Through
Trust Agreements, the Intercreditor Agreement, the PA Amendment No.
1 and (upon execution and delivery of the PA Amendment No. 1) the
Participation Agreement, will constitute the legal, valid and
binding obligations of the Pass Through Trustee enforceable against
it in accordance with their respective terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Pass Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement, this Agreement or the PA Amendment No.
1, the performance by the Pass Through Trustee of the Participation
Agreement, the purchase by the Pass Through Trustee of the Secured
Certificates pursuant to this Agreement or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements
contravenes any law, rule or regulation of the Commonwealth of
Massachusetts or any United States governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary
powers or any judgment or order applicable to or binding on the
Pass Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement or
instrument to which the Pass Through Trustee is a party or by which
it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 or this Agreement,
nor the consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby or by the Participation
Agreement, requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action
with respect to, any Massachusetts governmental authority or agency
or any federal governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, any of the Pass Through Trust Agreements, the
Intercreditor Agreement or the Participation Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by any of
the Pass Through Trust Agreements), and there are no Taxes payable
by the Pass Through Trustee imposed by the Commonwealth of
Massachusetts or any political subdivision thereof in connection
with the acquisition, possession or ownership by the Pass Through
Trustee of any of the Secured Certificates (other than franchise or
other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in
connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by
the Pass Through Trust Agreements will not be taxable as
corporations, but, rather, each will be characterized as a grantor
trust under subpart E, Part I of Subchapter J of the Code, such
trusts will not be subject to any Taxes imposed by the Commonwealth
of Massachusetts or any political subdivision thereof;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court or
administrative agency which individually or in the aggregate, if
determined adversely to it, would materially adversely affect the
ability of the Pass Through Trustee to perform its obligations
under this Agreement, the Participation Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Secured Certificate for sale to any
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<PAGE> 18
Person or solicited any offer to acquire any Secured Certificates
from any Person, nor has the Pass Through Trustee authorized anyone
to act on its behalf to offer directly or indirectly any Secured
Certificate for sale to any Person, or to solicit any offer to
acquire any Secured Certificate from any Person; and the Pass
Through Trustee is not in default under any Pass Through Trust
Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
(d) The Subordination Agent represents, warrants and covenants
that:
(1) the Subordination Agent is a duly organized national
banking association, validly existing and in good standing with the
Comptroller of the Currency under the laws of the United States and
has the full corporate power, authority and legal right under the
laws of the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and
this Agreement and to perform its obligations under this Agreement,
the Liquidity Facilities and the Intercreditor Agreement and, when
the PA Amendment No. 1 has been executed and delivered by each of
the parties thereto, the Participation Agreement;
(2) this Agreement has been, and when executed and delivered
by the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Subordination Agent;
this Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment No. 1 and (upon execution
and delivery by the Subordination Agent of the PA Amendment No. 1),
the Participation Agreement, will constitute, the legal, valid and
binding obligations of the Subordination Agent enforceable against
it in accordance with their respective terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or
the Participation Agreement, or the performance by the
Subordination Agent of the Participation Agreement, contravenes any
law, rule or regulation of the State of Connecticut or any United
States governmental authority or agency regulating the
Subordination Agent's banking, trust or fiduciary powers or any
judgment or order applicable to or binding on the Subordination
Agent and do not contravene or result in any breach of, or
constitute a default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its
properties may be bound;
(4) neither the execution and delivery by the Subordination
Agent of any of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement nor the
consummation by the Subordination Agent of any of the transactions
contemplated hereby or thereby or by the Participation Agreement
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect
to, any Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement, any
of the
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<PAGE> 19
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment
No. 1 or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with
the transactions contemplated by the Intercreditor Agreement or any
of the Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Secured Certificates (other than franchise or other taxes based on
or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of
the Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court or
administrative agency which individually or in the aggregate, if
determined adversely to it, would materially adversely affect the
ability of the Subordination Agent to perform its obligations under
this Agreement, the PA Amendment No. 1, the Participation
Agreement, the Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Secured Certificate for sale to any Person or solicited
any offer to acquire any Secured Certificates from any Person, nor
has the Subordination Agent authorized anyone to act on its behalf
to offer directly or indirectly any Secured Certificate for sale to
any Person, or to solicit any offer to acquire any Secured
Certificate from any Person; and the Subordination Agent is not in
default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and any such notice shall become effective upon being
deposited in the United States mail, with proper postage for first-class
registered or certified mail prepaid, or when delivered personally or, if
promptly confirmed by mail as provided above, when dispatched by facsimile or
other written telecommunication, addressed, if to the Lessee, the Guarantor, the
Owner Participant, the Owner Trustee, the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee, at their respective addresses or
facsimile numbers set forth below the signatures of such parties at the foot of
this Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b)
below, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee in connection with the
transactions contemplated by this Agreement, the other Operative Documents, the
Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity
Facilities and the Underwriting Agreement (except, in each case, as otherwise
provided therein) shall be paid promptly by the Owner Trustee solely from the
proceeds received from the issuance of the Secured Certificates which are in
excess of the aggregate principal amount of Original Certificates outstanding on
the Refinancing Date, including, without limitation:
(1) the reasonable fees, expenses and disbursements
allocable to the Secured Certificates issued under the Indenture of
(A) Bingham, Dana & Gould LLP, special counsel for the Pass Through
Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker,
special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C.,
special counsel in Oklahoma City, Oklahoma, (D) Shearman &
Sterling, special counsel for the Underwriters, and (E) special
counsel, if any, to the holders of Original Certificates;
(2) the reasonable fees, expenses and disbursements of
[ ], special counsel for the Owner
Participant, and [ ],
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<PAGE> 20
financial advisor to the Owner Participant (but, in the case of
[ ], only to the extent provided
in the letter agreement dated April 5, 1996, between the Lessee and
the Owner Participant);
(3) underwriting fees and commissions;
(4) the initial fees and expenses of the Indenture Trustee,
the Owner Trustee, the Liquidity Provider, the Pass Through Trustee
and the Subordination Agent;
(5) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the
United States; and
(6) the reasonable fees, expenses and disbursements of White
& Case, special counsel for the Liquidity Provider.
(b) In the event that Refinancing Expenses are in excess of
1.0049% of Lessor's Cost, or exceed the amount the Owner Trustee is required to
pay under Section 11(a) hereof, the Lessee shall pay on an after tax basis any
and all Refinancing Expenses which are in excess of 1.0049% of Lessor's Cost or
in excess of the amounts the Owner Trustee is required to pay under Section
11(a) hereof. In the event that the transactions contemplated by this Section 11
and the agreements referred to herein are not consummated, the Lessee shall bear
and pay all costs, expenses and fees referred to in this Section 11.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Secured Certificates shall be deemed to be a successor or assign of any holder
of Original Certificates.
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<PAGE> 21
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers there unto duly authorized as of the day
and year first above written.
NORTHWEST AIRLINES, INC.,
as Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 23
[ ]
as Owner Participant
By: ______________________________________
Name:
Title:
Address: _____________________________
with a copy to:
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<PAGE> 24
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as Pass
Through Trustee
By: _____________________________________________
Name:
Title:
Address: Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 25
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent
By: _____________________________________________
Name:
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 26
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Indenture Trustee
By: _____________________________________________
Name:
Title:
Address: Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 27
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity, except as
otherwise provided herein, but solely as Owner
Trustee
By: ______________________________________________
Name:
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 28
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1996-1C dated as of the Closing Date.
4. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1996-1D dated as of the Closing Date.
<PAGE> 29
SCHEDULE II TO
REFUNDING AGREEMENT
SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate Principal Purchase
Purchaser and Maturity Amount Price
--------- ------------- --------- --------
<S> <C> <C> <C>
Northwest Airlines
Pass Through Trust
1996-1A [ _ ]% Secured Certificates due [ ] $[ ] $[ ]
1996-1B [ _ ]% Secured Certificates due [ ] $[ ] $[ ]
1996-1C [ _ ]% Secured Certificates due [ ] $[ ] $[ ]
1996-1D [ _ ]% Secured Certificates due [ ] $[ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1990 A]
This TRUST AGREEMENT [NW 1990 A] dated as of August 23, 1990 between
[_______________________], a [________] corporation (the "Original Owner
Participant"), and The First National Bank of Boston, a national banking
association (in its individual capacity, "The First National Bank of Boston")
and otherwise not in its individual capacity but solely as trustee hereunder
(herein in such capacity with its permitted successors and assigns called the
"Owner Trustee");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1990 A], to be dated
as of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
<PAGE> 2
"Majority in Interest of Owner Participants" at any time means the
Owner Participant or Owner Participants which then hold more than 50% of the
Ownership Interests of all Owner Participants, except that if there shall then
be an Owner Participant that holds more than 50% but less than 100% of the
Ownership Interests of all Owner Participants, "Majority in Interest of Owner
Participants" shall mean such Owner Participant and one other Owner Participant.
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant,
the percentage of its undivided beneficial interest in the Trust Estate created
by this Trust Agreement, which percentage shall be: (i) in the case of the
Original Owner Participant (A) so long as it shall be the sole Owner
Participant, 100% and (B) if it shall no longer be the sole Owner Participant,
the percentage of such undivided interest in the Trust Estate which it shall not
have transferred to any Subsequent Owner Participant; and (ii) in the case of
any Subsequent Owner Participant, the percentage of such undivided interest in
the Trust Estate specified in the agreement pursuant to which such Subsequent
Owner Participant becomes an Owner Participant as provided in the definition of
"Subsequent Owner Participant" which it shall not have transferred to any
Subsequent Owner Participant.
"Participation Agreement" has the meaning ascribed to such term in
the Lease.
"Replacement Airframe" has the meaning ascribed to such term in the
Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
"Subsequent Owner Participant" means any corporation to which the
Original Owner Participant or any transferee from the Original Owner Participant
or any subsequent Owner Participant shall have transferred at any time after the
Delivery Date all or any part of the undivided right, title and interest
originally held by the Original Owner Participant in this Trust Agreement, the
Trust Estate and the Participation Agreement, to the extent permitted by Section
8.01 of this Trust Agreement and Section 8 of the Participation Agreement,
provided that any such transfer: (i) shall be effected by a written agreement,
in form and substance reasonably satisfactory to the Owner Trustee in its
individual capacity, among such transferee, its transferor and the Owner
Trustee, which shall (A) specify the percentage of the Ownership Interest of
such transferee so transferred to it and (B) provide that such transferee
thereby becomes a party to, and beneficiary of, this Trust Agreement and an
Owner Participant for all purposes hereof and that such transferee assumes all
of the obligations of its transferor under this Trust Agreement to the extent of
such transferee's Ownership Interest; and (ii) so long as the Lease shall be in
effect or the Secured Certificates remain unpaid, such transferee and its
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<PAGE> 3
transferor shall have complied with all of the terms of Section 8(n) of the
Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participants, American
Telephone and Telegraph Company, the Loan Participants or the Indenture Trustee)
and requisition, indemnity or other payments of any kind for or with respect to
the Aircraft (except amounts owing to the Owner Participants, to the Indenture
Trustee, to the Owner Trustee, in its individual capacity, or to the Loan
Participants or any other holder of a Secured Certificate, or to any of their
respective directors, officers, employees, servants and agents, pursuant to
Section 7 of the Participation Agreement). Notwithstanding the foregoing,
"Trust Estate" shall not include any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in
the Trust Indenture.
"Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at 150 Royall Street, Canton, Massachusetts 02021, Attention:
Manager - Corporate Trust, or the principal corporate trust office of any
successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. Authority to Execute Documents. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to execute and
deliver the Operative Documents and any other agreements, instruments or
documents to which the Owner Trustee is a party in the respective forms thereof
in which delivered from time to time by the Owner Participants to the Owner
Trustee for execution and delivery and, subject to the terms hereof, to perform
its duties and, upon instructions from a Majority in Interest of Owner
Participants, exercise its rights under said Operative Documents in accordance
with the terms thereof.
SECTION 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the
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<PAGE> 4
Owner Participants, subject, however, to the provisions of and the Lien created
by the Trust Indenture and to the provisions of the Lease.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. Acceptance of Aircraft. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the benefit of the Owner Participants that it will, on the
Delivery Date, subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering
the Aircraft;
(d) execute and deliver the Trust Supplement covering the Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the Participation
Agreement;
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of the
Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA
Bill of Sale; (ii) an application for registration of the Aircraft in the
name of the Owner Trustee (including without limitation an affidavit from
the Owner Trustee in compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement.
SECTION 3.02. Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect
to the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule I of the Participation Agreement
available to the
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Owner Trustee, in immediately available funds, in accordance with Section
1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the Original Owner Participant
and the Owner Trustee.
SECTION 3.03. Authorization in Respect of a Termination of the Lease and
Assumption of the Secured Certificates. The Original Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participants that it will, take the actions specified
to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 9(b) or Section 19(d)
of the Lease and upon Lessee's assuming the indebtedness evidenced by the
Secured Certificates in accordance with the provisions of such Section 8(x).
SECTION 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Original Owner Participant hereby authorizes and
directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of
the Owner Participants that it will, in the event of a Replacement Airframe and
Replacement Engines, if any, being substituted pursuant to Section 10(a) of the
Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of
the Lease, subject to due compliance with the terms of Section 10(a) or 10(b)
of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees of Lessee) to accept
delivery of the Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement Airframe
and Replacement Engines, if any, or the Replacement Engine a bill of sale
or bills of sale (if tendered), and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 10(a) or (b) of
the Lease;
(c) in the case of a Replacement Airframe, make application to the
Federal Aviation Administration for the registration in the name of the
Owner Trustee of the Aircraft of which such Replacement Airframe is a
part;
(d) execute and deliver a Lease Supplement and a Trust Supplement
covering (i) the Aircraft of which such Replacement Airframe is part or
(ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor's Liens, including for this purpose
Liens that would be Lessor's Liens but for the proviso to the definition
of Lessor's Liens) to the Airframe and Engines (if any) or the Engine
being replaced to Lessee;
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(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe and
Engines or engines (if any) or the Engine or engine being replaced from
the lien created under the Trust Indenture and release the Purchase
Agreement and the Purchase Agreement Assignment (solely with respect to
such replaced Airframe and Engines, if any, or Engine) from the
assignment and pledge under the Trust Indenture; and
(g) upon instructions from a Majority in Interest of Owner
Participants, take such further action as may be contemplated by clauses
(A) and (B) of the third paragraph of Section 10(a) of the Lease or
clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be.
SECTION 3.05. Trust Agreement Remaining in Full Force and Effect. In the
event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions
of this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine
were the same airframe or engine as the Airframe or Engine being replaced but
for the Event of Loss with respect to such Airframe or Engine.
SECTION 3.06. Authorization in Respect of a Return of an Engine. The
Original Owner Participant hereby authorizes and directs the Owner Trustee to,
and the Owner Trustee agrees for the benefit of the Owner Participants that it
will, in the event of an engine being transferred to the Owner Trustee pursuant
to Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such engine
contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor's Liens, including for this purpose
Liens that would be Lessor's Liens but for the proviso to the definition
of Lessor's Liens) and to an Engine to Lessee as contemplated by such
Section 5(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement and the Purchase
Agreement Assignment (solely with respect to such Engine) from the
assignment and pledge under the Trust Indenture.
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ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. Distribution of Payments. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof, any
payment of the type referred to in Section 4.01(a) hereof (other than Excluded
Payments) received by the Owner Trustee, any payments received from the
Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the balance,
if any, shall be paid ratably to each Owner Participant in proportion to such
Owner Participant's Ownership Interest.
(c) Certain Distributions to Owner Participant. All amounts from
time to time distributable by the Indenture Trustee to the Owner Participants
pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be
distributed by the Owner Trustee to each Owner Participant in proportion to such
Owner Participant's Ownership Interest and in accordance with the provisions of
Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
SECTION 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to each Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of such Owner Participant as such Owner
Participant may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will,
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if so requested by such Owner Participant in writing, pay any or all amounts
payable to such Owner Participant pursuant to this Article IV either (i) by
crediting such amount or amounts to an account or accounts maintained by such
Owner Participant with the Owner Trustee in its individual capacity in
immediately available funds, (ii) by payment at the Trust Office of the Owner
Trustee, in immediately available funds, or (iii) by mailing an official bank
check or checks in such amount or amounts payable to such Owner Participant at
such address as such Owner Participant shall have designated in writing to the
Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Owner Trustee
shall have knowledge of a Lease Event of Default or Indenture Event of Default
(or an event which with the passage of time or the giving of notice or both
would constitute a Lease Event of Default or an Indenture Event of Default) the
Owner Trustee shall give to each Owner Participant prompt telephonic or telex
notice thereof followed by prompt confirmation thereof by certified mail,
postage prepaid, provided that (i) in the case of an event which with the
passage of time would constitute an Indenture Event of Default referred to in
paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no
event be furnished later than ten days after the Owner Trustee shall first have
knowledge of such event and (ii) in the case of a misrepresentation by the Owner
Trustee which with the passage of time would constitute an Indenture Event of
Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture,
such notice shall in no event be furnished later than ten days after the Owner
Trustee shall first have knowledge of such event. Subject to the terms of
Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain
from taking such action, not inconsistent with the provisions of the Trust
Indenture, with respect to such Lease Event of Default, Indenture Event of
Default or other event as the Owner Trustee shall be directed in writing by a
Majority in Interest of Owner Participants. If the Owner Trustee shall not have
received instructions as above provided within 20 days after the mailing of such
notice to the Owner Participants, the Owner Trustee until instructed otherwise
in accordance with the preceding sentence may, but shall be under no duty to,
take or refrain from taking such action with respect to such Lease Event of
Default, Indenture Event of Default or other event, not inconsistent with the
provisions of the Trust Indenture, as it shall deem advisable in the best
interests of the Owner Participants. For all purposes of this Trust Agreement,
the Lease and the other Operative Documents, in the absence of actual knowledge
by a responsible officer or responsible employee of the Corporate Trust Division
of the Owner Trustee in his or her capacity as such, the Owner Trustee shall not
be deemed to have knowledge of a Lease Event of Default, Indenture Event of
Default or other event referred to in this Section 5.01 unless notified in
writing by the Indenture Trustee, one or more of the Owner Participants or
Lessee.
SECTION 5.02. Action Upon Instructions. Subject to the terms of
Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of a Majority in Interest of Owner Participants, the Owner
Trustee will take such of the following
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actions, not inconsistent with the provisions of the Trust Indenture, as may be
specified in such instructions: (i) give such notice or direction or exercise
such right, remedy or power hereunder or under any of the Operative Documents
to which the Owner Trustee is a party or in respect of all or any part of the
Trust Estate as shall be specified in such instructions (including entering
into agreements referred to in clause (i) of the definition of "Subsequent
Owner Participant"); (ii) take such action to preserve or protect the Trust
Estate (including the discharge of Liens) as may be specified in such
instructions; (iii) approve as satisfactory to it all matters required by the
terms of the Lease or the other Operative Documents to be satisfactory to the
Owner Trustee, it being understood that without written instructions of a
Majority in Interest of Owner Participants, the Owner Trustee shall not approve
any such matter as satisfactory to it (it being understood that the provisions
of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the
Owner Participant for the Owner Trustee to approve of or consent to the matters
to be approved of or consented to by the Owner Trustee in the sections of the
Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to
the rights of Lessee under the Operative Documents, after the expiration or
earlier termination of the Lease, deliver the Aircraft to the Owner
Participants in accordance with such instructions, convey all of the Owner
Trustee's right, title and interest in and to the Aircraft for such amount, on
such terms and to such purchaser or purchasers as shall be designated in such
instructions, or net lease the Aircraft on such terms and to such lessee or
lessees as shall be designated in such instructions.
SECTION 5.03. Indemnification. The Owner Trustee shall not be
required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participants, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if a Majority in Interest of Owner Participants shall have directed the
Owner Trustee to take any such action or refrain from taking any action, each
Owner Participant agrees to furnish such indemnity as shall be required
(severally and ratably according to their respective Ownership Interests) and,
in addition, to the extent not otherwise paid pursuant to the provisions of the
Lease or of the Participation Agreement, to pay (severally and ratably according
to their respective Ownership Interests) the reasonable compensation of the
Owner Trustee for the services performed or to be performed by it pursuant to
such direction and any fees and disbursements of counsel or agents employed by
the Owner Trustee in connection therewith. The Owner Trustee shall not be
required to take any action under Section 5.01 or 5.02 hereof if the Owner
Trustee shall reasonably determine, or shall have been advised by counsel, that
such action is contrary to the terms of any of the Operative Documents to which
the Owner Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
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extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in written instructions from a
Majority in Interest of Owner Participants received pursuant to the terms of
Section 5.01 or 5.02, and no implied duties or obligations shall be read into
this Trust Agreement against the Owner Trustee. The First National Bank of
Boston agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof) promptly take such action as may be
necessary to duly discharge and satisfy in full all Lessor Liens which it is
required to discharge pursuant to Section 8(h) of the Participation Agreement
and otherwise comply with the terms of said Section binding on it.
SECTION 5.05. Satisfaction of Conditions Precedent. Anything
herein to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
SECTION 5.06. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from a
Majority in Interest of Owner Participants pursuant to Section 5.01 or 5.02
hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The First National
Bank of Boston accepts the trusts hereby created and agrees to perform the same
but only upon the terms hereof applicable to it. The Owner Trustee also agrees
to receive and disburse all monies received by it constituting part of the Trust
Estate upon the terms hereof. The First National Bank of Boston shall not be
answerable or accountable under any circumstances, except (a) for its own
willful misconduct or gross negligence, (b) for performance of the terms of the
last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure
to use ordinary care to disburse funds and (d) for liabilities that may result
from the inaccuracy of any representation or warranty of it (or from the failure
by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the
Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of
the Participation Agreement.
SECTION 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and the
last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor The First
National Bank of Boston shall have any duty (i) to see
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to any recording or filing of any Operative Document or of any supplement to
any thereof or to see to the maintenance of any such recording or filing or any
other filing of reports with the Federal Aviation Administration or other
governmental agencies, except that The First National Bank of Boston, in its
individual capacity, shall comply with the reporting requirements set forth in
14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee
shall, to the extent that information for that purpose is supplied by Lessee
pursuant to any of the Operative Documents, complete and timely submit (and
furnish each Owner Participant with a copy of) any and all reports relating to
the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto,
other than to forward to each Owner Participant copies of all reports and other
written information which the Owner Trustee receives from Lessee pursuant to
Section 11(c) of the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and each of the Owner Participants, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Owner Trustee under
the Lease or any other Operative Document.
SECTION 6.03. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR THE FIRST NATIONAL BANK OF BOSTON MAKES
OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that
The First National Bank of Boston in its individual capacity warrants that on
the Delivery Date the Owner Trustee shall have received whatever title was
conveyed to it by Lessee and that the Aircraft shall during the Lease Term be
free of Lessor Liens attributable to it, or (b) any representation or warranty
as to the validity, legality or enforceability of this Trust Agreement or any
Operative Document to which the Owner Trustee is a party, or any other document
or instrument, or as to the correctness of any statement contained in any
thereof except to the extent that any such statement is expressly made herein or
therein as a representation by The First National Bank of Boston in its
individual capacity or by the Owner Trustee and except that The First National
Bank of Boston in its individual capacity hereby represents and warrants that
this Trust Agreement has been, and (assuming due authorization, execution and
delivery by the Original Owner Participant of this Trust Agreement) the
Operative Documents to which it or the Owner Trustee is a party have been (or at
the time of execution and delivery of any such instrument by it or the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the
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case may be, duly authorized to execute and deliver such instruments on behalf
of itself or the Owner Trustee, as the case may be.
SECTION 6.04. No Segregation of Monies Required; No Interest.
Except as provided in Section 22 of the Lease, monies received by the Owner
Trustee hereunder need not be segregated in any manner except to the extent
required by law, and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 6.05. Reliance Upon Certificates, Counsel and Agents. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participants or
Lessee mentioned herein or in any of the Operative Documents to which the Owner
Trustee is a party shall be sufficiently evidenced by written instruments signed
by a person purporting to be the chairman of the board, the president or any
vice president or a managing director and in the name of any such Owner
Participant or Lessee, as the case may be. The Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the Secretary of Lessee as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly adopted by
said Board or Committee and that the same is in full force and effect. As to
any fact or matter the manner of ascertainment of which is not specifically
described herein, the Owner Trustee may for all purposes hereof rely on a
certificate signed by a person purporting to be the Chairman of the Board, the
President or any Vice President or a managing director of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. In the administration of trusts hereunder, the Owner Trustee
may execute any of the trusts or powers hereof and perform its powers and duties
hereunder directly or through agents or attorneys and may, at the expense of the
Trust Estate, consult with counsel, accountants and other skilled persons to be
selected and employed by it. The Owner Trustee shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled persons and the Owner
Trustee shall not be liable for the negligence of any such agent, attorney,
counsel, accountant or other skilled person appointed by it with due care
hereunder.
SECTION 6.06. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons, other
than the Owner Participants, as provided herein, having any claim against the
Owner Trustee by reason of the transactions contemplated hereby shall look only
to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. Fees; Compensation. Except as provided in Section
5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right
against the Owner
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Participants or (subject to the provisions of the Trust Indenture) the Trust
Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not
paid by Lessee as contemplated by the last paragraph of Section 7(c) of the
Participation Agreement.
SECTION 6.08. Tax Returns. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement of all monies under this Trust Agreement or any
agreement contemplated hereby. The Owner Participants shall be responsible for
causing to be prepared and filed all income tax returns required to be filed by
the Owner Participants. The Owner Trustee shall be responsible for causing to
be prepared, at the request of a Majority in Interest of Owner Participants,
all income tax returns required to be filed with respect to the trust created
hereby and shall execute and file such returns. Each Owner Participant, upon
request, will furnish the Owner Trustee with all such information as may be
reasonably required from any such Owner Participant in connection with the
preparation of such income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANTS
SECTION 7.01. Owner Participants to Indemnify Owner Trustee.
The Owner Participants hereby severally agree, each in proportion to its
Ownership Interest, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless The First National Bank of Boston in its
individual capacity and its successors, assigns, legal representatives, agents
and servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by The First National
Bank of Boston in its individual capacity on or measured by any compensation
received by The First National Bank of Boston in its individual capacity for
its services hereunder), claims, actions, suits, costs, expenses or
disbursements (including, without limitation, reasonable ongoing fees of the
Owner Trustee, reasonable legal fees and expenses, and including without
limitation any liability of an owner, any strict liability and any liability
without fault) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against The First National Bank of Boston in its
individual capacity (whether or not also indemnified against by Lessee under
the Lease or under the Participation Agreement or also indemnified against by
any other person) in any way relating to or arising out of this Trust Agreement
or any of the Operative Documents or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement),
or in any way relating to or arising out of the administration of the Trust
Estate or the action or inaction of the Owner Trustee or The First National
Bank of Boston in its individual capacity hereunder, except (a) in the case of
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willful misconduct or gross negligence on the part of the Owner Trustee or The
First National Bank of Boston in its individual capacity in the performance or
non-performance of its duties hereunder or (b) those resulting from the
inaccuracy of any representation or warranty of the Owner Trustee or The First
National Bank of Boston in its individual capacity (or from the failure of the
Owner Trustee or The First National Bank of Boston in its individual capacity
to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of The First
National Bank of Boston in its individual capacity only, in Section 4 of the
Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation
Agreement or in any of the other Operative Documents or (c) as may result from
a breach by The First National Bank of Boston in its individual capacity of its
covenants in the last sentence of Section 5.04 hereof or (d) in the case of the
failure to use ordinary care on the part of the Owner Trustee or The First
National Bank of Boston in its individual capacity in the disbursement of
funds. The indemnities contained in this Section 7.01 extend to The First
National Bank of Boston only in its individual capacity and shall not be
construed as indemnities of the Trust Indenture Estate or the Trust Estate
(except to the extent, if any, that The First National Bank of Boston in its
individual capacity has been reimbursed by the Trust Indenture Estate or the
Trust Estate for amounts covered by the indemnities contained in this Section
7.01). The indemnities contained in this Section 7.01 shall survive the
termination of this Trust Agreement. In addition, if necessary, The First
National Bank of Boston in its individual capacity shall be entitled to
indemnification from the Trust Estate, subject to the Lien of the Trust
Indenture, for any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to
this Section 7.01 to the extent not reimbursed by Lessee, the Owner
Participants or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same The First National Bank of
Boston in its individual capacity shall have a Lien on the Trust Estate,
subject to the Lien of the Trust Indenture, which shall be prior to any
interest therein of the Owner Participants. The payor of any indemnity under
this Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF AN OWNER PARTICIPANT'S INTEREST
SECTION 8.01. Transfer of Interests. All provisions of Section
8(n) of the Participation Agreement shall (with the same force and effect as if
set forth in full, mutatis mutandis, in this Section 8.01) be applicable to
any assignment, conveyance or other transfer by any Owner Participant of any of
its right, title or interest in and to the Participation Agreement, the Trust
Estate or this Trust Agreement. If there is more than one Owner Participant,
no assignment, conveyance or other transfer by any Owner Participant of any of
its right, title or interest in and to the Participation Agreement, this Trust
Agreement or the Trust Estate shall be valid unless each other Owner
Participant's prior written consent is given to such assignment, conveyance or
other transfer.
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<PAGE> 15
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. Resignation of Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor
Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of
the Participation Agreement and (ii) may resign at any time without cause by
giving at least 60 days' prior written notice to each Owner Participant, the
Indenture Trustee and Lessee, such resignation to be effective upon the
acceptance of appointment by the successor Owner Trustee under Section 9.01(b)
hereof. In addition, a Majority in Interest of Owner Participants may at any
time remove the Owner Trustee without cause by a notice in writing delivered to
the Owner Trustee, all other Owner Participants, the Indenture Trustee and
Lessee, such removal to be effective upon the acceptance of appointment by the
successor Owner Trustee under Section 9.01(b) hereof. In the case of the
resignation or removal of the Owner Trustee, a Majority in Interest of Owner
Participants may appoint a successor Owner Trustee by an instrument signed by
such Owner Participants. If a successor Owner Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the Owner
Trustee, any Owner Participant, Lessee or the Indenture Trustee may apply to
any court of competent jurisdiction to appoint a successor Owner Trustee to act
until such time, if any, as a successor shall have been appointed as above
provided. Any successor Owner Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Owner
Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee an instrument accepting such appointment, and thereupon such successor
Owner Trustee, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of the predecessor Owner Trustee
in the trusts hereunder with like effect as if originally named the Owner
Trustee herein; but nevertheless, upon the written request of such successor
Owner Trustee, such predecessor Owner Trustee shall execute and deliver an
instrument transferring to such successor Owner Trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers and trusts of such
predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed. Upon the appointment of any successor Owner Trustee
hereunder, the predecessor Owner Trustee will execute such documents as are
provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are
reasonably required to cause registration of the Aircraft included in the Trust
Estate to be transferred upon the records of the Federal Aviation
Administration, or other governmental authority having jurisdiction, into the
name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a "citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation Act and shall also be a bank or
trust company organized under the laws of the United States or
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<PAGE> 16
any state thereof having a combined capital and surplus of at least
$50,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Owner Trustee hereunder upon reasonable
or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.02. Co-Trustees and Separate Trustees. If at any time
it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which all or any part of the Trust Estate is located, or the
Owner Trustee being advised by counsel shall determine that it is so necessary
or prudent in the interest of the Owner Participants or the Owner Trustee, or
the Owner Trustee shall have been directed to do so by a Majority in Interest
of Owner Participants, the Owner Trustee and each Owner Participant shall
execute and deliver an agreement supplemental hereto and all other instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more persons (any and all of which shall be a "citizen of the United
States" as defined in Section 101(16) of the Federal Aviation Act) approved by
the Owner Trustee and a Majority in Interest of Owner Participants, either to
act as co-trustee, jointly with the Owner Trustee, or to act as separate
trustee hereunder (any such co-trustee or separate trustee being herein
sometimes referred to as an "additional trustee"). In the event the Owner
Participants shall not have joined in the execution of such agreements
supplemental hereto within ten days after the receipt of a written request from
the Owner Trustee so to do, or in case a Lease Event of Default or Indenture
Event of Default shall occur and be continuing, the Owner Trustee may act under
the foregoing provisions of this Section 9.02 without the concurrence of the
Owner Participants; and the Owner Participants hereby appoint the Owner Trustee
their agent and attorney-in-fact to act for them under the foregoing provisions
of this Section 9.02 in either of such contingencies.
Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and the Owner Trustee and its successors shall
act, subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of
monies, the Aircraft or documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed
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<PAGE> 17
(including the holding of title to the Trust Estate) the Owner Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder;
(E) a Majority in Interest of Owner Participants, at any time, by
an instrument in writing may remove any such additional trustee. In the
event that the Owner Participants shall not have joined in the execution
of any such instrument within ten days after the receipt of a written
request from the Owner Trustee so to do, the Owner Trustee shall have the
power to remove any such additional trustee without the concurrence of
the Owner Participants; and the Owner Participants hereby appoint the
Owner Trustee their agent and attorney-in-fact for them in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of, the Trust Indenture or affect the interests
of the Indenture Trustee or the holders of the Secured Certificates in
the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and a
Majority in Interest of Owner Participants. Subject to Section 10.02 hereof and
Section 10(B) of the Participation Agreement, the Owner Trustee will execute
any amendment, supplement or other modification of this Trust Agreement or of
any other Operative Document to which the Owner Trustee is a party which it is
requested to execute by a Majority in Interest of Owner Participants, except
that the Owner Trustee shall not execute any such amendment, supplement or
other modification which, by the express provisions of any of the above
documents, requires the consent of any other party unless such consent shall
have been obtained; and provided that, without the prior written consent of
each Owner Participant: (i) no such supplement, amendment or modification
shall (A) modify any of the provisions of this Section 10.01, the definition of
"Majority in Interest of Owner Participants" in Section 1.01 hereof or Article
IV hereof, (B) reduce, modify or amend any indemnities in favor of any Owner
Participant as set forth in Section 7 of the Participation Agreement or in the
Tax Indemnity
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<PAGE> 18
Agreement, (C) reduce the amount or extend the time of payment of Basic Rent,
Supplemental Rent, Termination Value or Stipulated Loss Value for the Aircraft
as set forth in the Lease and (ii) no such supplement, amendment or
modification shall require any Owner Participant to invest or advance funds or
shall entail any additional personal liability or the surrender of any
indemnification, claim or individual right on the part of any Owner Participant
with respect to any agreement or obligation.
(b) Delivery of Amendments and Supplements to Certain Parties. A
signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each
holder of a Secured Certificate.
SECTION 10.02. Discretion as to Execution of Documents. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such
document.
SECTION 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant
to such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid,
a conformed copy thereof to each Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. No Request Needed as to Lease Supplement and Trust
Supplement. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust
Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust
Agreement and the trusts created hereby shall be of no further force or effect
upon the earlier of (a) both the final discharge of the Trust Indenture
pursuant to Section 10.01 thereof and the sale or other final disposition by
the Owner Trustee of all property constituting part of the Trust Estate and
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<PAGE> 19
the final distribution by the Owner Trustee of all monies or other property or
proceeds constituting part of the Trust Estate in accordance with Article IV
hereof, provided that at such time Lessee shall have fully complied with all of
the terms of the Lease and the Participation Agreement or (b) twenty-one years
less one day after the death of the last survivor of all of the descendants of
the grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto; otherwise this Trust
Agreement and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 11.02. Owner Participants Have No Legal Title in Trust
Estate. The Owner Participants shall not have legal title to any part of the
Trust Estate. No transfer, by operation of law or otherwise, of any right,
title and interest of the Owner Participant in and to the Trust Estate
hereunder shall operate to terminate this Trust Agreement or the trusts
hereunder or entitle any successors or transferees of the Owner Participants
to an accounting or to the transfer of legal title to any part of the Trust
Estate.
SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any
assignment, sale, transfer or other conveyance of its interest in the
Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease
or the Participation Agreement shall bind the Owner Participants and shall be
effective to transfer or convey all right, title and interest of the Owner
Trustee and the Owner Participants in and to the Aircraft. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such assignment, sale, transfer or conveyance or as
to the application of any sale or other proceeds with respect thereto by the
Owner Trustee.
SECTION 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 8(n) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in Article
IX hereof, nothing herein, whether expressed or implied, shall be construed to
give any person other than the Owner Trustee and the Owner Participants any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustee and the Owner Participants.
SECTION 11.05. Notices; Consent to Jurisdiction. (a) All notices,
demands, instructions and other communications required or permitted to be
given to or made upon any party hereto shall be in writing and shall be
personally delivered or sent by registered or certified mail, postage prepaid,
or by prepaid Telex, TWX or telegram (with messenger delivery specified in the
case of a telegram), or by telecopier, or by prepaid courier service, and shall
be deemed to be given for purposes of this Agreement on the day that such
writing is delivered or sent to the intended recipient thereof in accordance
with the provisions of this Section 11.05(a). Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this
Section 11.05(a), notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective Telex, TWX or telecopier numbers)
as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the
Indenture Trustee or the
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<PAGE> 20
Owner Participant, to the respective addresses set forth below the signatures
of such parties on the signature page of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such Subsequent Owner
Participant at such address as such Subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Certificate Holder, addressed to such Certificate Holder at its address set
forth in the secured certificate register maintained pursuant to Section 2.07
of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the
transactions contemplated hereby or thereby brought by any party or parties
thereto, or their successors or assigns, and (B) hereby waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that the Participation Agreement,
the Lease, the Tax Indemnity Agreement or any other Operative Document or the
subject matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts.
SECTION 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 11.07. Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
SECTION 11.08. Counterparts. This Trust 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.
SECTION 11.09. Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participants, their
successors and, to the extent permitted by Article VIII hereof, their assigns.
Any request, notice, direction, consent, waiver or other instrument or action
by an Owner Participant shall bind its successors and assigns. Any Owner
Participant which shall cease to have any Ownership Interest shall thereupon
cease to
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<PAGE> 21
be a party hereto or an Owner Participant for any reason and shall have no
further obligations hereunder.
SECTION 11.10. Headings; References. The headings of the various
Articles and Sections herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Trust Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the
state of New York, including all matters of construction, validity and
performance. This Trust Agreement has been delivered in the State of New York.
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<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
BY ________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By ________________________________
Title:
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<PAGE> 23
[Document 2.09]
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1990 A]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A], dated
August 23, 1990 (herein called the "Trust Supplement") of THE FIRST NATIONAL
BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee
(herein called the "Owner Trustee"), under the Trust Agreement [NW 1990 A],
dated as of August 23, 1990 (herein called the "Trust Agreement"), between the
Owner Trustee and the Owner Participant named therein.
WITNESSETH:
WHEREAS, the Trust Agreement provides for the execution and
delivery of one or more Supplements thereto substantially in the form hereof,
which shall particularly describe the Aircraft and any Replacement Airframe or
Replacement Engine included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture and Security Agreement [NW 1990 A],
dated as of August 23, 1990 (herein called the "Indenture"), between the Owner
Trustee and The Connecticut Bank and Trust Company, National Association, as
Indenture Trustee (herein called the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft (such term and other
defined terms in the Indenture being herein used with the same meanings) and
any Replacement Airframe or Replacement Engine included in the Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Indenture relates to the Airframe and Engines described
below, and a counterpart of the Indenture is attached hereto and made a part
hereof and this Trust Agreement and Indenture Supplement, together with such
counterpart of the Indenture, is being filed for recordation on the date hereof
with the Federal Aviation Administration as one document.
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Original Amount of, premium, if any, and interest on,
and all other amounts due with respect to, all Secured Certificates from time
to time outstanding under the Indenture and the performance and observance by
the Owner Trustee of all the agreements, covenants and provisions in the
Indenture and in the Participation Agreement for the benefit of the Indenture
Trustee, the Loan Participants and the holders of the Secured Certificates and
in the Secured Certificates contained, and the prompt payment of all amounts
from time to time owing under the Participation Agreement to the Loan
Participants and/or the holders of the
<PAGE> 24
Secured Certificates, and for the uses and purposes and subject to the terms
and provisions of the Indenture, and in consideration of the premises and of
the covenants contained in the Indenture, and of the acceptance of the Secured
Certificates by the holders thereof, and of the sum of $1.00 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery hereof, the receipt
whereof is hereby acknowledged; the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Loan Participants and the holders from time to time
of the Secured Certificates, upon the trusts created by the Indenture, all
right, title and interest of the Owner Trustee in, to and under the following
described property:
AIRFRAME
One airframe identified as follows:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------------ ------------------ ------------ --------------
<S> <C> <C> <C>
The Boeing Company 747-451 N669US _____
</TABLE>
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time thereto
belonging, in which the Owner Trustee has an interest and installed in or
appurtenant to said aircraft.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer's
Manufacturer Model Serial Number
------------------------------- ------- --------------
<S> <C> <C>
United Technologies Corporation PW 4056 P71____
Pratt & Whitney Aircraft Group
United Technologies Corporation PW 4056 P71____
Pratt & Whitney Aircraft Group
</TABLE>
<TABLE>
<CAPTION>
Manufacturer's
Manufacturer Model Serial Number
------------------------------- ------- --------------
<S> <C> <C>
United Technologies Corporation PW 4056 P71____
Pratt & Whitney Aircraft Group
</TABLE>
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<PAGE> 25
United Technologies Corporation PW 4056 P71____
Pratt & Whitney Aircraft Group
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, in which the Owner Trustee has an interest and installed in or
appurtenant to said aircraft engines.
Together with all substitutions, replacements and renewals of the
property above described, and all property which shall hereafter become
physically attached to or incorporated in the property above described, whether
the Owner Trustee now has or shall hereafter acquire an interest therein.
As further security for the obligations referred to above and
secured by the Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
holders from time to time of the Secured Certificates, in the trust created by
the Trust Indenture, all of the right, title and interest of the Owner Trustee
in, to and under Lease Supplement No. 1 of even date (other than Excluded
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Loan Participants and the holders from time to time of the Secured
Certificates for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and to the Trust Agreement and shall form a part of each, and
the Trust Agreement and the Indenture are each hereby incorporated by reference
herein and each is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
delivered Aircraft referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the
Indenture.
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<PAGE> 26
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed by one of its officers, thereunto duly authorized, on the day
and year first above written.
THE FIRST NATIONAL BANK OF BOSTON,
not in its Individual Capacity
but Solely as Owner Trustee,
Owner Trustee,
By: _______________________________
Title:
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<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1990 A]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1990 A] (this
"AMENDMENT") dated as of June 12, 1996 between [______________________], a
[_______] corporation (the "OWNER PARTICIPANT"), and First Security Bank of
Utah, National Association, a national banking association, not in its
individual capacity but solely as Owner Trustee (the "OWNER TRUSTEE"), as
successor to The First National Bank of Boston (the "ORIGINAL OWNER TRUSTEE").
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the respective meanings attributed thereto
in or pursuant to the Trust Agreement defined below.
W I T N E S S E T H:
WHEREAS, the Owner Participant and the Original Owner Trustee
entered into a Trust Agreement [NW 1990 A] dated as of August 23, 1990,
supplemented by a Trust Agreement and Indenture Supplement [NW 1990 A] dated
August 23, 1990 covering the Aircraft (the "ORIGINAL TRUST AGREEMENT," and as so
supplemented and as amended hereby and from time to time, the "TRUST
AGREEMENT"), pursuant to which the Owner Trustee agrees, among other things, to
hold the Trust Estate for the use and benefit of the Owner Participant;
WHEREAS, pursuant to the Lease Agreement [NW 1990 A] dated as
of August 23, 1990 between the Original Owner Trustee and Northwest Airlines,
Inc., a Minnesota corporation (the "LESSEE"), as supplemented by the Lease
Supplement No. 1 [NW 1990 A] dated August 23, 1990 (as so supplemented, the
"ORIGINAL LEASE"), the Lessee has leased the Aircraft from the Owner Trustee;
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance [NW 1990 A] dated May 28, 1996 among the
Owner Participant, the Original Owner Trustee and the Owner Trustee (the
"INSTRUMENT OF TRANSFER"), the Owner Trustee succeeded to all the estates,
properties, rights, powers and trusts of the Original Owner Trustee as Owner
Trustee under the Trust Agreement, including, without limitation, all right,
title and interest of the Owner Trustee in and to the Aircraft and in, to and
under the Original Lease and the other Operative Documents;
WHEREAS, the Lessee, Northwest Airlines Corporation, a Delaware
corporation, as guarantor, the Owner Trustee, the Owner Participant and certain
other parties have entered into a Refunding Agreement [NW 1990 A] dated as of
June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation
as contemplated by Section 17 of the Original Participation Agreement;
<PAGE> 2
WHEREAS, on June 3, 1996, the Lessee and the Owner Trustee
entered into the First Amendment to Lease Agreement [NW 1990 A], containing
amendments, modifications and additions to the Original Lease necessary to give
effect to the transactions described in the Refunding Agreement (the Original
Lease as so amended, the "LEASE"); and
WHEREAS, the Owner Participant and the Owner Trustee wish to
amend the Original Trust Agreement as set forth herein to give effect to the
transactions contemplated by the Refunding Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 1.01 of the Original Trust Agreement is hereby amended by
deleting in the definition of "Trust Office" the words, numbers and punctuation
"150 Royall Street, Canton, Massachusetts 02021, Attention: Manager - Corporate
Trust" and substituting therefor the words, numbers and punctuation "79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department".
SECTION 2. AMENDMENT OF SECTION 5.04 OF THE ORIGINAL TRUST
AGREEMENT. Section 5.04 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" and substituting therefor
the words and punctuation "First Security Bank of Utah, National Association".
SECTION 3. AMENDMENT OF SECTION 6.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.01 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" each time such words
appear and substituting therefor the words and punctuation "First Security Bank
of Utah, National Association".
SECTION 4. AMENDMENT OF SECTION 6.02 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.02 of the Original Trust Agreement is hereby amended by
deleting the words "The First National Bank of Boston" each time such words
appear and substituting therefor the words and punctuation "First Security Bank
of Utah, National Association".
SECTION 5. AMENDMENT OF SECTION 6.03 OF THE ORIGINAL TRUST
AGREEMENT. Section 6.03 of the Original Trust Agreement is hereby amended by
deleting the words "THE FIRST NATIONAL BANK OF BOSTON" and substituting therefor
the words and punctuation "FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION"
and by deleting the words "The First National Bank of Boston" each time such
words appear and substituting therefor the words and punctuation "First Security
Bank of Utah, National Association".
SECTION 6. AMENDMENT OF SECTION 7.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 7.01 of the Original Trust Agreement is hereby amended by
deleting the words "The
2
<PAGE> 3
First National Bank of Boston" each time such words appear and substituting
therefor the words and punctuation "First Security Bank of Utah, National
Association".
SECTION 7. AMENDMENT OF SECTION 11.11 OF THE ORIGINAL TRUST
AGREEMENT. Section 11.11 of the Original Trust Agreement is hereby amended by
deleting the first sentence thereof and substituting therefor the following:
"THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE."
SECTION 8. ACKNOWLEDGMENTS AND DIRECTION. (a) The parties
hereto acknowledge and confirm that, pursuant to the Instrument of Transfer, the
Owner Trustee succeeded to all the estates, properties, rights, powers and
trusts of the Original Owner Trustee as trustee under the Trust Agreement with
like effect as if originally named the Owner Trustee therein, including without
limitation all right, title and interest of the Owner Trustee in and to the
Aircraft and in, to and under the Lease and the other Operative Documents.
(b) Pursuant to and in conformity with Section 10.01(a) of the
Trust Agreement, the Owner Participant hereby requests the Owner Trustee to
execute this Amendment. The Owner Participant represents and warrants that it is
a Majority in Interest of Owner Participants.
SECTION 9. RATIFICATION. Except as modified hereby and by the
Instrument of Transfer, the Original Trust Agreement shall continue in full
force and effect as originally executed. From and after the date of this
Amendment, each and every reference in the Trust Agreement, as amended hereby,
to "this Agreement", "herein", "hereof" or similar words or phrases referring to
the Trust Agreement or any word or phrase referring to a section or provision of
the Trust Agreement is deemed for all purposes to be a reference to the Trust
Agreement or such section or provision as amended by this Amendment.
SECTION 10. MISCELLANEOUS. This Amendment may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have each caused this Amendment
to be duly executed as of the day and year first written above.
[Owner Participant]
By:
---------------------------------
Title:
------------------------------
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Title:
------------------------------
4
<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1990 A]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1990
A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and The First National Bank of Boston in
its individual capacity have entered into the Trust Agreement whereby, among
other things, (i) the Owner Trustee has established a certain trust for the use
and benefit of the Owner Participant subject, however, to the Trust Indenture
Estate created pursuant hereto for the use and benefit of, and with the priority
of payment to, the holders of Secured Certificates issued hereunder, and (ii)
the Owner Trustee has been authorized and directed to execute and deliver this
Trust Indenture;
WHEREAS, (i) The First National Bank of Boston, as owner trustee, and
The Connecticut Bank and Trust Company, National Association entered into the
Trust Indenture and Security Agreement [NW 1990 A] dated as of August 23, 1990
(the "ORIGINAL INDENTURE"), (ii) The First National Bank of Boston, as owner
trustee, and The Connecticut Bank and Trust Company, National Association
entered into the Trust Agreement and Indenture Supplement [NW 1990 A] (the
"SUPPLEMENT") dated August 23, 1990 to the Original Indenture, (iii) the
Original Indenture and the Supplement were recorded by the Federal Aviation
Administration on August 23, 1990 and were assigned Conveyance No. [Q56550] and
(iv) the Lease Agreement [NW 1990 A] dated as of even date with the Original
Indenture between The First National Bank of Boston, as owner trustee, and
Lessee and the Lease Supplement No. 1 [NW 1990 A] were recorded by the Federal
Aviation Administration on August 23, 1990 and were assigned Conveyance No.
[Q56551] and (v) pursuant to the Original Indenture, The First National Bank of
Boston, as owner trustee, issued and sold to the Loan Participant Secured
Certificates (as defined in the Original Indenture);
WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment,
Assumption and Acceptance among the Owner Participant, the Original Owner
Trustee and the Owner Trustee dated May 28, 1996 (the "INSTRUMENT OF TRANSFER",
the Owner Trustee succeeded to all of the estates, properties, rights, powers,
duties and trusts of the Original Owner Trustee under the Trust Agreement and
the other Operative Documents to which the Original Owner Trustee was a party;
WHEREAS, pursuant to an Instrument of Assignment and Acceptance of
Trust Indenture and Security Agreement [NW 1990 A] dated as of July 14, 1991,
the Indenture Trustee succeeded to the Original Indenture Trustee as indenture
trustee under the Original Indenture and the other Operative Documents to which
the Original Indenture Trustee was a party;
WHEREAS, the parties have agreed that subject to certain conditions,
Lessee shall have the right to cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Secured Certificates
issued to the Loan Participant pursuant to the Original Indenture shall be
redeemed and new Secured
<PAGE> 2
Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the
Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner Trustee for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount
of, interest on, Make-Whole Amount, if any, and all other amounts due with
respect to, all Secured Certificates from time to time outstanding hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions herein and in the Participation Agreement and the
Secured Certificates contained, for the benefit of the Certificate Holders and
the prompt payment of all amounts from time to time owing under the
Participation Agreement to the Certificate Holders by the Owner Trustee and for
the uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the Secured Certificates by the holders thereof, and for other
good and valuable consideration the receipt and adequacy whereof are hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors in trust and assigns, for the security and
benefit of the Certificate Holders, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, other than
Excluded Payments (which collectively, excluding Excluded Payments but including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Agreement and Indenture Supplement or any mortgage
supplemental hereto, are included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor in which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Trust Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Basic Rent, Supplemental Rent,
and payments of any kind thereunder, but excluding any Excluded Payments) and
the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Trust
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding Excluded Payments;
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding Excluded Payments;
(7) all monies and securities from time to time deposited (other than
Excluded Payments) or required to be deposited with the Indenture Trustee
pursuant to any terms of this Trust Indenture or the Lease or required hereby or
by the Lease to be held by the Indenture Trustee hereunder; and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
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<PAGE> 4
Concurrently with the delivery of the Original Indenture, the Owner
Trustee delivered to the Indenture Trustee the original executed counterpart of
the Lease and the Lease Supplement No. 1 (to each of which a chattel paper
receipt is attached), and executed copies of the Participation Agreement, and
the Purchase Agreement Assignment with the Consent and Agreement attached
thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (8) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under each of the
Indenture Agreements to which it is a party, to perform all of the obligations
assumed by it thereunder, except to the extent prohibited or excluded from doing
so pursuant to the terms and provisions thereof, and the Indenture Trustee and
the Certificate Holders shall have no obligation or liability under the
Indenture Agreements, by reason of or arising out of the assignment hereunder,
nor shall the Indenture Trustee or the Certificate Holders be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to any of the Indenture Agreements to which it is a
party, or, except as herein expressly provided, to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the true
and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement any amounts distributed to it by the Indenture Trustee under this
Trust Indenture.
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<PAGE> 5
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee in its individual capacity nor
the Owner Participant shall have any obligation as to any recording, filing,
refiling or re-recording of any documents or instruments in regard to
maintaining the perfection of the security interests created hereunder, in the
Trust Indenture Estate or any security interest that may be claimed to have been
created by the Lease or the ownership interest of the Owner Trustee in the
Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee and its predecessor(s) in this transaction, and that it will not, except
as otherwise provided in this Trust Indenture and except with respect to
Excluded Payments to which it is entitled, (i) accept any payment from Lessee
under any Indenture Agreement, (ii) enter into any agreement amending or
supplementing any Indenture Agreement, (iii) execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers or privileges
under, any Indenture Agreement, (iv) settle or compromise any claim (other than
those relating to an Excluded Payment) arising under any Indenture Agreement or
(v) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any Indenture Agreement to arbitration
thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment of
Rent (other than Excluded Payments), including Basic Rent,
Stipulated Loss Value, Termination Value or any other payment to
be made pursuant to Section 9 or 10 of the Lease prior to the date
for the payment thereof provided for by the Lease or assign,
transfer or hypothecate (other than to the Indenture Trustee
hereunder) any payment of Rent, including Basic Rent, Stipulated
Loss Value, Termination Value or any other payment to be made
pursuant to Section 9 or 10 of the Lease, then due or to accrue in
the future under the Lease in respect of the Airframe and Engines;
or
(b) except as contemplated by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage,
transfer, assign or hypothecate (other than to the Indenture
Trustee hereunder) its interest in the Airframe and Engines or any
part thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing paragraphs,
there is hereby excluded from the foregoing sale, transfer, assignment, grant,
pledge and security interest all Excluded Payments.
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<PAGE> 6
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee
or Indenture Trustee, as the case may be, actual knowledge of a Responsible
Officer in the Trust Office of the Owner Trustee or in the Corporate Trust
Office of the Indenture Trustee, as the case may be, and (ii) as it applies to
the Owner Participant, actual knowledge of a vice president or other higher
officer of the Owner Participant having responsibility for the transactions
contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Date on the Amortization
Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed shall
be the date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Secured Certificate.
"REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at the redemption
date of such Secured Certificate, shall be the number of days equal to the
quotient obtained by dividing (a) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one or
more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder.
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<PAGE> 7
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture.
"Default" means any event or condition that with the giving of notice
or the lapse of time or both would become an Event of Default or a Lease Event
of Default (excluding Lease Events of Default related to Excluded Payments).
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Enforcement Date" shall have meaning specified in Section 4.03 hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or payable
by Lessee to or in respect of the Owner Participant or the Owner Trustee in its
individual capacity, their respective Affiliates, successors and permitted
assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to clauses 2(B)(y) and 2(B)(z) of Section 9(b) of the
Lease or the amounts payable to the Owner Trustee pursuant to the third sentence
of Section 19(d) of the Lease plus all reasonable expenses incurred by the Owner
Trustee and the Owner Participant in connection with such assumption, as
applicable, (vii) any payment of the foregoing under the Guarantee, (viii)
interest accrued on any of the above, and (ix) any right to enforce the payment
of any amount described in clauses (i) through (viii) above and the right to
declare an Event of Default in respect of any of the foregoing amounts.
"Government Entity" means (a) 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 (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified
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<PAGE> 8
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1990 A], dated as
of August 23, 1990, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery of the Original Trust Indenture, as said Lease
Agreement has been, or may from time to time be, supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Indenture. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Default" shall mean any event or condition that with the giving
of notice or the lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" shall mean an "Event of Default" as defined in
the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a particular date
of determination shall mean the holders of more than a majority in aggregate
unpaid Principal Amount of all Secured Certificates outstanding as of such date
(excluding any Secured Certificates held by the Owner Trustee or the Owner
Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate, the
amount (as determined by an independent investment banker selected by Lessee and
reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield (plus, in the case of Series C and D
Secured Certificates, 75 basis points) exceeds (b) the outstanding principal
amount of such Secured Certificate plus accrued interest. For purposes of
determining the Make-Whole Amount, "TREASURY YIELD" at the time of determination
with respect to any Secured Certificate means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Secured Certificate and
trading in the public securities market either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Secured Certificate and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Secured Certificate, in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Secured Certificate is reported on the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519). "H.15(519)" means the
weekly statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third
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<PAGE> 9
Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in Section 3.03
hereof.
"Owner Indemnitee" shall have the meaning specified in the definition
of Excluded Payments herein.
"Owner Participant" shall mean [
], so long as such party
shall have any interest in the Trust Estate, and transferees thereof as
permitted by Section 8 of the Participation Agreement.
"PA Amendment No. 1" shall mean the First Amendment to Participation
Agreement [NW 1990 A], dated as of the Closing Date, among Lessee, the Owner
Trustee, the Pass Through Trustee, the Owner Participant, the Subordination
Agent and State Street Bank and Trust Company, in its individual capacity and as
Indenture Trustee.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1990 A], dated as of August 23, 1990, among the Owner Trustee, the
Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment
No. 1, as the same may from time to time be supplemented or further amended, or
the terms thereof waived or modified, to the extent permitted by, and in
accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured Certificates,
the rate per annum equal to 2% over the Debt Rate as in effect from time to
time.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with the
Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
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<PAGE> 10
"Secured Certificates" shall mean and include any Secured Certificates
issued hereunder, and issued in exchange therefor or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section 2.06
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Series D" or "Series D Secured Certificates" means Secured
Certificates issued and designated as "Series D" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series D."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the Participation
Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement to
the Trust Agreement and to this Indenture, in substantially the form of Exhibit
A hereto, which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture" and "the Indenture" shall mean this Amended and
Restated Trust Indenture and Security Agreement [NW 1990 A] as it may from time
to time be supplemented or amended as herein provided, including supplementing
by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
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<PAGE> 11
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form set forth
below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1990 A] DATED AS OF AUGUST 23, 1990.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N669US.
No.____ Date: [______,__]
$_______________________
INTEREST RATE MATURITY DATE
[________] [________,________]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1990 A], dated as of
August 23, 1990, between the Owner Participant named therein and The First
National Bank of Boston (herein as such Trust Agreement may be supplemented or
amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay
to ___________, or the registered assignee thereof, the principal sum of
$_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the
Principal Amount remaining unpaid from time to time (calculated on the basis of
a year of 360 days comprised of twelve 30-day months) from the date hereof until
paid in full at a rate per annum equal to the Interest Rate indicated above. The
Principal Amount of this Secured Certificate shall be payable in installments on
the dates set forth in Schedule I hereto equal to the corresponding percentage
of the Principal Amount of this Secured Certificate set forth in Schedule I
hereto. Accrued but unpaid interest shall be due and payable in semi-annual
installments commencing January 2, 1997, and thereafter on July 2 and January 2
of each year, to and including _______, _____. Notwithstanding the foregoing,
the final payment made on this Secured Certificate shall be in an amount
sufficient to discharge in full the unpaid Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1990 A], dated as of June
12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the
"INDENTURE TRUSTEE"), as the same may be amended or supplemented from
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<PAGE> 12
time to time. All other capitalized terms used in this Secured Certificate and
not defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if any,
and other amounts, if any, to be made by the Owner Trustee hereunder and under
the Trust Indenture or the Participation Agreement shall be payable only from
the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder shall
be payable in Dollars in immediately available funds at the Corporate Trust
Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred to
in the Trust Indenture which have been or are to be issued by the Owner Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Indenture Trustee as security, in part, for the Secured Certificates. The
provisions of this Secured Certificate are subject to the Trust Indenture.
Reference is hereby made to the Trust Indenture and the Participation Agreement
for a complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Secured Certificate and the rights
and obligations of the holders of, and
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<PAGE> 13
the nature and extent of the security for, any other Secured Certificates
executed and delivered under the Trust Indenture, as well as for a statement of
the terms and conditions of the Trust created by the Trust Indenture, to all of
which terms and conditions in the Trust Indenture and the Participation
Agreement each holder hereof agrees by its acceptance of this Secured
Certificate.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Secured Certificate is exchangeable for a like aggregate
Principal Amount of Secured Certificates of different authorized denominations,
as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Secured
Certificate, the Owner Trustee and the Indenture Trustee shall treat the person
in whose name this Secured Certificate is registered as the owner hereof for all
purposes whether or not this Secured Certificate be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1)[Series A and Series B Secured Certificates](2) [Series A,
Series B and Series C Secured Certificates](3), and this Secured Certificate is
issued subject to such provisions. The Certificate Holder of this Secured
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Trust Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed by or
on behalf of the Indenture Trustee by manual signature, this Secured Certificate
shall not be entitled to any benefit under the Trust Indenture or be valid or
obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ---------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
(3) To be inserted in the case of a Series D Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By______________________________________
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance thereof,
shall be issued in four separate series consisting of Series A, Series B, Series
C and Series D and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate (other
than any Series D Secured Certificate) a fraction, the numerator of
which is the aggregate principal balance then outstanding of the
Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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<PAGE> 17
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Certificate Holders under this
Trust Indenture, each Certificate Holder, by its acceptance of a Secured
Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to sue the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property of,
or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee,
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<PAGE> 18
directly or indirectly (other than the recourse liability of the Owner Trustee
(in its individual capacity), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture and (iii) any Certificate Holder or
the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount
by which such payment exceeds the amount that would have been received by a
Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a registered Certificate
Holder, all payments to it shall be made to the account of such Certificate
Holder specified in Schedule I thereto and otherwise in the manner provided in
or pursuant to the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) unless it shall have specified
some other account or manner of payment by notice to the Indenture Trustee
consistent with this Section 2.04.
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(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured Certificate
(as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
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Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid (provided
that such Secured Certificate shall not be subject to redemption except as
provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.
A Certificate Holder shall not, as such, have any further interest in,
or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE
REGISTER") in which the Indenture Trustee shall provide for the registration of
Secured Certificates and the registration of transfers of Secured Certificates.
No such transfer shall be given effect unless and until registration hereunder
shall have occurred. The Secured Certificate Register shall be kept at the
Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby
appointed "Secured Certificate Registrar" for the purpose of registering Secured
Certificates and transfers of Secured Certificates as herein provided. A holder
of any Secured Certificate intending to exchange such Secured Certificate shall
surrender such Secured Certificate to the Indenture Trustee at the Corporate
Trust Office, together with a written request from the registered holder thereof
for the issuance of a new Secured Certificate, specifying, in the case of a
surrender for transfer, the name and address of the new holder or holders. Upon
surrender for registration of transfer of any Secured Certificate, the Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Secured
Certificates of a like aggregate Principal Amount and of the same series. At the
option of the Certificate Holder, Secured Certificates may be exchanged for
other Secured Certificates of any authorized denominations of a like aggregate
Principal Amount, upon surrender of the Secured Certificates to be exchanged to
the Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
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made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t),
8(x), 8(hh), 10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have
represented and warranted (except as provided above), and covenanted, to the
parties to the Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participant in the Participation Agreement.
Subject to compliance by the Certificate Holder and its transferee (if any) of
the requirements set forth in this Section 2.07, the Indenture Trustee and the
Owner Trustee shall use all reasonable efforts to issue new Secured Certificates
upon transfer or exchange within 10 Business Days of the date a Secured
Certificate is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the holder of such
Secured Certificate, execute and the Indenture Trustee shall authenticate and
deliver in replacement thereof a new Secured Certificate, payable in the same
Principal Amount dated the same date and captioned as issued in connection with
the Aircraft. If the Secured Certificate being replaced has become mutilated,
such Secured Certificate shall be surrendered to the Indenture Trustee and a
photocopy thereof shall be furnished to the Owner Trustee. If the Secured
Certificate being replaced has been destroyed, lost or stolen, the holder of
such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
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SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by Lessee
pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed
all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13
and to Section 8(x) of the Participation Agreement, on the date the Lease is so
terminated all the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with accrued interest thereon to the date of redemption and all other amounts
payable hereunder or under the Participation Agreement to the Certificate
Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any purchase
by the Owner Trustee of any Secured Certificate may be made except to the extent
and in the manner expressly permitted by this Trust Indenture. No purchase of
any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Secured Certificates to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption
date in immediately available funds the redemption price of the Secured
Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at
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any office or agency maintained for such purposes pursuant to Section 2.07, and
from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation Agreement, and
subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon the events
and subject to the terms and conditions and for the price set forth in this
Section 2.14, purchase all but not less than all of the Secured Certificates
outstanding hereunder, and each Certificate Holder agrees that it will, upon
such events and subject to such terms and conditions and upon receipt of such
price, sell, assign, transfer and convey to such purchaser or its nominee
(without recourse or warranty of any kind except as to its title to the Secured
Certificates and except against Liens on such Secured Certificates arising by,
through or under such holder), all of the right, title and interest of such
Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture
and the Secured Certificates held by it, and such purchaser or its nominee shall
assume all of such holder's obligations under the Participation Agreement and
hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default, the purchase price
thereof shall equal the price provided in the preceding sentence plus the
Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Secured Certificates shall
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become irrevocable upon the sixteenth day preceding the date specified in the
written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date of
such purchase shall so request, the Certificate Holders will comply with all the
provisions of Section 2.07 to enable new Secured Certificates to be issued to
the Owner Trustee or the Owner Participant or its nominee in such denominations
as the Owner Trustee or the Owner Participant shall request. All taxes, charges
and expenses required pursuant to Section 2.09 in connection with the issuance
of such new Secured Certificate shall be borne by the Owner Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured Certificates of
any Series, each Certificate Holder of such Series, hereby agree that no payment
or distribution shall be made on or in respect of the Secured Obligations owed
to such Certificate Holder of such Series, including any payment or distribution
of cash, property or securities after the commencement of a proceeding of the
type referred to in Section 4.02(g) hereof, except as expressly provided in
Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series (other
than Series A), each Certificate Holder of such Series agrees that in the event
that such Certificate Holder, in its capacity as a Certificate Holder, shall
receive any payment or distribution on any Secured Obligations in respect of
such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean,
(i) the Certificate Holders of Series A until the Secured Obligations in respect
of Series A Secured Certificates have been paid in full, (ii) after the Secured
Obligations in respect of Series A Secured Certificates have been paid in full,
the Certificate Holders of Series B until the Secured Obligations in respect of
Series B Secured Certificates have been paid in full and (iii) after the Secured
Obligations in respect of Series B Secured Certificates have been paid in full,
the Certificate Holders of Series C until the Secured Obligations in respect of
Series C Secured Certificates have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each installment
of Basic Rent, any payment of interest on overdue installments of Basic Rent and
any payment received by the Indenture Trustee pursuant to Section 4.03 hereof
shall be promptly distributed in the following order of priority:
FIRST, (i) so much of such installment or payment as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series A Secured Certificates
shall be distributed to the Certificate Holders of Series A
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each
Series A Secured Certificate
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bears to the aggregate amount of the payments then due under all
Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series B Secured Certificates shall
be distributed to the Certificate Holders of Series B ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
B Secured Certificate bears to the aggregate amount of the
payments then due under all Series B Secured Certificates;
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series C Secured Certificates shall
be distributed to the Certificate Holders of Series C ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
C Secured Certificate bears to the aggregate amount of the
payments then due under all Series C Secured Certificates; and
(iv) after giving effect to paragraph (iii) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series D Secured Certificates shall
be distributed to the Certificate Holders of Series D ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
D Secured Certificate bears to the aggregate amount of the
payments then due under all Series D Secured Certificates; and
SECOND, the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner Trustee; provided, however,
that if an Event of Default shall have occurred and be
continuing, then such balance shall not be distributed as
provided in this clause "Second" but shall be held by the
Indenture Trustee as part of the Trust Indenture Estate and
invested in accordance with Section 5.09 hereof until whichever
of the following shall first occur: (i) all Events of Default
shall have been cured or waived, in which event such balance
shall be distributed as provided in this clause "Second" without
reference to this proviso, (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be distributed in
accordance with the provisions of such Section 3.03, or (iii) the
120th day after the receipt of such payment in which case such
payment shall be distributed as provided in this clause "Second"
without reference to this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and
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to all other amounts payable hereunder or to the Indenture Trustee or any
Certificate Holder under the Participation Agreement by applying such funds in
the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders
for any reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents and then (b)
to pay any other amounts then due to the Indenture Trustee and
the Certificate Holders under this Trust Indenture, the
Participation Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third"
of Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Secured Certificates;
(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series C Secured Certificates; and
(iv) after giving effect to paragraph (iii) above, to pay the amounts
specified in paragraph (iv) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series D Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of
Default shall have occurred and be continuing and the Secured Certificates shall
have become due and payable pursuant to Section 4.04(b) hereof, as well as all
payments or amounts then held by the Indenture Trustee as part of the Trust
Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
FIRST, so much of such payments or amounts as shall be required to reimburse
the Indenture Trustee for any tax, expense or other loss (including,
without limitation, all amounts to be expended at the expense of, or
charged upon the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate (all such
property being herein called the "MORTGAGED PROPERTY") pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed), the expenses of any sale, taking or
other proceeding,
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reasonable attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the Indenture
Trustee or the Certificate Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by
the Indenture Trustee or any Certificate Holder, liquidated or
otherwise, upon such Event of Default shall be applied by the Indenture
Trustee as between itself and the Certificate Holders in reimbursement
of such expenses and any other expenses for which the Indenture Trustee
or the Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid, then ratably, without
priority of one over the other, in proportion to the amounts owed each
hereunder;
SECOND, so much of such payments or amounts remaining as shall be required to
reimburse the then existing or prior Certificate Holders for payments
made pursuant to Section 5.03 hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Certificate Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Certificate Holder pursuant to said Section 5.03
hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount of
all Series A Secured Certificates, and the accrued but unpaid
interest and other amounts due thereon and all other Secured
Obligations in respect of the Series A Secured Certificates to
the date of distribution, shall be distributed to the Certificate
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series A Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series A Secured Certificates held
by all such holders plus the accrued but unpaid interest and
other amounts due thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series B Secured
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect
of the Series B Secured Certificates to the date of distribution,
shall be distributed to the Certificate Holders of Series B, and
in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series B Secured
Certificates held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the
date of distribution, bears to the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by all such
holders plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Secured
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect
of the Series C Secured Certificates to the date of distribution,
shall be distributed to the Certificate Holders of Series C, and
in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series C Secured
Certificates held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the
date of distribution, bears to the aggregate unpaid
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Principal Amount of all Series C Secured Certificates held by all
such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Secured
Certificates, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect
of the Series D Secured Certificates to the date of distribution,
shall be distributed to the Certificate Holders of Series D, and
in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series D Secured
Certificates held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the
date of distribution, bears to the aggregate unpaid Principal
Amount of all Series D Secured Certificates held by all such
holders plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured
Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this Article
III, any amounts received by the Indenture Trustee which constitute Excluded
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
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SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no provision
as to the application thereof is made in the Lease, the Participation Agreement,
elsewhere in this Trust Indenture or in any other Operative Document shall be
distributed by the Indenture Trustee to the extent received or realized at any
time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
FIRST, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of Section
3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent received or
realized at any time after payment in full of all Secured Obligations due the
Certificate Holders, shall be distributed by the Indenture Trustee in the order
of priority specified in clause (ii) of the immediately preceding sentence of
this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to the Owner
Trustee shall be paid to the Owner Trustee (within the time limits contemplated
by Section 2.04(a)) by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
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(a) the Owner Trustee will duly and punctually pay the Principal Amount
of, Make-Whole Amount, if any, and interest on and other amounts due under
the Secured Certificates and hereunder in accordance with the terms of the
Secured Certificates and this Trust Indenture and all amounts, if any,
payable by it to the Certificate Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and agrees
that it shall not, directly or indirectly, cause or permit to exist a Lessor
Lien attributable to it in its individual capacity with respect to the
Aircraft or any other portion of the Trust Estate; that it will promptly, at
its own expense, take such action as may be necessary to duly discharge such
Lessor Lien attributable to it in its individual capacity; and that it will
make restitution to the Trust Estate for any actual diminution of the assets
of the Trust Estate resulting from such Lessor Liens attributable to it in
its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Event of Default, Default or Event of Loss to
the Indenture Trustee, each Certificate Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to the Owner
Trustee under the Lease, including, without limitation, a copy of any
Termination Notice and a copy of each report or notice received pursuant to
Section 9(a) and 11(c) of the Lease to the extent that the same shall not
have been furnished to the Indenture Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent of
the Indenture Trustee (acting pursuant to instructions given in accordance
with Section 9.01 hereof), the Owner Trustee will not contract for, create,
incur, assume or suffer to exist any Debt, and will not guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing, or
otherwise), endorse or otherwise be or become contingently liable, directly
or indirectly, in connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing thereof
to Lessee and the carrying out of the transactions contemplated hereby and
by the Lease, the Participation Agreement, the Trust Agreement and the other
Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or
the Owner Participant when due any amount that is included in the definition
of Excluded Payments shall not constitute an Event of Default unless notice
is given by the Owner Trustee to the Indenture Trustee that such failure
shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other amount
due and payable under any Secured Certificate or hereunder (other than any
such failure arising by virtue of a tax withheld pursuant to Section 2.04(b)
hereof or as a result of a Lease Event of Default or a Lease Default) and
such failure shall have continued unremedied for ten Business Days in the
case of any payment of Principal Amount or interest
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or Make-Whole Amount, if any, thereon and, in the case of any other amount,
for ten Business Days after the Owner Trustee or the Owner Participant
receives written demand from the Indenture Trustee or any Certificate
Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual
or trust capacity pursuant to Section 8(h) of the Participation Agreement,
or by the Owner Participant pursuant to Section 8(h) of the Participation
Agreement shall remain undischarged for a period of 30 days after the Owner
Trustee and the Owner Participant shall have received written notice from
the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or the
Owner Trustee herein, in the Participation Agreement (or, upon consummation
of the Refinancing Transaction, the Refunding Agreement) or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents shall prove to have
been false or incorrect when made in any material respect and continues to
be material; and if such misrepresentation is capable of being corrected and
if such correction is being sought diligently, such misrepresentation shall
not have been corrected within 60 days (or, without affecting Section
4.02(f) hereof, in the case of the representations made in Section 8(c) of
the Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as soon
as is reasonably practicable but in any event within 60 days) following
notice thereof from the Indenture Trustee or any Certificate Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform any other
covenant or obligation of the Owner Trustee or Owner Participant, as the
case may be, for the benefit of the Indenture Trustee or the Certificate
Holders contained in the Participation Agreement, Section 4.01(a) of the
Trust Agreement, the Secured Certificates or this Trust Indenture which is
not remedied within a period of 60 days after notice thereof has been given
to the Owner Trustee and the Owner Participant; or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the Aircraft
under the Federal Aviation Act, and regulations then applicable thereunder,
shall cease to be effective; provided that no Event of Default shall be
deemed to have occurred under this paragraph (f) unless such circumstances
continue unremedied for more than 60 days after the Owner Participant has
Actual Knowledge of the state of facts that resulted in such ineffectiveness
and of such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or
other proceeding in respect of the Owner Participant, the Owner Trustee or
the Trust Estate under the federal bankruptcy Laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or seeking the winding-up or liquidation of its affairs and the continuation
of any such case or other proceeding undismissed and unstayed for a period
of 90 consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or other
similar Law in the United States, or the consent by the Owner Participant,
the Owner Trustee or the Trust Estate to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or the making by the Owner Participant, the Owner Trustee or the Trust
Estate of any assignment for the benefit of creditors or the Owner
Participant
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or the Owner Trustee shall take any action to authorize any of the
foregoing; provided, however, that an event referred to in this Section
4.02(g) with respect to the Owner Participant shall not constitute an Event
of Default if within 30 days of the commencement of the case or proceeding a
final non-appealable order, judgment or decree shall be entered in such case
or proceeding by a court or a trustee, custodian, receiver or liquidator, to
the effect that, no part of the Trust Estate (except for the Owner
Participant's beneficial interest therein) and no right, title or interest
under the Trust Indenture Estate shall be included in, or be subject to, any
declaration or adjudication of, or proceedings with respect to, the
bankruptcy, insolvency or liquidation of the Owner Participant referred to
in this Section 4.02(g).
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the Owner
Trustee and the Owner Participant prompt written notice of any Event of Default
of which the Indenture Trustee has Actual Knowledge and, if any such Event of
Default results from a Lease Event of Default, shall give the Certificate
Holders, the Owner Trustee and the Owner Participant not less than ten Business
Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after
which the Indenture Trustee may commence and consummate the exercise of any
remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of
the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture
Trustee shall have insufficient funds to make any payment of Principal Amount
and interest on any Secured Certificate on the day it becomes due and payable,
the Owner Trustee or the Owner Participant may, but shall not be obligated to,
pay the Indenture Trustee prior to the Enforcement Date, in the manner provided
in Section 2.04 hereof, for application in accordance with Section 3.01 hereof,
an amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of payments of Basic Rent
on each of the three immediately preceding Basic Rent payment dates, or the
Owner Trustee has cured six previous Events of Default in respect of payments of
Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this
Trust Indenture be deemed to cure any Event of Default which would otherwise
have arisen on account of the nonpayment by Lessee of such installment of Basic
Rent (but not any other Default or Event of Default which shall have occurred
and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the
Owner Participant may, but shall not be obligated to, cure such Event of Default
prior to the Enforcement Date as is necessary to accomplish the observance or
performance of the defaulted covenant, condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Basic Rent which was overdue at the time of such payment and
interest payable by Lessee on account of its being overdue and any Supplemental
Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant
to the immediately preceding paragraph (but in either case shall have no rights
as a secured party hereunder), and thereafter, the Owner Trustee or the Owner
Participant, as the case may be, shall be entitled to receive such overdue Basic
Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt
thereof by the Indenture Trustee (and shall be entitled to bring an action
against Lessee to enforce such payment); provided, however, that (i) if the
Principal Amount and
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interest on the Secured Certificates shall have become due and payable pursuant
to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount
of, interest on, Make-Whole Amount, if any, and all other amounts due with
respect to all Secured Certificates shall have been paid in full, be subordinate
to the rights of the Indenture Trustee and the Certificate Holders in respect of
such payment of overdue Basic Rent, Supplemental Rent and such interest and (ii)
the Owner Trustee shall not be entitled to seek to recover any such payment (or
any payment in lieu thereof) except pursuant to the foregoing right of
subrogation by demand or suit for damages.
SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an Event of
Default shall have occurred and be continuing and so long as the same shall
continue unremedied, then and in every such case the Indenture Trustee may,
subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder as a
result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee's own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
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(b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Indenture Trustee may (and shall, upon receipt of a
written demand therefor from a Majority in Interest of Certificate Holders),
subject to Section 4.03 hereof, at any time, by delivery of written notice or
notices to the Owner Trustee and the Owner Participant, declare all the Secured
Certificates to be due and payable, whereupon the unpaid Principal Amount of all
Secured Certificates then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if at
any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale pursuant to
Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
(d) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing,
subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture
Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture
Trustee such instruments of title and other documents as the Indenture Trustee
may deem necessary or advisable to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any part of the Mortgaged Property included in the Trust Indenture Estate
to which the Indenture Trustee shall at the time be entitled hereunder. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent
permitted by applicable law, and (ii) pursue all or part of such Mortgaged
Property wherever it may be found and, in the event that a Lease Event of
Default has occurred and is continuing, may enter any of the premises of Lessee
wherever such Mortgaged Property may be or be supposed to be and search for such
Mortgaged Property and take possession of and remove such Mortgaged Property.
All expenses of
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obtaining such judgment or of pursuing, searching for and taking such property
shall, until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture Trustee
specifically or otherwise in this Trust Indenture shall be cumulative and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Indenture Trustee, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Indenture
Trustee and Lessee shall, subject to any determination in such proceedings, be
restored to their former positions and rights hereunder with respect to the
Mortgaged Property, and all rights, remedies and powers of the Owner Trustee,
the Indenture Trustee or Lessee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
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thereon; provided, that in the absence of written instructions from all the
Certificate Holders, the Indenture Trustee shall not waive any Default (i) in
the payment of the Principal Amount, Make-Whole Amount, if any, and interest and
other amounts due under any Secured Certificate then outstanding, or (ii) in
respect of a covenant or provision hereof which, under Article IX hereof, cannot
be modified or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE,
ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee the true
and lawful attorney-in-fact of the Owner Trustee in its name and stead and on
its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture, the right
of any Certificate Holder to receive payment of principal of, and premium, if
any, and interest on a Secured Certificate on or after the respective due dates
expressed in such Secured Certificate, or to bring suit for the enforcement of
any such payment on or after such respective dates in accordance with the terms
hereof, shall not be impaired or affected without the consent of such
Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay Rent, the Indenture
Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner
Participant, Lessee, and each Certificate Holder. Subject to the terms of
Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
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Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Basic Rent within one Business
Day after the same shall become due, if any portion of such installment was then
required to be paid to the Indenture Trustee, which failure shall constitute
knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee,
the Owner Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01
and 5.03 hereof, upon the written instructions at any time and from time to time
of a Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
or any other part of the Trust Indenture Estate as shall be specified in such
instructions; and (iii) after the occurrence and during the continuance of an
Event of Default, approve as satisfactory to the Indenture Trustee all matters
required by the terms of the Lease to be satisfactory to the Owner Trustee, it
being understood that without the written instructions of a Majority in Interest
of Certificate Holders, the Indenture Trustee shall not approve any such matter
as satisfactory to the Indenture Trustee; provided, that anything contained in
this Trust Indenture, the Lease or the other Operative Documents to the contrary
notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the consent
of the Indenture Trustee, demand, collect, sue for or otherwise obtain all
amounts included in Excluded Payments from Lessee or the Guarantor, exercise
any election or option or make any decision or determination or to give or
receive any notice, consent, waiver or approval in respect of any Excluded
Payment and seek legal or equitable remedies to require Lessee or the
Guarantor to maintain the insurance coverage referred to in Section 11 of
the Lease; provided, that the rights referred to in this clause (1) shall
not be deemed to include the exercise of any remedies provided for in
Section 15 of the Lease other than the right to proceed by appropriate court
action, either at law or in equity, to enforce payment by Lessee or the
Guarantor of such amounts included in Excluded Payments or performance by
Lessee or the Guarantor of such insurance covenant, or to recover damages
for the breach thereof or for specific performance of any covenant of Lessee
or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing and except as provided in clause (4) below,
the Indenture Trustee shall not, without the consent of the Owner Trustee,
which consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be diminished or impaired thereby,
(i) enter into, execute and deliver amendments, modifications, waivers or
consents in respect of any of the provisions of the Lease, or (ii) approve
any accountants, engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to the Owner Trustee pursuant to the
Operative Documents; provided that, whether or not an Event of Default shall
have occurred and be continuing, no amendment, modification, waiver or
consent in respect of the Lease shall affect the amount or timing of, or the
right to enforce payment of, any Excluded Payment;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee, (i)
to receive from Lessee all notices, certificates, reports, filings, opinions
of counsel and other documents and all information which any thereof is
permitted or required to give or furnish to
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the Owner Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise
inspection rights pursuant to Section 12 of the Lease, (iii) to retain all
rights with respect to insurance maintained for its own account which
Section 11(e) of the Lease specifically confers on Lessor or the Owner
Participant, (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor under
Section 21 of the Lease and (v) to give notices of default under Section 14
of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the
right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated
Loss Values and Termination Values as provided in Section 3(d) of the Lease
and to select counsel with respect to any opinion relating to tax matters to
be delivered solely to the Owner Participant;
(5) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee may, without the
consent of the Indenture Trustee, (i) solicit and make bids with respect to
the Aircraft under Section 9 of the Lease in respect of a termination of the
Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market
sales value" and "fair market rental value" under Section 19 of the Lease
for all purposes except following an Event of Default pursuant to Section 15
of the Lease, and (iii) make an election pursuant to and in accordance with
the provisions of Section 9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights of
the "Lessor" under the Lease shall be exercised by the Owner Trustee to the
exclusion of the Indenture Trustee including, without limitation, the right
to (i) exercise all rights with respect to Lessee's use and operation,
modification or maintenance of the Aircraft and any Engine which the Lease
specifically confers on Lessor, and (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease; provided that the foregoing
shall not limit (A) any rights separately granted to the Indenture Trustee
under the Operative Documents or (B) the right of the Indenture Trustee to
receive any funds to be delivered to the "Lessor" under the Lease (except
with respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be continuing
and the Owner Trustee shall not have cured fully such Lease Event of Default
under and in accordance with Section 4.03 hereof, on request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall declare the Lease
to be in default
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pursuant to Section 15 thereof and exercise those remedies specified by such
Certificate Holders. The Indenture Trustee agrees to provide to the Certificate
Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with
such declaration by the Indenture Trustee, notice of such declaration by the
Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or pursuant
to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if
no Lease Event of Default is continuing, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of
this Trust Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid, but only upon compliance by Lessee with the applicable
provisions of Section 10 of the Lease and upon receipt by or deposit with the
Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such release
specifically describing the Airframe and/or Engine(s) so to be released.
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(2) A certificate signed by a duly authorized officer of Lessee stating
the following:
A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to be received
(including the manufacturer, model, FAA registration number
(or other applicable registration information) and
manufacturer's serial number) as consideration for the
Airframe to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Airframe the Owner
Trustee will be the legal owner of such Replacement Airframe
free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Airframe will
on such date be in good working order and condition, and
that such Replacement Airframe has been or, substantially
concurrently with such withdrawal, will be duly registered
in the name of the Owner Trustee under the Federal Aviation
Act or under the law then applicable to the registration of
the Airframe and that an airworthiness certificate has been
duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe,
and that such registration and certificate is in full force
and effect, and that Lessee will have the full right and
authority to use such Replacement Airframe;
(iv) the existence of the insurance required by Section 11 of the
Lease with respect to such Replacement Airframe and the
payment of all premiums then due thereon;
(v) that the Replacement Airframe is of the same or an improved
model as the Airframe requested to be released from this
Indenture;
(vi) the fair market value of the Replacement Airframe as of the
date of such certificate (which value in the judgment of
Lessee shall be not less than the then fair market value of
the Airframe requested to be released) (assuming such
Airframe was in the condition and repair required to be
maintained under the Lease);
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(vii) the fair market value of the Airframe immediately prior to
the date the Airframe suffered an Event of Loss (assuming
such Airframe was in the condition and repair required to be
maintained under the Lease);
(viii) that no Lease Event of Default and no event which, with
lapse of time or notice, or both, would become a Lease Event
of Default, has occurred which has not been remedied or
waived, and that Lessee will not be in default, by the
making and granting of the request for release and the
addition of a Replacement Airframe, in the performance of
any of the terms and covenants of the Lease; and
(ix) that the release of the Airframe so to be released will not
be in contravention of any of the provisions of this
Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's serial number;
(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) as consideration for
the Engine to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Engine the Owner
Trustee will be the legal owner of such Replacement Engine
free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Engine will on
such date be in good working order and condition and that
such Replacement Engine is substantially the same as the
Engine to be released (or as improved model);
(iv) the fair market value of the Replacement Engine as of the
date of such certificate (which value shall not be less than
the then fair market value of the Engine to be released
(assuming such Engine was in the condition and repair
required to be maintained under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered by such
Engine and assuming that such Engine was in the condition
and repair required to be maintained under the Lease);
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(vi) that each of the conditions specified in Section 10(b) of
the Lease with respect to such Replacement Engine have been
satisfied and that Lessee will not be in default, by the
making and granting of the request for release and the
addition of the Replacement Engine, in the performance of
any of the terms and covenants of the Lease;
(vii) that, with respect to the replacement of an Engine pursuant
to Section 9(d) of the Lease, no Lease Event of Default and
no Lease Default has occurred which has not been remedied or
waived; and
(viii) that the release of the Engine so to be released will not be
in contravention of any of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this Indenture
as deemed necessary or desirable by counsel for the Indenture Trustee to protect
the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and
deposited with the Indenture Trustee conform to the
requirements of this Indenture and the Lease and, upon the
basis of such application, the property so sold or disposed
of may be lawfully released from the lien of this Indenture
and all conditions precedent herein provided for relating to
such release have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the lien of this Indenture and covered
by the
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Lease, the instruments subjecting such Replacement Airframe
or Replacement Engine to the Lease and to the Lien of this
Indenture, as the case may be, have been duly filed for
recordation pursuant to the Federal Aviation Act or any
other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any
document is necessary or advisable in order to establish and
perfect the right, title, estate and interest of the Owner
Trustee to and the lien of this Indenture on such
Replacement Aircraft or Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being substituted as
contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Certificate Holders and Lessee, subject to
fulfillment of the conditions precedent and compliance by Lessee with its
obligations set forth in Section 10 of the Lease and the requirements of Section
5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to
execute and deliver a Lease Supplement and a Trust Agreement and Indenture
Supplement, as applicable, as contemplated by Section 10 of the Lease.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced, and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
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ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and applicable
to it and agrees to perform the same but only upon the terms of this Trust
Indenture and agrees to receive and disburse all monies constituting part of the
Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee,
in its individual capacity, and the Indenture Trustee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for their own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) in the case of the Indenture Trustee, as
provided in the fourth sentence of Section 2.04(a) hereof and the last sentence
of Section 5.04 hereof, and (iii) for liabilities that may result, in the case
of the Owner Trustee, from the inaccuracy of any representation or warranty of
the Owner Trustee expressly made in its individual capacity in the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished
to the Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents) or, in the case of the
Indenture Trustee (in its individual capacity), from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement) or expressly made hereunder. Neither the
Owner Trustee nor the Indenture Trustee shall be liable for any action or
inaction of the other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03 and 5.04
hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR
THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT NOR THE OWNER PARTICIPANT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND
EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner
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Trustee has received on the Delivery Date whatever title was conveyed to it by
Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for
this purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to the Owner Trustee in its individual
capacity. Neither the Owner Trustee, in its individual capacity or as Owner
Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual
or trust capacities, makes or shall be deemed to have made any representation or
warranty as to the validity, legality or enforceability of this Trust Indenture,
the Trust Agreement, the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement or the Guarantee, or as to the correctness of any statement
contained in any thereof, except for the representations and warranties of the
Owner Trustee made in its individual capacity and the representations and
warranties of the Indenture Trustee, in each case expressly made in this Trust
Indenture or in the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement). The Loan Participants, the
Certificate Holders and the Owner Participant make no representation or warranty
hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest all monies held as directed by Lessee so long as no Lease Event of
Default or Lease Default has occurred and is continuing (or in the absence of
such direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
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SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to
assume liability for, and does hereby indemnify, protect, save and keep harmless
the Indenture Trustee (in its individual and trust capacities), and its
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, to the extent not reimbursed by Lessee. Without limiting the
foregoing, the Indenture Trustee agrees that, prior to seeking indemnification
from the Trust Indenture Estate, it will demand, and take such action as it may
in its discretion determine to be reasonable to pursue, indemnification
available to the Indenture Trustee under the Lease or the Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Expenses to the extent relating to or
arising from the willful misconduct or gross negligence (or negligence in the
case of handling funds) of the Indenture Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any representation or
warranty of the Indenture Trustee (in its individual capacity) referred to in
Section 6.03 hereof, or as provided in Section 6.01
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hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded
by the terms of Sections 7(b) and 7(c) of the Participation Agreement from
Lessee's indemnities under such Sections. In addition, if necessary, the
Indenture Trustee shall be entitled to indemnification from the Trust Indenture
Estate for any liability, obligation, loss, damage, penalty, claim, action,
suit, cost, expense or disbursement indemnified against pursuant to this Section
7.01 to the extent not reimbursed by Lessee or others, but without releasing any
of them from their respective agreements of reimbursement; and to secure the
same the Indenture Trustee shall have a prior Lien on the Trust Indenture
Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee
an instrument accepting such appointment and assuming the obligations of the
Indenture Trustee under the Participation Agreement arising from and after the
time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a bank
or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; Hartford, Connecticut; or
Boston,
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Massachusetts and having (or whose obligations under the Operative Documents are
guaranteed by an affiliated entity having) a combined capital and surplus of at
least $100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise any
of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
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Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with respect
to Excluded Payments, the Owner Trustee agrees it shall not enter into any
amendment of or supplement to the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and
deliver any written waiver or modification of, or consent under, the terms of
the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified, amended, changed or
waived in such manner as shall be agreed to by the Owner Participant and Lessee
and (ii) the Owner Trustee and Lessee may enter into amendments of or additions
to the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments, modifications
and changes do not and would not affect the time of, or reduce the amount of,
Rent payments until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
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<PAGE> 50
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06
hereof, Section 14 (except to add an Event of Default) of the Lease, the
definitions of "Event of Default", "Default", "Lease Event of Default", "Lease
Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or
"Certificate Holder", or the percentage of Certificate Holders required to take
or approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Principal Amount, Make-Whole
Amount, if any, or interest with respect to any Secured Certificate, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the
Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend
any indemnities in favor of the Certificate Holders, (iv) consent to any change
in the Trust Indenture or the Lease which would permit redemption of Secured
Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the
purchase of the Secured Certificates other than as permitted by Section 2.14
hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
altering the absolute and unconditional character of the obligations of Lessee
to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part thereof other
than Permitted Liens or deprive any Certificate Holder of the benefit of the
Lien of this Trust Indenture on the Trust Indenture Estate, except as provided
in connection with the exercise of remedies under Article IV hereof. So long as
no Lease Event of Default has occurred and is continuing, without the consent of
Lessee no amendment or supplement to this Trust Indenture or waiver or
modification of the terms hereof shall adversely affect Lessee.
(c) At any time after the date of the consummation of the Refinancing
Transaction, the Owner Trustee and the Indenture Trustee may enter into one or
more agreements supplemental hereto without the consent of any Certificate
Holder for any of the following purposes: (i) (a) to cure any defect or
inconsistency herein or in the Secured Certificates, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee under the
Trust Agreement or the institution acting as Indenture Trustee hereunder, any
document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
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<PAGE> 51
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the Certificate
Holders or the Owner Participant pursuant to Section 9.01 hereof shall be
required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE
HOLDERS.
No holder of a Secured Certificate shall have legal title to any part
of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of
any Secured Certificate or other right, title and interest of any Certificate
Holder in and to the Trust Indenture Estate or hereunder shall operate to
terminate this Trust Indenture or entitle such holder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or any part
thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE
TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
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<PAGE> 52
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053) with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to
any Participant, Lessee or any Certificate Holder, addressed to such party at
such address as such party shall have furnished by notice to the Owner Trustee
and the Indenture Trustee, or, until an address is so furnished, addressed to
the address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Secured Certificate Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any Participant or the
Indenture Trustee or any Certificate Holder or Lessee to any of the other of
them, such notice shall be deemed given and such requirement satisfied when such
notice is received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
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<PAGE> 53
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a vote of a
Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
* * *
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture
to be duly executed by their respective officers thereof duly authorized as of
the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee, as Owner Trustee
By:___________________________
Name:_________________________
Title:
STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee
By:___________________________
Name:_________________________
Title:
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<PAGE> 55
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1990 A]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A], dated
_______ __, _____ (herein called this "TRUST AGREEMENT AND INDENTURE
SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner Trustee (herein called the "OWNER
TRUSTEE") under that certain Trust Agreement [NW 1990 A] dated as of August 23,
1990 (the "TRUST AGREEMENT"), between FIRST NATIONAL BANK OF BOSTON and the
Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1990 A], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Agreement and Indenture Supplement, together
with such counterpart of the Trust Indenture, is being filed for recordation on
the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Agreement and Indenture Supplement
witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust
Indenture on the Trust Indenture Estate covers all of Owner Trustee's right,
title and interest in and to the following described property:
<PAGE> 56
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in and
to all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts).
As further security for the obligations referred to above and secured
by the Trust Indenture and hereby, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Certificate Holders, in the trust created by the
Trust Indenture, all of the right, title and interest of the Owner Trustee in,
to and under the Lease Supplement [of even date herewith] covering the property
described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity
EXHIBIT A-2
<PAGE> 57
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and subject to the terms and provisions set forth in the Trust Indenture.
This Trust Agreement and Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Agreement and Indenture Supplement is being delivered in the
State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
referred to in this Trust Agreement and Indenture Supplement and the aforesaid
Lease Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 58
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Agreement
and Indenture Supplement to be duly executed by one of its officers, thereunto
duly authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee,
Owner Trustee
By:_____________________________________
Name:
Title:
<PAGE> 59
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A . . . . . . $51,475,500 7.67%
Series B . . . . . . $17,158,500 8.07%
Series C . . . . . . $17,158,341 8.97%
Series D . . . . . . $12,657,657 10.15%
</TABLE>
<PAGE> 60
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N669US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 2.00000194%
Jul 2, 1997 0.00000000%
Jan 2, 1998 2.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.00000000%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.00000000%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.00000000%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.00000000%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.00000000%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.00000000%
Jul 2, 2005 0.00000000%
Jan 2, 2006 4.00000000%
Jul 2, 2006 0.00000000%
Jan 2, 2007 4.00000000%
Jul 2, 2007 0.00000000%
Jan 2, 2008 4.00000000%
Jul 2, 2008 0.00000000%
Jan 2, 2009 4.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 4.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 3.00000000%
Jul 2, 2011 14.83361793%
Jan 2, 2012 0.00000000%
Jul 2, 2012 21.03333625%
Jan 2, 2013 0.35130110%
Jul 2, 2013 21.85343707%
Jan 2, 2014 0.87919496%
Jul 2, 2014 0.00000000%
Jan 2, 2015 0.04911074%
</TABLE>
<PAGE> 61
SERIES B
AIRCRAFT: N669US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 2.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 2.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.00000000%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.00000000%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.00000000%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.00000000%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.00000000%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.00000000%
Jul 2, 2005 0.00000000%
Jan 2, 2006 4.00000000%
Jul 2, 2006 0.00000000%
Jan 2, 2007 4.00000000%
Jul 2, 2007 0.00000000%
Jan 2, 2008 4.00000000%
Jul 2, 2008 0.00000000%
Jan 2, 2009 22.92187546%
Jul 2, 2009 0.00000000%
Jan 2, 2010 40.91090713%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 6.16721741%
</TABLE>
<PAGE> 62
SERIES C
AIRCRAFT: N669US
<TABLE>
<CAPTION>
PERCENTAGE OF PRINCIPAL
PAYMENT DATE AMOUNT TO BE PAID
------------ -----------------------
<S> <C>
Jan 2, 1997 1.99909187%
Jul 2, 1997 0.00000000%
Jan 2, 1998 2.00001853%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.00001853%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.00001853%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.00001853%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.00001853%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.00001853%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.00001853%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.00001853%
Jul 2, 2005 0.00000000%
Jan 2, 2006 13.48560446%
Jul 2, 2006 0.00000000%
Jan 2, 2007 25.50879482%
Jul 2, 2007 0.00000000%
Jan 2, 2008 29.04015021%
Jul 2, 2008 0.00000000%
Jan 2, 2009 13.96621037%
</TABLE>
<PAGE> 63
SERIES D
AIRCRAFT: N669US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 25.34999171%
Jul 2, 1997 0.00000000%
Jan 2, 1998 5.40351978%
Jul 2, 1998 0.00000000%
Jan 2, 1999 7.03779538%
Jul 2, 1999 0.00000000%
Jan 2, 2000 8.83795477%
Jul 2, 2000 0.00000000%
Jan 2, 2001 10.82083359%
Jul 2, 2001 0.00000000%
Jan 2, 2002 9.81057553%
Jul 2, 2002 0.00000000%
Jan 2, 2003 9.74941097%
Jul 2, 2003 0.00000000%
Jan 2, 2004 11.98943059%
Jul 2, 2004 0.00000000%
Jan 2, 2005 11.00048769%
</TABLE>
<PAGE> 64
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as of
June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as of
June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1C, dated as of
June 12, 1996.
4. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1D, dated as of
the June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1990 A]
This LEASE AGREEMENT [NW 1990 A], dated as of August 23, 1990,
between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (as defined in Section 1 hereof) (in such capacity, "Lessor"),
and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to
the laws of the State of Minnesota ("Lessee");
WITNESSETH:
SECTION 1. Definitions. Unless the context otherwise
requires, the following terms shall have the following meanings for all
purposes of this Lease Agreement [NW 1990 A] and shall be equally applicable to
both the singular and the plural forms of the terms herein defined:
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the four Engines initially leased
hereunder (or any engine substituted for any of such Engines
pursuant to the terms hereof), whether or not any of such
initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 747-451 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to
<PAGE> 2
such aircraft (except Engines or engines from time to time
installed thereon), or (B) so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such aircraft (except Engines or
engines from time to time installed thereon); provided,
however, that at such time as an aircraft (except Engines or
engines from time to time installed thereon) shall be deemed
part of the property leased hereunder in substitution for the
Airframe pursuant to the applicable provisions hereof, the
replaced Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bank" means Algemene Bank Nederland N.V., Cayman Islands
Branch.
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but subject always to the
provisions of Section 3(d)(v) hereof and, for any Renewal
Term, Basic Rent determined pursuant to Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on February 23, 2015.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good and marketable
title to the Airframe and each Engine described in such Bill
of Sale, free and clear of all liens, encumbrances and rights
of others except Liens permitted by clause (v) of Section 6 of
the Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Hartford,
Connecticut; Boston, Massachusetts; or Minneapolis, Minnesota.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
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<PAGE> 3
"Civil Reserve Air Fleet Program" shall mean the
Civil Reserve Air Fleet Program administered by the United
States Government pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as
amended through the Delivery Date.
"Commencement Date" means February 23, 1991.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be,
to finance the Owner Trustee's payment of Lessor's Cost for
the Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1990 A], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default pursuant to Section 14(a), (b), (e), (f) or (g)
hereof.
"Delivery Date" means the date of the Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 1997.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the four Pratt & Whitney
Model PW4056 engines listed by manufacturer's serial number in
the initial Lease Supplement, whether or not from time to time
thereafter installed on the Airframe or installed on any other
airframe or on any other aircraft; and (ii) any engine which
may from time to time be substituted, pursuant to the terms
hereof, for any of such four engines, together in each case
with any and all Parts incorporated or installed in or
attached thereto or any and all Parts removed therefrom so
long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 after removal from such
Engine; provided, however, that at such time as an engine
shall be deemed part of the property leased hereunder in
substitution for an Engine pursuant to the applicable
provisions hereof, the replaced Engine shall cease to be an
Engine hereunder. The term
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<PAGE> 4
"Engines" means, as of any date of determination, all
Engines then leased hereunder.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the
Aircraft, or any agency or instrumentality of any thereof)
which in the case of any event referred to in this clause
(iii) shall have resulted in the loss of possession of such
property by Lessee for a period in excess of 180 consecutive
days; (iv) as a result of any law, rule, regulation, order or
other action by the Federal Aviation Administration or other
governmental body of the government of registry of the
Aircraft having jurisdiction, the use of such property in the
normal course of the business of air transportation shall have
been prohibited for a period of 180 consecutive days, unless
Lessee, prior to the expiration of such 180 day period, shall
have undertaken and shall be diligently carrying forward all
steps which are necessary or desirable to permit the normal
use of such property by Lessee, but in any event if such use
shall have been prohibited for a period of three consecutive
years, provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Lessee's
entire U.S. registered fleet of Boeing Model 747-400 aircraft
and Lessee, prior to the expiration of such three year period,
shall have conformed at least one such aircraft in its fleet
to the requirements of any such law, rule, regulation, order
or other action and commenced regular commercial use of the
same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the
Aircraft by Lessee; (v) the requisition for use by the United
States Government or any other government of registry of the
Aircraft or any instrumentality or agency of any thereof,
which shall have occurred during the Basic Term (or the
Interim Term or any Renewal Term) and shall have continued for
30 days beyond the Term, provided, however, that no Event of
Loss pursuant to this clause (v) shall exist if Lessor shall
have furnished to Lessee the written notice specified in
Section 10(d) hereof; and (vi) any divestiture of title to or
interest in an Engine treated as an Event of Loss pursuant to
Section 7(b) hereof. An Event of Loss with
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<PAGE> 5
respect to the Aircraft shall be deemed to have occurred if an
Event of Loss occurs with respect to the Airframe.
"Excess Amount" for the Commencement Date means an
amount equal to the amount determined by multiplying Lessor's
Cost by the percentage set forth in column 3 of Exhibit B
hereto opposite the Commencement Date; provided, however,
that, to the extent that the aggregate amount of interest due
and payable on the Commencement Date on the Secured
Certificates for the period from and including the Delivery
Date to but excluding the Commencement Date is less than the
aggregate amount of interest on the Secured Certificates that
would have been due and payable on the Commencement Date if
such Secured Certificates had borne interest at the Assumed
Interest Rate for such period, the corresponding percentage
set forth in column 3 of Exhibit B shall be decreased by an
amount equal to such differential.
"Expenses" means any and all liabilities,
obligations, losses, damages, penalties, claims, actions,
suits, out-of-pocket costs, expenses and disbursements
(including reasonable legal fees and expenses and Transaction
Expenses to the extent not required to be paid by the Owner
Trustee pursuant to Section 16 hereof but excluding internal
costs and expenses such as salaries and overhead), of
whatsoever kind and nature.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means the Federal Aviation Act
of 1958, as amended from time to time.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any
successor agency or agencies thereto.
"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,
Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those
required by, the Federal Aviation Administration, the Civil
Aviation Authority of the United Kingdom, the Direction
Generale de l'Aviation Civile of the French Republic or the
Luftfahrt Bundesamt of the Federal Republic of Germany.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Loan Participants and each other Certificate Holder,
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<PAGE> 6
and each of their respective Affiliates, successors, permitted
assigns, directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which
arises from acts or claims against the Indenture Trustee not
related to the transactions contemplated by the Operative
Documents.
"Interest Period" means Interest Period as defined in
the Trust Indenture.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1990 A] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date.
"Lease Period Date" means August 23, 1991 and each
succeeding February 23 and August 23, to and including the
last such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the Delivery Date for the
purpose of leasing the Aircraft under and pursuant to the
terms of this Lease Agreement, and any subsequent Lease
Supplement entered into in accordance with the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it
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<PAGE> 7
relates to the Aircraft), the FAA Bill of Sale, the Bill of
Sale, the Purchase Agreement Assignment and the Tax Indemnity
Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
The First National Bank of Boston, in its individual capacity,
or the Owner Participant not related to the transactions
contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or The First
National Bank of Boston, in its individual capacity, which is
not related to the transactions contemplated by the Operative
Documents or is in violation of any of the terms of the
Operative Documents, (iii) claims against the Owner
Participant, Lessor, or The First National Bank of Boston, in
its individual capacity, with respect to Taxes or Expenses
against which Lessee is not required to indemnify the Owner
Participant, Lessor or The First National Bank of Boston, in
its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the
Owner Participant arising out of any transfer by Lessor or the
Owner Participant of all or any portion of the respective
interests of Lessor or the Owner Participant in the Aircraft,
the Trust Estate or the Operative Documents other than the
transfer of possession of the Aircraft by Lessor pursuant to
this Agreement, the transfer pursuant to the Trust Indenture
or a transfer of the Aircraft pursuant to Section 9, 10 or 19
hereof or pursuant to the exercise of the remedies set forth
in Section 15 hereof, provided, however, that any Lien which
is attributable solely to The First National Bank of Boston or
the Owner Participant and would otherwise constitute a Lessor
Lien hereunder shall not constitute a Lessor Lien hereunder so
long as (1) the existence of such Lien poses no material risk
of seizure of the Aircraft, (2) the existence of such Lien
does not interfere in any way with the use or operation of the
Aircraft by Lessee (or any Sublessee), (3) the existence of
such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) The
First National Bank of Boston or the Owner Participant, as
appropriate, is diligently contesting such Lien and (5) the
existence of such Lien does not pose a material threat of
interference with the payment of Rent (other than Excluded
Payments in favor of The First National Bank of Boston or the
Owner Participant, as appropriate).
"Lessor's Cost" for the Aircraft means $127,500,000.
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub- sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
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<PAGE> 8
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Manufacturer's FAA Bills of Sale" means the bills of
sale for the Aircraft on AC Form 8050-2 or such other form as
may be then approved by the Federal Aviation Administration
for the Aircraft, one executed by the Manufacturer in favor of
Boeing Sales Corporation, a subsidiary of the Manufacturer,
and one executed by Boeing Sales Corporation in favor of
Lessee.
"Net Economic Return" means the Owner Participant's
net after-tax yield and aggregate after-tax cash flow
utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and
assumptions as were utilized by the Owner Participant in
determining Basic Rent, Excess Amount, Stipulated Loss Value
and Termination Value percentages as of the Delivery Date.
"Net Present Value of Rents" means the net present
value, as of the Delivery Date, of Basic Rent set forth in
Exhibit B hereto, discounted at a rate per Lease Period equal
to (a) 10.5 percent divided by (b) the number of Lease Periods
per year.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement
covering the Aircraft, the Secured Certificates, the Bill of
Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as
it relates to the Aircraft), the Purchase Agreement Assignment
and the Consent and Agreement.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust
Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement
and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
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<PAGE> 9
"Owner Participant Parent" means [__________________]
its Affiliates, and [_____________________], but only so long
as the corporation executing the Participation Agreement as
the Owner Participant retains any portion of its right, title
and interest in and to the Trust Agreement, the Trust Estate
and the Participation Agreement.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1990 A], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum equal to 1% over the Base Rate.
"Permitted Lien" means any Lien referred to in
clauses (i) through (vii) of Section 6 hereof.
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<PAGE> 10
"Permitted Sublessee" means any entity listed in
Exhibit F hereto and such other entities to which Lessor and
the Indenture Trustee shall consent.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section
3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No.
1267, dated December 13, 1985, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1990 A], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Basic Rent and Supplemental Rent,
collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Secured Certificates" shall have the meaning
assigned to that term in the Trust Indenture.
"Special Purchase Price" shall mean 56.0% of Lessor's
Cost.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including February 23, 2015, means,
but subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost for the
Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 8 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Lease Period in which such
Stipulated Loss Value Date occurs up to
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<PAGE> 11
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential.
"Stipulated Loss Value" as of any date after February 23, 2015
shall be the amount determined as provided in Section 19(a)
hereof.
"Stipulated Loss Value Date" means the twenty-third
calendar day of each calendar month during the Interim Term,
Basic Term and any Renewal Term.
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any person for so long, but only so
long, as such person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Basic Rent) which Lessee assumes
or agrees to pay to Lessor or others hereunder, under the
Participation Agreement, under the Tax Indemnity Agreement or
under any of the other Operative Documents. The parties
acknowledge that Supplemental Rent is a general category and,
accordingly, agree that any provision of any Operative
Document which calls for the payment of Supplemental Rent and
also calls for the payment of specific items which are
includable in Supplemental Rent is not to be interpreted as
requiring any double payment.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, gross
receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings
of any nature whatsoever, together with any and all penalties,
fines, additions to tax and interest thereon (each,
individually a "Tax").
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1990 A], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
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<PAGE> 12
"Termination Value" with respect to the Aircraft as
of any date through and including February 23, 2015, means,
but subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost for the
Aircraft by the percentage specified in Exhibit D hereto
opposite the Termination Date with respect to which the amount
is determined (as such Exhibit D may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 8 of
the Tax Indemnity Agreement). In the event that the
Termination Date with respect to which Termination Value is
determined is a date on which Basic Rent is payable in advance
as indicated on Exhibit B, to the extent that the actual
amount of interest paid and to be paid on the Secured
Certificates during the Lease Period ending on such
Termination Date is greater or less than the amount included
in calculating the corresponding percentage set forth in
Exhibit D with respect to such Termination Date on account of
such interest, the corresponding percentage set forth in
Exhibit D shall be adjusted appropriately to compensate for
such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Messrs. Day,
Berry & Howard, special counsel for the Indenture Trustee,
such information to be furnished by the Indenture Trustee, (2)
Messrs. Csaplar & Bok, counsel for the Owner Trustee under the
Trust Agreement, such information to be furnished by the Owner
Trustee, (3) Messrs. White & Case, special counsel to the Loan
Participants, such information to be furnished by the Loan
Participants, and (4) Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, such information to be furnished
by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and
financing statements, such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (iv)
the initial fee and reasonable and actual disbursements of the
Indenture Trustee under the Trust Indenture, such information
to be furnished by the Indenture Trustee, (v) the fee of
Avmark Inc. (or of such other appraiser as shall be acceptable
to Lessee and the Owner Participant) with respect to the
appraisal of the Aircraft pursuant to Section 4(a)(xx) of the
Participation Agreement, such information to be furnished by
the Owner Participant, (vi) the reasonable and actual fees,
expenses and disbursements of [______________________], special
counsel to the Owner Participant, such information to be
furnished by the Owner Participant, and (vii) the fee payable
to [_______________________], on the Delivery Date.
"Trust Agreement" means that certain Trust Agreement
[NW 1990 A], dated as of the date hereof, between the Owner
Participant and The First National Bank of Boston, in its
individual capacity, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
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<PAGE> 13
thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant
to the applicable provisions thereof.
"Trust Estate" means the Trust Estate as that term
is defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1990 A], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any United States air
carrier as to which there is in force a certificate issued
pursuant to Section 401 of the Federal Aviation Act of 1958,
as amended, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the
regulations under such Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee
(or any Sublessee) agrees to furnish the Airframe and Engines
or engines installed thereon to a third party pursuant to
which such Airframe and Engines or engines (i) shall be
operated solely by regular employees of Lessee (or any
Sublessee) possessing all current certificates and licenses
that would be required under the Federal Aviation Act for the
performance by such employees of similar functions within the
United States of America (it is understood that cabin
attendants need not be regular employees of Lessee (or any
Sublessee)) and (ii) shall be maintained by Lessee (or any
Sublessee) in accordance with its normal maintenance
practices.
SECTION 2. Acceptance and Lease. Lessor hereby agrees
(subject to satisfaction of the conditions set forth in Section 4(a) of the
Participation Agreement) to accept the transfer of title to and simultaneously
to lease to Lessee hereunder, and Lessee hereby agrees (subject to satisfaction
of the conditions set forth in Section 4(b) of the Participation Agreement) to
lease from Lessor hereunder, the Aircraft as evidenced by the execution by
Lessor and Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee
hereby agrees that such acceptance of the Aircraft by Lessor shall, without
further act, irrevocably constitute acceptance by Lessee of such Aircraft for
all purposes of this Lease.
SECTION 3. Term and Rent. (a) Interim Term and Basic Term.
The Interim Term shall commence on the Delivery Date and end on and include the
day immediately preceding the Commencement Date unless earlier terminated
pursuant to the provisions hereof. The Basic Term shall commence on the
Commencement Date and end on February 23, 2015, or such earlier date as this
Lease may be terminated in accordance with the provisions hereof.
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<PAGE> 14
(b) [Intentionally Omitted]
(c) Basic Rent. Lessee shall pay Basic Rent with respect to
each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in 48 consecutive installments in the amounts as provided in the
next sentence, each such installment to cover the Lease Period specified in
Exhibit B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 10.5% per annum, computed on
the basis of a 360-day year of twelve 30-day months (the "Assumed Interest
Rate"), Lessor and Lessee recognize that the actual rate of interest on the
Secured Certificates may be a rate from time to time which may be greater or
less than the Assumed Interest Rate and that the related basis upon which
interest on the Secured Certificates will be computed will be as provided in
the Trust Indenture. Accordingly, each installment of Basic Rent shall be
increased or decreased (but not below zero), as the case may be, by the Rent
Differential Amount (as defined herein). For purposes hereof, "Rent
Differential Amount" shall mean, as of any Lease Period Date with respect to
the Basic Term, the difference between (i) the aggregate amount of interest due
and payable on such Lease Period Date on the Secured Certificates, and (ii) the
aggregate amount of interest on the Secured Certificates that would have been
due and payable on such Lease Period Date if such Secured Certificates had
borne interest at the Assumed Interest Rate, in each case for the period from
and including the Lease Period Date (or the Commencement Date in the case of
the first Lease Period) next preceding such Lease Period Date to but excluding
such Lease Period Date. If, as of any Lease Period Date, the amount determined
in accordance with clause (i) of the immediately preceding sentence shall be
greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Basic Rent payable on such Lease Period Date shall be
increased by the Rent Differential Amount. If, as of any Lease Period Date,
the amount determined in accordance with such clause (ii) shall exceed the
amount determined in accordance with such clause (i), the amount of Basic Rent
due on such Lease Period Date shall be decreased (but not below zero) by the
Rent Differential Amount. Notwithstanding the foregoing, the amount of Basic
Rent due on any Lease Period Date prior to the second anniversary of the
Commencement Date shall not be decreased below an amount equal to 1% of
Lessor's Cost.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs
other than on August 23, 1990, or (B) Transaction Expenses
paid by Lessor pursuant to Section 16(a) of the Participation
Agreement are determined to be other than 0.5% of Lessor's
Cost, then in each case the Basic Rent percentages set forth
in Exhibit B and Stipulated Loss Value percentages set forth
in Exhibit C and the Termination Value percentages set forth
in Exhibit D shall be recalculated by the Owner Participant,
on or prior to April 1, 1991 using the same methods and
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<PAGE> 15
assumptions used to calculate original Rent and Stipulated
Loss Value and Termination Value percentages, in order to:
(1) maintain the Owner Participant's Net Economic Return and
(2) minimize the Net Present Value of Rents to Lessee to the
extent possible consistent with clause (1) hereof.
(ii) In the event of a refinancing or a refunding as
contemplated by Section 17 of the Participation Agreement,
then the Basic Rent percentages set forth in Exhibit B and
Stipulated Loss Value percentages set forth in Exhibit C and
the Termination Value percentages set forth in Exhibit D shall
be recalculated (upwards or downwards) by the Owner
Participant as contemplated by such Section to (1) maintain
the Owner Participant's Net Economic Return and (2) to the
extent possible consistent with clause (1) hereof, minimize
the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant
to this Section 3(d), the Owner Participant shall redetermine
the Excess Amounts set forth in column 3 of Exhibit B in a
manner consistent with such recalculation. In addition, (X)
any recalculation of Basic Rent, Stipulated Loss Value or
Termination Value percentages made pursuant to this Section
3(d) shall take into account any decrease in the Excess Amount
with respect to the Commencement Date required by the proviso
to the definition of "Excess Amount", and (Y) at the time of
any payment of Stipulated Loss Value or Termination Value, the
Stipulated Loss Value percentage set forth in Exhibit C or the
Termination Value percentage set forth in Exhibit D, by
reference to which the amount of such payment is determined
shall be recalculated to take into account any decrease in the
Excess Amount with respect to the Commencement Date or any
Lease Period Date that has not theretofore been taken into
account in accordance with clause (X) of this sentence.
(iv) Any recalculation of Basic Rent, Excess Amounts
and Stipulated Loss Value and Termination Value percentages
pursuant to this Section 3(d) shall be determined by the Owner
Participant and shall be subject to the verification
procedures set forth in Exhibit E hereto. Such recalculated
Basic Rent, Excess Amounts and Stipulated Loss Value and
Termination Value percentages shall be set forth in a Lease
Supplement or an amendment to this Lease.
(v) Anything contained in the Participation
Agreement or this Lease to the contrary notwithstanding, each
installment of Basic Rent payable hereunder, whether or not
adjusted in accordance with this Section 3(d), shall, together
with the amount of the Excess Amount in respect of the date on
which such installment is payable, and each payment of
Termination Value and Stipulated Loss Value, whether or not
adjusted in accordance with this Section 3(d), shall, together
with all other amounts (including an amount equal to the
premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by
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<PAGE> 16
Lessee pursuant to this Lease, in each case be, under any
circumstances and in any event, in an amount at least
sufficient to pay in full, on the date on which such amount of
Rent is due, any payments then required to be made on account
of the principal of, premium, if any, and interest on the
Secured Certificates. It is agreed that no installment of
Basic Rent or payment of Termination Value or Stipulated Loss
Value shall be increased or adjusted by reason of (i) any
attachment or diversion of Rent on account of (A) Lessor Liens
or (B) any Loan Participant Lien or other Lien on or against
the Trust Estate, any part thereof or the Operative Documents
arising as a result of claims against the Indenture Trustee or
any Loan Participant or a Certificate Holder not related to
the transactions contemplated by the Operative Documents, (ii)
any modification of the payment terms of the Secured
Certificates made without the prior written consent of Lessee
or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of
Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this
Section 3(d) shall be (A) in compliance with the tests of
Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28
(provided that the test of Rev. Proc. 75-28 Section 4.08(1)
shall be applied on a prospective basis from the date of such
adjustment) and (B) subject to verification pursuant to
Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be
paid) promptly to Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent constituting Stipulated Loss Value or Termination Value
as the same shall become due and owing and all other amounts of Supplemental
Rent within five days after demand or within such other relevant period as may
be provided in any Operative Document, and in the event of any failure on the
part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or in any other Operative
Document or by law or equity or otherwise in the case of nonpayment of Basic
Rent. Lessee shall pay as Supplemental Rent when due any amount of premium
payable when due under the Trust Indenture and shall pay amounts equal to the
amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust
Indenture, as and when the same shall become due and payable. Lessee also will
pay to Lessor, or to whomsoever shall be entitled thereto, on demand, as
Supplemental Rent, to the extent permitted by applicable law, interest at the
Past Due Rate on any part of any installment of Basic Rent not paid when due
for any period for which the same shall be overdue and on any payment of
Supplemental Rent not paid when due for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by wire
transfer of immediately available funds prior to 10:30 A.M. New York time, on
the date of payment, to Lessor at its office at 150 Royall Street, Canton,
Massachusetts 02021 (or such other office of Lessor in the continental United
States or such other account as Lessor shall direct in a notice to Lessee at
least 10 Business Days prior to the date such payment of Rent is due);
provided, that so long
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<PAGE> 17
as the Trust Indenture shall not have been fully discharged, Lessor hereby
directs and Lessee agrees, that, unless the Indenture Trustee shall otherwise
direct, all Rent payable to Lessor and assigned to the Indenture Trustee
pursuant to the Trust Indenture shall be paid prior to 10:30 A.M. New York time
on the due date thereof in funds of the type specified in this Section 3(f)
directly to the Indenture Trustee at the office of the Indenture Trustee, One
Constitution Plaza, Hartford, Connecticut 06115, Attention: Corporate Trust
Department (or such other office of the Indenture Trustee in the continental
United States as the Indenture Trustee shall direct in a notice to Lessee at
least 10 Business Days prior to the date such payment of Rent is due). All
payments of Supplemental Rent owing to the Indenture Trustee or to a Loan
Participant or any other Certificate Holder pursuant to the Participation
Agreement shall be made in Dollars in immediately available funds prior to
10:30 A.M. New York time, on the due date thereof at the office of the
Indenture Trustee or at such other office of such other financial institution
located in the continental United States as the party entitled thereto may so
direct at least 10 Business Days prior to the due date thereof. All payments
of Supplemental Rent payable to the Owner Participant, to the extent that such
amounts constitute Excluded Payments (as defined in the Trust Indenture), shall
be made in Dollars in immediately available funds prior to 10:30 A.M. New York
time, on the due date thereof, to the account of the Owner Participant
specified in Schedule I to the Participation Agreement (or to such other
account as may be specified in writing by the Owner Participant from time to
time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if
any, that there shall not have been received by the Indenture Trustee at One
Constitution Plaza, Hartford, Connecticut, Attention: Corporate Trust
Department, in funds of the type specified in Section 3(f) hereof by 10:30 A.M.
New York time on the Commencement Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall on the Commencement Date, prepay on
the Commencement Date a portion of Basic Rent equal to the Excess Amount not so
paid (the amount of such Basic Rent to be prepaid by Lessee being herein called
"Prepaid Rent"); provided, that Lessee shall, under all circumstances and
whether or not an Event of Default shall be continuing on the Commencement
Date, pay as Basic Rent (and not as Prepaid Rent) on the Commencement Date an
amount equal to the excess, if any, of the interest to be paid on the Secured
Certificates on such date over the Excess Amount payable on such date;
provided, further, that Lessee will also pay to the Indenture Trustee, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Applicable Rate on any part of any Prepaid Rent and on the
amount, if any, payable pursuant to the immediately preceding proviso not paid
when due for any period for which the same shall be overdue. Lessor agrees to
reimburse Lessee in the manner provided in the following sentence for (x) the
Prepaid Rent so paid by Lessee, plus (y) any Supplemental Rent paid with
respect to Prepaid Rent by Lessee pursuant to this Section 3(g), plus (z)
accrued interest on the
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<PAGE> 18
unreimbursed portion thereof at a rate to be agreed between Lessee and Lessor
(and consented to by the Owner Participant) or in the absence of such an
agreement and consent at the rate equal to the Base Rate as in effect on the
date such amount is paid plus 5% per annum from the date such amount is paid by
Lessee to but not including the date of each such reimbursement (such amounts
to be reimbursed being herein called the "Reimbursement Amount"). Upon at
least five days prior written notice to the Indenture Trustee, Lessee shall be
entitled to offsets (without duplication) against each succeeding payment
(other than as limited by the proviso to this sentence) due from Lessee to
Persons other than the Loan Participants, the Indenture Trustee and the Owner
Trustee in its individual capacity (including, without limitation, Basic Rent,
payments due under Section 9, 10, 15 and 19 hereof, payments due under the Tax
Indemnity Agreement and payments due to Persons other than the Loan
Participants, the Indenture Trustee and Lessor in its individual capacity under
Section 7 of the Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however, that in the case of
any payment due from Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right of offset shall be limited to amounts distributable
to Lessor thereunder. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any installment of Basic Rent to an amount
insufficient, together with the Excess Amount and all other amounts payable
simultaneously by Lessee, to pay in full the payments then required to be made
on account of the principal of and interest on (and premium, if any, due with
respect to) the Secured Certificates then outstanding.
SECTION 4. Lessor's Representations and Warranties. NEITHER
LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE
DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO
HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that The First National
Bank of Boston, in its individual capacity, (i) represents and warrants that on
the Delivery Date, Lessor shall have received whatever title to the Aircraft
was conveyed to it by Lessee, (ii) represents and warrants that on the Delivery
Date the Aircraft shall be free of Lessor Liens attributable to it, (iii)
covenants that it will not, through its own actions or inactions, interfere in
Lessee's quiet enjoyment of the Aircraft during the Term so long as this Lease
shall not have been declared in default pursuant to Section 15 hereof, (iv)
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine or any portion of the Trust Estate and (v) represents and
warrants that it is a citizen of the United States as defined in Section
101(16) of the Federal Aviation Act and agrees that if at any time it shall
cease to be a
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<PAGE> 19
"citizen of the United States" within the meaning of Section 101(16) of the
Federal Aviation Act, it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
the Owner Participant or Lessee), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. Lessor
covenants that during the Term (so long as this Lease shall not have been
declared in default pursuant to Section 15 hereof) it will not, through its own
actions or inactions interfere in the quiet enjoyment of the Aircraft by Lessee
or any Sublessee and agrees that it will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Lien attributable to it on or with
respect to the Airframe or any Engine.
SECTION 5. Return of the Aircraft. (a) Condition Upon
Return. Unless purchased by Lessee pursuant to Section 9(b) or Section 19
hereof, upon the termination of this Lease at the end of the Basic Term or any
Renewal Term or pursuant to Section 9(c) or 15, Lessee, at its own expense,
will return the Airframe to Lessor at a major airport in one of the forty-eight
contiguous states of the United States chosen by Lessee, and Lessee will give
Lessor ten days prior written notice of the place of such return; provided,
however, that if Lessor shall have made the request for storage pursuant to
Section 5(d) hereof, Lessee shall return the Airframe to Lessor at the site of
the storage at the end of the storage period. At the time of such return,
Lessee will, unless otherwise requested by Lessor at least 90 days prior to the
return hereunder, cause the Aircraft, if it is not then so registered, to be
registered under the laws of the United States with the Federal Aviation
Administration in the name of the Lessor or its designee, provided that Lessee
shall be relieved of its obligations under this sentence if such registration
is prohibited by reason of the failure of Lessor or its designee to be eligible
on such date to own an aircraft registered with the Federal Aviation
Administration; the Airframe will be fully equipped with the Engines (or other
Pratt & Whitney Model PW4056 engines or four engines of the same or another
manufacturer of equivalent utility, value and remaining useful life, and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; provided that all four
engines shall be of the same make, model and manufacturer) duly installed
thereon. Also, at the time of such return, such Airframe and Engines or
engines (i) shall be certified (or, if not then registered under the Federal
Aviation Act, shall be eligible for certification) as an airworthy aircraft by
the Federal Aviation Administration, (ii) shall be free and clear of all Liens
(other than Lessor Liens, Indenture Trustee's Liens and Loan Participant Liens)
and rights of third parties under pooling, interchange, overhaul, repair or
other similar agreements or arrangements, (iii) shall be in commercial
passenger configuration and in as good an operating condition as when delivered
to Lessee hereunder, ordinary wear and tear excepted, or, in the case of any
such engines owned by Lessee, shall have a value, utility and remaining useful
life at least equal to, and shall be in as good an operating condition as
required by the terms hereof with respect to Engines constituting part of the
Aircraft but not then installed on the Airframe, (iv) in the event that Lessee
(or any Sublessee then in possession of the Aircraft) shall not then be using a
continuous maintenance program with respect to the Airframe, Lessee agrees that
during the period of operation of the Aircraft immediately prior to such return
(A) Lessee or such Sublessee, as the case may be, shall have
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<PAGE> 20
been using a block overhaul program with respect to the Airframe which shall
have been approved by all necessary governmental approvals of the country under
the laws of which the Aircraft shall then have been registered and (B) the
Airframe shall have remaining until the next scheduled block overhaul at least
25% of the allowable hours between block overhauls permitted under the block
overhaul program then used by Lessee or such Sublessee, (v) in the event that
Lessee (or any Sublessee then in possession of the Aircraft) during the period
of operation of the Aircraft immediately prior to such return shall not have
been using an on-condition maintenance program with respect to the Engines or
engines, Lessee agrees that the average number of hours or cycles of operation
(whichever shall be applicable under the maintenance program then in use with
respect to such Engines or engines) on such Engines or engines remaining until
the next scheduled engine refurbishment shall be at least 25% of the hours or
cycles (whichever shall be applicable) between engine refurbishment allowed
under the maintenance program then in use with respect to such Engines or
engines which shall have been approved by all necessary governmental approvals
of the country under the laws of which the Aircraft shall have then been
registered, (vi) shall have all Lessee's and any Sublessee's exterior markings
removed or painted over and the areas where such markings were removed or
painted over refurbished as necessary to blend with adjacent areas, and (vii)
shall have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return. In the event the Federal Aviation
Administration shall issue any directive which would require improvements to
the Aircraft in order for the airworthiness certificate of the Aircraft to be
maintained in good standing, Lessee shall not apply for an extension of the
date of compliance with the directive as to the Aircraft to a date after the
date of return of the Aircraft pursuant to this Section 5, unless it shall
previously or concurrently have applied for such an extension with respect to
all Boeing 747-400 aircraft in its fleet affected by such directive.
If clause (iv) of the first paragraph of this Section 5(a)
shall be applicable but the Airframe does not meet the conditions specified in
said clause (iv), Lessee shall pay or cause to be paid to Lessor a Dollar
amount computed by multiplying (I) 120% of the average direct cost to Lessee
(based upon the actual direct cost to Lessee for similar aircraft in the fleet
of Lessee) during the preceding 12 months of performing an airframe block
overhaul of the type referred to in such clause (iv) by (II) a fraction of
which (x) the numerator shall be the excess of 25% of hours of operation
allowable between such block overhauls over the actual number of hours of
operation remaining on the Airframe to the next such block overhaul and (y) the
denominator shall be the number of hours of operation allowable between such
block overhauls in accordance with such block overhaul program.
If clause (v) of the first paragraph of this Section 5(a)
shall be applicable but the Engines or engines do not meet the conditions
specified in said clause (v), Lessee shall pay or cause to be paid to Lessor a
Dollar amount computed by multiplying (aa) four by (bb) 120% of the average
direct cost to Lessee (based upon the actual direct cost to Lessee for similar
aircraft in the fleet of Lessee) during the preceding 12 months of performing
for an engine of the same model as the Engines the scheduled engine
refurbishment under the maintenance program then used by Lessee or any
Sublessee for engines of the same model as the Engines by (cc) a fraction of
which (x) the numerator shall be the excess of 25% of the hours or cycles
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<PAGE> 21
of operation (whichever is applicable) between engine refurbishment allowable
for an engine under the maintenance program then in use with respect to such
Engines or engines over the actual average number of hours or cycles of
operation on such Engines or engines remaining until the next such scheduled
engine refurbishment and (y) the denominator shall be the number of hours or
cycles allowable between such scheduled engine refurbishment.
During the last 6 months of the Term (unless Lessee shall have
elected to purchase the Aircraft or renew this Lease in accordance with the
terms of this Lease), with reasonable notice, Lessee will cooperate, and cause
any Sublessee to cooperate, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating thereto, provided that such cooperation shall not interfere with the
normal operation of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not
owned by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to
the effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens, Loan Participant Liens and
Indenture Trustee Liens), against receipt from Lessor of a bill of sale or
other instrument evidencing the transfer, without recourse or warranty (except
as to the absence of Lessor Liens, including for this purpose Liens that would
be Lessor Liens but for the proviso to the definition of Lessor Liens), by
Lessor to Lessee or its designee of all of Lessor's right, title and interest
in and to any Engine constituting part of the Aircraft but not installed on the
Airframe at the time of the return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessor shall pay Lessee, as compensation for any fuel or oil contained in
the fuel or oil tanks of such Airframe, the value of such fuel or oil being the
price paid by Lessee for such fuel or oil, as the case may be, and (ii) Lessee
shall deliver or cause to be delivered to Lessor all logs, manuals and data and
inspection, modification and overhaul records required to be maintained with
respect thereto under applicable rules and regulations of each country under
the laws of which the Aircraft has been registered during the period of
operation thereof.
(d) Storage Upon Return. If, at least 30 days prior to
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with free parking facilities for the Aircraft
(maintenance costs and other out-of-pocket costs other than parking fees to be
for the account of Lessor) for a period not exceeding thirty days commencing on
the date of such termination, at a location in the continental United States
selected by Lessee used as a location for the
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<PAGE> 22
parking or storage of aircraft. Lessee will maintain insurance for the
Aircraft during such period not exceeding thirty days and be reimbursed by
Lessor for the premiums thereon.
SECTION 6. Liens. Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, title thereto or any interest therein or in this Lease, except (i)
the respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens, Loan Participant Liens, and Indenture Trustee's
Liens, (iv) Liens for taxes of Lessee (or any Sublessee) either not yet due or
being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Airframe or any Engine or any interest therein, (v) materialmen's,
mechanics', workmen's, repairmen's, employees' or other like Liens arising in
the ordinary course of Lessee's (or, if a Sublease is then in effect, the
Sublessee's) business (including those arising under maintenance agreements
entered into in the ordinary course of business) securing obligations that are
not overdue for a period of more than 60 days or are being contested in good
faith by appropriate proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Airframe or any Engine
or any interest therein, (vi) Liens arising out of any judgment or award
against Lessee (or any Sublessee), unless the judgment secured shall not,
within 30 days after the entry thereof, have been discharged, vacated, reversed
or execution thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within 30 days after the expiration of such stay, and (vii)
any other Lien with respect to which Lessee (or any Sublessee) shall have
provided a bond or other security adequate in the reasonable opinion of Lessor.
Lessee will promptly, at its own expense, take (or cause to be taken) such
actions as may be necessary duly to discharge any such Lien not excepted above
if the same shall arise at any time.
SECTION 7. Registration, Maintenance and Operation;
Possession and Subleases; Insignia. (a)(I) Registration and Maintenance.
Lessee, at its own cost and expense, shall (or shall cause any Sublessee to):
(i) forthwith upon the delivery thereof hereunder, cause the Aircraft to be
duly registered in the name of Lessor, and, subject to the second paragraph of
this Section 7(a) and Section 8(f) of the Participation Agreement, to remain
duly registered in the name of Lessor under the Federal Aviation Act, provided
that Lessor shall execute and deliver all such documents as Lessee (or any
Sublessee) may reasonably request for the purpose of effecting and continuing
such registration, and shall not register the Aircraft or permit the Aircraft
to be registered under any laws other than the Federal Aviation Act at any time
except as provided in Section 8(f) of the Participation Agreement and shall
cause the Trust Indenture to be duly recorded and maintained of record as a
first mortgage on the Aircraft; (ii) maintain, service, repair, and overhaul
(or cause to be maintained, serviced, repaired, and overhauled) the Aircraft so
as to keep the Aircraft in as good an operating condition as delivered to
Lessee hereunder, ordinary wear and tear excepted, and so as to keep the
Aircraft in such condition as may be necessary to enable the applicable
airworthiness certification for the Aircraft to be maintained in good standing
at all times (other than temporary periods of storage in accordance with
applicable regulations)
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under the Federal Aviation Act, except when all Boeing 747-400 aircraft powered
by engines of the same type as those with which the Airframe shall be equipped
at the time of such grounding and registered in the United States have been
grounded by the Federal Aviation Administration other than as a result of
actions taken or omitted to be taken by Lessee (or, if a Sublease is then in
effect, by Lessee or any Sublessee) (although such certification need actually
be maintained only during such periods as the Aircraft is registered under such
Act), or the applicable laws of any other jurisdiction in which the Aircraft
may then be registered from time to time in accordance with Section 8(f) of the
Participation Agreement, utilizing, except during any period that a Sublease is
in effect, the same manner and standard of maintenance, service, repair or
overhaul used by Lessee with respect to similar aircraft operated by Lessee in
similar circumstances and utilizing, during any period that a Sublease is in
effect, the same manner and standard of maintenance, service, repair or
overhaul used by the Sublessee with respect to similar aircraft operated by the
Sublessee in similar circumstances or such other manner as shall have been
approved by the Owner Participant pursuant to Section 7(b); (iii) maintain or
cause to be maintained all records, logs and other materials required to be
maintained in respect of the Aircraft by the Federal Aviation Administration or
the applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered; and (iv) promptly furnish or cause to be
furnished to Lessor and the Owner Participant such information as may be
required to enable Lessor to file any reports required to be filed by Lessor or
the Owner Participant with any governmental authority because of Lessor's
ownership of the Aircraft. (II) Operation. Lessee will not maintain, use,
service, repair, overhaul or operate the Aircraft (or permit any Sublessee to
maintain, use, service, repair, overhaul or operate the Aircraft) in violation
of any law or any rule, regulation, order or certificate of any government or
governmental authority (domestic or foreign) having jurisdiction, or in
violation of any airworthiness certificate, license or registration relating to
the Aircraft issued by any such authority, except to the extent Lessee (or, if
a Sublease is then in effect, any Sublessee), after providing written notice to
Lessor, is contesting in good faith the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Lessor. Lessee will not operate the Aircraft, or
permit any Sublessee to operate the Aircraft, in or to any area excluded from
coverage by any insurance required by the terms of Section 11; provided,
however, that the failure of Lessee to comply with the provisions of this
sentence shall not give rise to an Event of Default hereunder where such
failure is attributable to causes beyond the reasonable control of Lessee (or,
if a Sublease is then in effect, the Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in
the ordinary course of the regular operations of Lessee (or, if a Sublease is
then in effect, the Sublessee).
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation
Agreement, shall, at the request and sole expense of Lessee, cooperate with
Lessee to take all actions required to change the registration of the Aircraft
to another country.
(b) Possession and Subleases. Lessee will not, without the
prior written consent of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish
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<PAGE> 24
possession of the Airframe or any Engine or install or permit any Engine to be
installed on any airframe other than the Airframe or enter into any Wet Lease
or similar arrangement; provided that, so long as no Default or Event of
Default shall have occurred and be continuing at the time of such sublease,
delivery, transfer or relinquishment of possession or installation or such Wet
Lease or similar arrangement, and so long as the action to be taken shall not
deprive the Indenture Trustee of the perfected first priority lien of the Trust
Indenture on the Airframe or (subject to the further proviso (B) to clause (i)
of this Section 7(b)) any Engine, and so long as Lessee (or any Sublessee)
shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee may,
without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines
then installed thereon to normal interchange agreements or any
Engine to normal pooling or similar arrangements, in each case
customary in the airline industry and entered into by Lessee
(or any Sublessee) in the ordinary course of its business;
provided, that (A) no such agreement or arrangement
contemplates or requires the transfer of title to the
Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Foreign Air Carrier;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof (or for delivery thereof)
or to any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work on the Airframe
or Engine or any part of any thereof or for alterations or
modifications in or additions to such Airframe or Engine to
the extent required or permitted by the terms of Section 8(c)
hereof;
(iii) install an Engine on an airframe owned by
Lessee (or any Sublessee) free and clear of all Liens, except:
(A) Permitted Liens and those which apply only to the engines
(other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
shall not be divested as a result thereof and (C) mortgage
liens or other security interests, provided, that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to
Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all
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<PAGE> 25
Liens, except: (A) the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and (y)
such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee
(or any Sublessee), leased to Lessee (or any Sublessee) or
purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b) hereof,
subject any appliances, Parts or other equipment owned by
Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject)
the Airframe or any Engine to the Civil Reserve Air Fleet
Program and transfer (or permit any Sublessee to transfer)
possession of the Airframe or any Engine to the United States
of America or any instrumentality or agency thereof pursuant
to the Civil Reserve Air Fleet Program, so long as Lessee (or
any Sublessee) shall (A) promptly notify Lessor upon
subjecting the Airframe or any Engine to the Civil Reserve Air
Fleet Program in any contract year and provide Lessor with the
name and address of the Contracting Office Representative for
the Military Airlift Command of the United States Air Force to
whom notice must be given pursuant to Section 15 hereof, and
(B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of
the Term, enter into a Wet Lease for the Airframe and Engines
or engines then installed thereon with any third party;
(ix) for a period not to extend beyond the end of
the Term, transfer possession of the Airframe or any Engine to
the United States of America or any instrumentality or agency
thereof pursuant to a contract, a copy of which shall promptly
be provided to Lessor; or
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<PAGE> 26
(x) so long as the term of any sublease does not
extend beyond the Term and so long as the Sublessee is not
subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws on the date the
sublease is entered into, Lessee may, at any time, enter into
any sublease with (1) a U.S. Air Carrier, (2) any Person
approved in writing by the Owner Participant and the Indenture
Trustee, which approval shall not be unreasonably withheld or
(3) after the Depreciation Period, with any Permitted
Sublessee, provided, however, that (A) no sublease entered
into pursuant to this clause (x) shall extend beyond the date
which is six months prior to the expiration of the Basic Term
or any Renewal Term then in effect unless the Owner
Participant shall have previously approved in writing the
maintenance procedures of the Sublessee, or Lessee shall have
irrevocably committed to purchase the Aircraft or (if
permitted by the terms hereof) extend the Term of this Lease
for a period ending at least six months from the end of the
proposed sublease and (B) in the event that (x) there has been
no downgrade of Lessee's long term senior unsecured debt
rating in the twelve month period preceding the date of
Lessee's entering into a sublease with a Person described in
clause (3) of this subparagraph and on such date such debt is
rated BB+ or lower by Standard & Poor's Corporation and Ba1 or
lower by Moody's Investors Service or (y) there has been a
downgrade of Lessee's long term senior unsecured debt rating
in the twelve month period preceding the date of Lessee's
entering into a sublease with a Person described in clause (3)
of this subparagraph and on such date such debt is rated BB+
or lower by Standard & Poor's Corporation or Ba1 or lower by
Moody's Investors Service, Lessee may not enter into such
sublease with such Person unless the country of such
Sublessee's domicile imposes aircraft maintenance standards
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 or the
Luftfahrt Bundesamt of the Federal Republic of Germany, and
Lessor, the Owner Participant and the Indenture Trustee shall
have received a favorable opinion of counsel (which counsel
and opinion are reasonably satisfactory to Lessor, the Owner
Participant and the Indenture Trustee) in the jurisdiction of
the Sublessee's domicile (a) that the terms (including,
without limitation, the governing law, service of process and
jurisdictional-submission provisions thereof) of the Sublease,
the Lease and the Trust Indenture are legal, valid, binding
and enforceable in such jurisdiction against third parties to
substantially the same extent as in the United States, (b)
that it is not necessary for the Owner Participant, Lessor,
the Indenture Trustee or the Loan Participants to register or
qualify to do business in such jurisdiction, (c) that there is
no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction (it
being understood that, in the event such latter opinion cannot
be given in a form satisfactory to the Owner Participant,
Lessor and the Indenture Trustee, such opinion shall be waived
if insurance reasonably satisfactory to the Owner Participant,
Lessor and the Indenture Trustee is obtained to cover such
risk) and (d) that there exist no
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<PAGE> 27
possessory rights in favor of such Sublessee under the laws of
such jurisdiction which would, upon bankruptcy of Lessee or
other default by Lessee or Sublessee, prevent the return of
the Aircraft to Lessor in accordance with and where permitted
by the terms of Sections 14 and 15 of the Lease upon the
exercise by Lessor of its remedies under Section 15 of the
Lease and the practical realization by Lessor of its rights
and benefits under said Section 15.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any Sublease permitted by this
paragraph (b) which has a term of more than three months, shall be effectively
and expressly subject and subordinate to, all the terms of this Lease and to
the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant
to Section 15 hereof and to avoid such Sublease upon such repossession, and
Lessee shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such Sublease or transfer had
not occurred, and the terms of any such Sublease shall not permit any Sublessee
to take any action not permitted to be taken by Lessee in this Lease with
respect to the Aircraft. No pooling agreement, sublease or other
relinquishment of possession of the Airframe or any Engine or Wet Lease shall
in any way discharge or diminish any of Lessee's obligations to Lessor
hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any
Sublease permitted by this paragraph (b) shall expressly prohibit any further
sublease by the Sublessee. Lessor agrees, for the benefit of Lessee (and any
Sublessee) and for the benefit of any mortgagee or other holder of a security
interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee
(or any Sublessee) and any conditional vendor of any engine (other than an
Engine) purchased by Lessee (or any Sublessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that none of Lessor,
its successors or assigns will acquire or claim, as against Lessee (or any
Sublessee) or any such mortgagee, lessor or conditional vendor or other holder
of a security interest or any successor or assignee of any thereof, any right,
title or interest in such engine as the result of such engine being installed
on the Airframe; provided, however, that such agreement of Lessor shall not be
for the benefit of any lessor or secured party of any airframe (other than the
Airframe) leased to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security agreement or for the
benefit of any mortgagee of or any other holder of a security interest in an
airframe owned by Lessee (or any Sublessee), unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against Lessor, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Lessee shall provide to the Owner
Participant and the Indenture Trustee written notice of any Sublease hereunder
which has a term of more than three months (such notice to be given prior to
entering into such Sublease, if practicable, but in any event promptly after
entering into any such Sublease).
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<PAGE> 28
(c) Insignia. On or prior to the Delivery Date, or as soon
thereafter as practicable, Lessee agrees to affix and maintain (or cause to be
affixed and maintained) in the cockpit of the Airframe adjacent to the
airworthiness certificate therein and on each Engine a nameplate bearing the
inscription:
Leased From
The First National Bank of Boston, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
Mortgaged To
The Connecticut Bank and Trust Company, National Association,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any person, association or corporation to be placed
on the Airframe or on any Engine as a designation that might be interpreted as
a claim of ownership; provided, that nothing herein contained shall prohibit
Lessee (or any Sublessee) from placing its customary colors and insignia on the
Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own
cost and expense, will promptly replace or cause to be replaced all Parts which
may from time to time be incorporated or installed in or attached to the
Airframe or any Engine and which may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided
in paragraph (c) of this Section 8. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided, that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost
and expense, replace such Parts as promptly as practicable. All replacement
Parts shall be free and clear of all Liens (except for Permitted Liens and
pooling arrangements to the extent permitted by paragraph (b) of this Section 8
and except in the case of replacement property temporarily installed on an
emergency basis) and shall be in as good operating condition as, and shall have
a value and utility at least equal to, the Parts replaced assuming such
replaced Parts were in the condition and repair required to be maintained by
the terms hereof. All Parts at any time removed from the Airframe or any
Engine shall remain the property of Lessor, no matter where located, until such
time as such Parts shall be replaced by
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<PAGE> 29
Parts which have been incorporated or installed in or attached to the Airframe
or such Engine and which meet the requirements for replacement Parts specified
above. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided,
without further act (subject only to Permitted Liens and any pooling
arrangement to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an
emergency basis), (i) title to such replacement Part shall thereupon vest in
Lessor, (ii) such replacement Part shall become subject to this Lease and be
deemed part of the Airframe or such Engine for all purposes hereof to the same
extent as the Parts originally incorporated or installed in or attached to the
Airframe or such Engine, and (iii) title to the replaced Part shall thereupon
vest in Lessee (or, if a Sublease is then in effect, any Sublessee), free and
clear of all rights of Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in paragraph (a) of this Section 8 may be subjected by
Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided, that the Part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided, that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens other than Permitted Liens or (ii)
replaces such replacement Part by incorporating or installing in or attaching
to the Airframe or Engine a further replacement Part owned by Lessee (or any
Sublessee) free and clear of all Liens other than Permitted Liens and by
causing title to such further replacement Part to vest in Lessor in accordance
with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its
own expense, will make (or cause to be made) such alterations and modifications
in and additions to the Airframe and Engines as may be required from time to
time to meet the applicable standards of the Federal Aviation Administration or
any applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered as permitted by Section 8(f) of the
Participation Agreement; provided, however, that Lessee (or, if a Sublease is
then in effect, any Sublessee) may, in good faith, contest the validity or
application of any such law, rule, regulation or order in any reasonable manner
which does not adversely affect Lessor. In addition, Lessee (or any
Sublessee), at its own expense, may from time to time add further parts or
accessories and make such alterations and modifications in and additions to the
Airframe or any Engine as Lessee (or any Sublessee) may deem desirable in the
proper conduct of its business, including, without limitation, removal of Parts
which Lessee (or any Sublessee) has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such
Engine (such parts, "Obsolete Parts"); provided
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<PAGE> 30
that no such alteration, modification or addition shall diminish the value,
utility or remaining useful life of the Airframe or such Engine, or materially
impair the condition or impair the airworthiness thereof, below the value,
utility, condition, airworthiness, or remaining useful life thereof immediately
prior to such alteration, modification or addition assuming the Airframe or
such Engine was then of the value and utility and in the condition and
airworthiness required to be maintained by the terms of this Lease, except that
the value (but not the utility, condition, airworthiness or remaining useful
life) of the Airframe or any Engine may be reduced by the value of Obsolete
Parts which shall have been removed so long as the aggregate original cost of
all Obsolete Parts which shall have been removed and not replaced shall not
exceed $600,000. Title to all Parts incorporated or installed in or attached
or added to the Airframe or an Engine as the result of such alteration,
modification or addition (except those parts which Lessee has leased from
others) (the "Additional Parts") shall, without further act, vest in Lessor.
Notwithstanding the foregoing sentence, Lessee (or any Sublessee) may, at any
time during the Term, so long as no Event of Default shall have occurred and be
continuing, remove or suffer to be removed any Additional Part, provided that
such Additional Part (i) is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or attached
to the Airframe or any Engine at the time of delivery thereof hereunder or any
Part in replacement of or substitution for any such Part, (ii) is not required
to be incorporated or installed in or attached or added to the Airframe or any
Engine pursuant to the terms of Section 7 hereof or the first sentence of this
paragraph (c) and (iii) can be removed from the Airframe or such Engine without
diminishing or impairing the value, utility, condition, remaining useful life
or airworthiness which the Airframe or such Engine would have had at such time
had such alteration, modification or addition not occurred. Upon the removal
by Lessee (or Sublessee) of any Part as provided above, title thereto shall,
without further act, vest in Lessee (or any Sublessee, as the case may be) and
such Part shall no longer be deemed part of the Airframe or Engine from which
it was removed. Any Part not removed by Lessee (or any Sublessee) as above
provided prior to the return of the Airframe or Engine to Lessor hereunder
shall remain the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event.
(1) So long as no Event of Default shall have occurred and be continuing,
Lessee shall have the right to elect to terminate this Lease on the Lease
Period Date occurring in February, 1997, February, 2000, February, 2003,
February, 2006 or February, 2009. Lessee shall exercise this option by
purchasing the Aircraft pursuant to paragraph (b) of this Section 9.
(2) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to elect to terminate this Lease on any
Lease Period Date occurring on or after the fifth anniversary of the Delivery
Date if Lessee shall have made the good faith determination, which shall be
evidenced by a resolution duly adopted by its Board of Directors (or the
Executive Committee thereof), that the Aircraft is obsolete or surplus to its
needs.
(3) Lessee shall give to Lessor at least ninety days'
revocable advance written notice (or, if such termination is being elected
pursuant to Section 9(a)(2) of this Lease, 180 days' advance revocable written
notice) of Lessee's intention to so terminate this Lease (any such notice, a
"Termination Notice") specifying (i) the Lease Period Date on which Lessee
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<PAGE> 31
intends to terminate this Lease in accordance with this Section 9 (such
specified date, a "Termination Date") and (ii) whether or not Lessee has
determined that the Aircraft is obsolete or surplus to its needs. In addition,
in the case of a termination pursuant to Section 9(a)(1), Lessee agrees that it
shall deliver to the Indenture Trustee and Lessor at least twenty Business Days
irrevocable notice of its election to purchase the Aircraft pursuant to Section
9(b).
(b) Option to Purchase. In the event that Lessee shall have
exercised its right to terminate this Lease under Section 9(a)(1) and Lessee
shall have given its irrevocable notice pursuant to Section 9(a)(3), then on
the Termination Date specified in Section 9(a)(3), Lessee shall purchase the
Aircraft for an amount determined in accordance with the next succeeding
sentence. In such event, Lessor shall, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso to the definition of Lessor Liens), sell the
Aircraft to Lessee in exchange for, at Lessee's option, either (1) immediately
available funds in an amount equal to the sum of (A) all unpaid Basic Rent with
respect to the Aircraft due prior to such Termination Date and, if such Basic
Rent is payable in arrears on such Termination Date as indicated on Exhibit B,
on such Termination Date, and all unpaid Supplemental Rent with respect to the
Aircraft due on or prior to such Termination Date plus (B) all reasonable
expenses incurred by Lessor in connection with such sale except those incurred
and payable by Lessor as a result of an appraisal conducted pursuant to Section
19(c) hereof, plus (C) the greater of (x) the Termination Value for the
Aircraft, computed as of the Termination Date or (y) the fair market sales
value of the Aircraft on the Termination Date, determined in accordance with
Section 19(c) hereof, plus (E) the premium, if any, due on the Secured
Certificates; or (2) (A) the assumption by Lessee, pursuant to Section 8(x) of
the Participation Agreement and Section 2.15 of the Trust Indenture, of all of
the obligations of Lessor under the Trust Indenture and the Secured
Certificates, (B) the payment in immediately available funds in an amount equal
to the sum of (x) all unpaid Basic Rent with respect to the Aircraft due prior
to such Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent with respect to the Aircraft due on or prior to such
Termination Date plus (y) all reasonable expenses incurred by Lessor in
connection with such sale except those incurred and payable by Lessor as a
result of an appraisal conducted pursuant to Section 19(c) hereof plus (z) the
excess of the greater of (I) the Termination Value for the Aircraft, computed
as of the Termination Date and (II) the fair market sales value of the Aircraft
on the Termination Date, determined in accordance with Section 19(c) hereof
over the unpaid principal of the Secured Certificates outstanding as of such
date after giving effect to the application of Rent paid pursuant to clause (x)
above. Upon payment in full of the amounts required to be paid and the
performance of all acts required to be performed by Lessee pursuant to the
preceding sentence, (i) the obligation of Lessee to pay Basic Rent hereunder
with respect to the Aircraft for any period commencing on or after the
Termination Date shall terminate and (ii) this Lease shall terminate on the
Termination Date.
(c) Optional Sale of the Aircraft. In the event that Lessee
shall have exercised its right to terminate this Lease under Section 9(a)(2),
then during the period from the giving of the notice referred to in Section
9(a)(3) until the proposed Termination Date (unless Lessee shall have revoked
the Termination Notice specifying such proposed Termination Date),
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Lessee, as agent for Lessor and at no expense to Lessor, shall use its best
efforts to obtain bids in the worldwide market for the purchase of the Aircraft
and, in the event it receives any bid, Lessee shall, within five Business Days
after receipt thereof and at least ten Business Days prior to the proposed
Termination Date, certify to Lessor in writing the amount and terms of such
bid, and the name and address of the party or parties (who shall not be Lessee
or any Affiliate of Lessee or any person with whom Lessee or any such Affiliate
has an arrangement or understanding regarding the future use of the Aircraft by
Lessee or any such Affiliate but who may be the Owner Participant, any
Affiliate thereof or any person contacted by the Owner Participant) submitting
such bid. After Lessee shall have certified to Lessor all bids received, the
Owner Participant, any Affiliate thereof or any Person contacted by the Owner
Participant may submit a further bid or bids to Lessee not later than five
Business Days prior to the Termination Date proposed by Lessee (unless Lessee
shall have revoked the Termination Notice specifying such proposed Termination
Date). Subject to the next succeeding sentence, on or before the Termination
Date, subject to the release of all mortgage and security interests with
respect to the Aircraft under the Trust Indenture: (1) Lessee shall deliver
the Aircraft, or cause the Aircraft to be delivered, to the bidder(s), if any,
which shall have submitted the highest bid therefor at least ten (or, in the
case of the Owner Participant, any Affiliate thereof, or person contacted by
the Owner Participant, five) Business Days prior to such Termination Date, in
the same manner and in the same condition and otherwise in accordance with all
the terms of this Lease as if delivery were made to Lessor pursuant to Section
5, and shall duly transfer to Lessor title to any engines not owned by Lessor
all in accordance with the terms of Section 5, (2) Lessor shall comply with the
terms of the Trust Indenture and shall, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso to the definition of Lessor Liens), subject to
prior or concurrent payment by Lessee of all amounts due under clause (3) of
this sentence, sell all of Lessor's right, title and interest in and to the
Aircraft for cash in Dollars to such bidder(s), the total selling price
realized at such sale to be retained by Lessor, and (3) Lessee shall
simultaneously pay or cause to be paid to Lessor in funds of the type specified
in Section 3(f) hereof, an amount equal to the sum of (A) the excess, if any,
of (i) the Termination Value for the Aircraft, computed as of the Termination
Date, over (ii) the sale price of the Aircraft sold by Lessor after deducting
the reasonable expenses incurred by Lessor in connection with such sale, (B)
all unpaid Basic Rent with respect to the Aircraft due prior to such
Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect
to the Aircraft, and (C) the premium, if any, due on the Secured Certificates,
and upon such payment Lessor simultaneously will transfer to Lessee, without
recourse or warranty (except as to the absence of Lessor Liens, including for
this purpose Liens that would be Lessor Liens but for the proviso to the
definition of Lessor Liens), all of Lessor's right, title and interest in and
to any Engines constituting part of the Aircraft which were not sold with the
Aircraft. Notwithstanding the preceding sentence, Lessor may, if Lessee has
not revoked the Termination Notice, elect to retain title to the Aircraft. If
Lessor so elects, Lessor shall give to Lessee written notice of such election
at least five Business Days prior to the Termination Date accompanied by an
irrevocable undertaking by the Owner Participant to make available to the
Lessor for payment to the Indenture Trustee on the Termination Date the amount
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required to pay in full the unpaid principal amount of the Secured Certificates
outstanding on the Termination Date plus interest accrued thereon through the
Termination Date together with the premium, if any, due on the Secured
Certificates, if the same is not otherwise paid. Upon receipt of notice of
such an election by Lessor and the accompanying undertaking by the Owner
Participant, Lessee shall cease its efforts to obtain bids as provided above
and shall reject all bids theretofore or thereafter received. On the
Termination Date, Lessor shall pay in full the unpaid principal amount of the
Secured Certificates outstanding on the Termination Date plus interest accrued
thereon through the Termination Date together with all premium, if any, due on
the Secured Certificates and, provided that the Secured Certificates are paid
as aforesaid, Lessee shall deliver the Airframe and Engines or engines to
Lessor in accordance with Section 5 and shall pay all Basic Rent due prior to
the Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
Supplemental Rent due on or prior to the Termination Date and the premium, if
any, due on the Secured Certificates. If no sale shall have occurred on the
Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, this Lease shall
continue in full force and effect as to the Aircraft, Lessee shall pay the
reasonable costs and expenses incurred by the Owner Participant and Lessor
(unless such failure to terminate the Lease is a consequence of the failure of
Lessor or the Owner Participant without due cause to make, or cause to be made,
the payment referred to in the immediately preceding sentence), if any, in
connection with preparation for such sale and Lessee may give one or more
additional Termination Notices in accordance with Sections 9(a)(1) and (2)
subject to the last sentence of this Section 9(c). In the event of any such
sale or such retention of the Aircraft by Lessor and upon compliance by Lessee
with the provisions of this paragraph, the obligation of Lessee to pay Basic
Rent or any other amounts hereunder shall cease to accrue and this Lease shall
terminate. Lessor may, but shall be under no duty to, solicit bids, inquire
into the efforts of Lessee to obtain bids or otherwise take any action in
connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft,
against receipt of the payments provided herein. Lessee may revoke a
Termination Notice given pursuant to Section 9(a)(2) no more than four times
during the Term.
(d) Termination as to Engines. So long as no Event of
Default shall have occurred and be continuing, Lessee shall have the right at
its option at any time during the Term, on at least 30 days' prior written
notice, to terminate this Lease with respect to any Engine. In such event, and
prior to the date of such termination, Lessee shall replace such Engine
hereunder by complying with the terms of Section 10(b) to the same extent as if
an Event of Loss had occurred with respect to such Engine, and Lessor shall
transfer such right, title and interest as it may have to the replaced Engine
as provided in Section 5(b).
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event
of Loss with Respect to the Aircraft. Upon the occurrence of an Event of Loss
with respect to the Airframe or the Airframe and the Engines and/or engines
then installed thereon, Lessee shall forthwith (and in any event, within
fifteen days after such occurrence) give Lessor written
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notice of such Event of Loss, and within 45 days after such Event of Loss
Lessee shall give Lessor written notice of its election to perform one of the
following options (it being agreed that if Lessee shall not have given such
notice of election within such period, Lessee shall be deemed to have elected
the option set forth in clause (i) below). Not later than the earlier of (x)
the Business Day next succeeding the 120th day following the occurrence of such
Event of Loss or (y) the third Business Day following the receipt of insurance
proceeds in respect of such occurrence but not earlier than thirty days after
such occurrence, Lessee shall:
(i) pay or cause to be paid to Lessor in funds of
the type specified in Section 3(f) hereof, the sum of (A) the
Stipulated Loss Value of the Aircraft computed as of the
Stipulated Loss Value Date occurring on or immediately
following the date of such Event of Loss plus (B) interest on
such Stipulated Loss Value at the Applicable Rate then in
effect from and including such Stipulated Loss Value Date to,
but not including, the date of any advance payment in respect
of Stipulated Loss Value as provided below, and thereafter on
the unpaid balance of such Stipulated Loss Value from the date
of such advance payment to, but excluding, the date such
Stipulated Loss Value is paid in full; provided, however, that
if a Lease Period Date shall occur after the Stipulated Loss
Value Date with respect to which Stipulated Loss Value is
determined but prior to the date of such payment of the sum of
the amounts specified in clauses (A) and (B) above, Lessee
shall pay on such Lease Period Date an amount equal to the
Basic Rent that would have been due on such Lease Period Date
if such Event of Loss had not occurred, which amount shall be
credited as an advance against the amounts payable pursuant to
clauses (A) and (B) above, or
(ii) provided that no Event of Default shall have
occurred and be continuing, elect to substitute an aircraft or
an airframe or an airframe and one or more engines, as the
case may be;
provided, that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor not later
than the Business Day next following the end of such period the amount
specified in clause (i) of this Section 10(a).
At such time as Lessor shall have received the sum of the
amounts specified in clauses (A) and (B) of subparagraph (i) above, together
with all other amounts that then may be due hereunder (including, without
limitation, all Basic Rent due before the date of such payment and all
Supplemental Rent), under the Participation Agreement and under the Tax
Indemnity Agreement, (1) the obligation of Lessee to pay the installments of
Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any
other amount shall cease to accrue, (2) this Lease shall terminate, (3) Lessor
will comply with the terms of the Trust Indenture and transfer to or at the
direction of Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso to the definition of Lessor Liens), all Lessor's right, title
and interest in and to the Airframe and any Engines subject to such Event of
Loss, as well as any Engines not
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subject to such Event of Loss, and furnish to or at the direction of Lessee a
bill of sale in form and substance reasonably satisfactory to Lessee (or any
Sublessee), evidencing such transfer, and (4) Lessee will be subrogated to all
claims of Lessor, if any, against third parties, for damage to or loss of the
Airframe and any Engines which were subject to such Event of Loss to the extent
of the then insured value of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, not later than the later to occur of (i) the Business Day next
succeeding the 120th day following the occurrence of such Event of Loss and
(ii) the Lease Period Date next succeeding the occurrence of such Event of
Loss, (A) convey or cause to be conveyed to Lessor and to be leased by Lessee
hereunder, an aircraft (or an airframe or an airframe and one or more engines
which, together with the Engines constituting a part of the Aircraft but not
installed thereon at the time of such Event of Loss constitute the Aircraft)
free and clear of all Liens (other than Permitted Liens) and having a value,
utility and remaining useful life at least equal to, and being in as good an
operating condition as, the Aircraft subject to such Event of Loss assuming
that the Aircraft had been maintained in accordance with this Lease; provided
that any aircraft, airframe or engine so substituted hereunder shall be of the
same or improved model as those initially leased hereunder and (B) prior to or
at the time of any such substitution, Lessee (or any Sublessee), at its own
expense, will (1) furnish Lessor with a full warranty bill of sale and a
Federal Aviation Administration bill of sale, in form and substance
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, together with an opinion of counsel (which shall be
Cadwalader, Wickersham & Taft and, if not, other counsel chosen by Lessee and
reasonably acceptable to Lessor) addressed to Lessor and satisfactory to Lessor
stating the same legal opinions referred to in Section 5.06(5) of the Trust
Indenture, and an opinion of counsel chosen by Lessee and reasonably acceptable
to the Owner Participant as to the tax consequences (without any requirement as
to the nature of such tax consequences) to Lessor and the Owner Participant of
such substitution, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso to the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an
opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not,
other counsel chosen by
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Lessee and reasonably acceptable to Lessor) reasonably satisfactory to Lessor
to the effect that Lessor and the Indenture Trustee as assignee of Lessor
should be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code
with respect to the substitute aircraft and (7) Lessee will be subrogated to
all claims of Lessor, if any, against third parties for damage to or loss of
the Airframe and any Engine which were subject to such Event of Loss to the
extent of the then insured value of the Aircraft. For all purposes hereof, the
property so substituted shall after such transfer be deemed part of the
property leased hereunder and shall be deemed an "Aircraft", "Airframe" and
"Engine", as the case may be, as defined herein. No Event of Loss with respect
to the Airframe or the Airframe and the Engines or engines then installed
thereon for which substitution has been elected pursuant to Section 10(a)(ii)
hereof shall result in any reduction in Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty days
after the occurrence of such Event of Loss, convey or cause to be conveyed to
Lessor, as replacement for the Engine with respect to which such Event of Loss
occurred, title to another Pratt & Whitney Model PW4056 engine (or engine of
the same or another manufacturer of the same, an equivalent or an improved
model and suitable for installation and use on the Airframe without impairing
the value, utility or remaining useful life of the Aircraft) free and clear of
all Liens (other than Permitted Liens, which engine may upon its transfer to
Lessor become subject to any and all Permitted Liens) and having a value,
utility and remaining useful life at least equal to, and being in as good an
operating condition as, the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine,
(ii) cause a Lease Supplement and Trust Supplement to be duly executed by
Lessee and to be filed for recording pursuant to the Federal Aviation Act, or
the applicable laws, rules and regulations of any other jurisdiction in which
the Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso to the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (B) all claims, if any,
against third parties, for damage to or loss of the Engine subject to such
Event of Loss, and such Engine shall thereupon cease to be the Engine leased
hereunder. For all purposes hereof, each such replacement engine shall, after
such conveyance, be deemed part of the property leased hereunder, and shall be
deemed an "Engine". No Event of Loss with respect to an
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Engine under the circumstances contemplated by the terms of this paragraph (b)
shall result in any reduction in Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other person with
respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement)
for reasonable costs and expenses, so much of such payments
remaining as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a), shall
be applied in reduction of Lessee's obligation to pay
Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee
for its payment of Stipulated Loss Value, and following the
foregoing application, the balance, if any, of such payments
will be paid over to, or retained by Lessee, provided that
Lessor shall be entitled to so much of the excess, if any, of
such payment over the greater of (x) the Stipulated Loss Value
and (y) the fair market value of the Aircraft as Lessor shall
demonstrate to Lessee's reasonable satisfaction is
attributable to compensation for loss of Lessor's interest in
the Aircraft as distinguished from the loss of use of the
Aircraft; or (B) if such property is replaced pursuant to the
last paragraph of Section 10(a), such payments shall be paid
over to, or retained by, Lessee; provided, that Lessee shall
have fully performed or, concurrently therewith, will fully
perform the terms of the last paragraph of Section 10(a) with
respect to the Event of Loss for which such payments are made;
and
(ii) if such payments are received with respect to
an Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after reimbursement
of Lessor (as provided for in Section 7.01 of the Trust
Agreement) for reasonable costs and expenses shall be paid
over to, or retained by, Lessee, provided that Lessee shall
have fully performed, or concurrently therewith will perform,
the terms of Section 10(b) with respect to the Event of Loss
for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, Lessee shall promptly notify Lessor of such requisition, and all of
Lessee's obligations under this Lease Agreement with respect to the Aircraft
shall continue to the same extent as if such requisition had not occurred,
provided that if such Airframe and Engines or engines installed thereon are
not returned by such government prior to the end of
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the Term, Lessee shall be obligated to return the Airframe and such Engines or
engines to Lessor pursuant to, and in all other respects in compliance with the
provisions of, Section 5 promptly on the date of such return by such
government. If Lessee shall fail to return the Aircraft on or before the
thirtieth day beyond the end of the Term, such failure shall constitute an
Event of Loss which shall be deemed to have occurred on the last day of the
Term and in such event Lessee shall make the payment contemplated by Section
10(a)(i) in respect of such Event of Loss; provided, however, that Lessor may
notify Lessee in writing on or before the twentieth day prior to the last day
of the Term that, in the event Lessee shall fail by reason of such requisition
to return the Airframe and such Engines or engines on or before the thirtieth
day beyond the end of the Term, such failure shall not be deemed an Event of
Loss. Upon the giving of such notice and such failure to return by the
thirtieth day beyond the end of the Term, Lessee shall be relieved of all of
its obligations pursuant to the provisions of Section 5 (but not under any
other Section), except that if any engine not owned by Lessor shall then be
installed on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause
to be furnished, to Lessor a full warranty (as to title) bill of sale with
respect to each such engine, in form and substance reasonably satisfactory to
Lessor (together with an opinion of counsel) to the effect that such full
warranty bill of sale has been duly authorized and delivered and is enforceable
in accordance with its terms and that such engines are free and clear of Liens
other than Lessor Liens, Loan Participant Liens and Indenture Trustee Liens,
against receipt from Lessor of a bill of sale evidencing the transfer, without
recourse or warranty (except as to the absence of Lessor Liens, including for
this purpose Liens that would be Lessor Liens but for the proviso to the
definition of Lessor Liens), by Lessor to Lessee or its designee of all of
Lessor's right, title and interest in and to any Engine constituting part of
the Aircraft but not then installed on the Airframe. All payments received by
Lessor or Lessee from such government for the use of such Airframe and Engines
or engines during the Term shall be paid over to, or retained by, Lessee (or,
if directed by Lessee, any Sublessee); and all payments received by Lessor or
Lessee from such government for the use of such Airframe and Engines or engines
after the end of the Term shall be paid over to, or retained by, Lessor unless
Lessee shall have exercised its purchase option hereunder, in which case such
payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft or any agency or instrumentality of any
thereof (other than in the circumstances contemplated by subsection (d)),
Lessee shall replace such Engine hereunder by complying (or causing any
Sublessee to comply) with the terms of Section 10(b) to the same extent as if
an Event of Loss had occurred with respect thereto, and, upon compliance with
Section 10(b) hereof, any payments received by Lessor or Lessee from such
government with respect to such requisition shall be paid over to, or retained
by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or such Sublessee) if at the time of such payment or retention a
Default or an Event of Default shall have occurred and be continuing, but shall
be held by or paid over to Lessor as security for the obligations of Lessee (or
such
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Sublessee) under this Lease and, if Lessor declares this Lease to be in default
pursuant to Section 15 hereof, applied against Lessee's obligations hereunder
as and when due. At such time as there shall not be continuing any such
Default or Event of Default, such amount shall be paid to Lessee (or such
Sublessee) to the extent not previously applied in accordance with the
preceding sentence.
SECTION 11. Insurance. (a) Public Liability and Property
Damage Insurance. (I) Except as provided in clause (II) of this Section
11(a), Lessee will carry or cause to be carried at its or any Sublessee's
expense (i) aircraft public liability (including, without limitation, passenger
legal liability) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an
amount not less than the greater of (x) the amounts of public liability and
property damage insurance from time to time applicable to aircraft owned or
operated by Lessee of the same type as the Aircraft which comprise Lessee's
fleet and (y) such amount per occurrence as shall have been agreed to on the
Delivery Date by the Owner Participant and (ii) cargo liability insurance, in
the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft owned by Lessee of the
same type which comprise Lessee's fleet and (B) which is maintained in effect
with insurers of recognized responsibility. Any policies of insurance carried
in accordance with this paragraph (a) and any policies taken out in
substitution or replacement for any of such policies (A) shall be amended to
name Lessor, in its individual capacity and as owner trustee, the Indenture
Trustee, the Loan Participants, the Owner Participant and the Owner Participant
Parent (but without imposing on any such parties liability to pay the premiums
for such insurance) (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) as additional insureds as their
respective interests may appear, (B) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee, the Loan Participants,
the Owner Participant and the Owner Participant Parent (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) in
such policies the insurance shall not be invalidated by any action or inaction
of Lessee (or, if any Sublease is then in effect, any Sublessee) and shall
insure Lessor, the Indenture Trustee, the Loan Participants, the Owner
Participant and the Owner Participant Parent (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) regardless of
any breach or violation of any warranty, declaration or condition contained in
such policies by Lessee (or, if any Sublease is then in effect, any Sublessee),
(C) may provide for self-insurance to the extent permitted by Section 11(d) and
(D) shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of Lessor, the Indenture Trustee, the Loan Participants,
the Owner Participant or the Owner Participant Parent (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), or
such insurance shall lapse for non-payment of premium, such cancellation, lapse
or change shall not be effective as to Lessor, the Indenture Trustee, the Loan
Participants, the Owner Participant or the Owner Participant Parent (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) for thirty days (seven days in the case of war risk and allied perils
coverage) after receipt by Lessor, the Indenture Trustee, the Loan
Participants, the Owner Participant, the Owner Participant Parent,
respectively, of written notice by such insurers of such cancellation, lapse or
change;
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provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable. Each liability policy (1) shall be
primary without right of contribution from any other insurance which is carried
by Lessor, the Indenture Trustee, the Loan Participants, the Owner Participant
or the Owner Participant Parent (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease), (2) shall expressly provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured, and (3) shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor or the Indenture Trustee, the Loan
Participants, the Owner Participant or the Owner Participant Parent (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) to the extent of any moneys due to Lessor, the Indenture Trustee, the
Owner Participant, the Loan Participants or the Owner Participant Parent (or,
if any Sublease shall be in effect, Lessee in its capacity as sublessor under
the Sublease).
(II) During any period that the Aircraft is on the ground and
not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which comprise Lessee's fleet and which are on
the ground and not in operation; and (B) the scope of the risks covered and the
type of insurance shall be the same as from time to time shall be applicable to
aircraft owned or operated by Lessee of the same type which comprise Lessee's
fleet and which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I)
Except as provided in clause (II) of this Section 11(b), Lessee shall maintain
or cause to be maintained in effect, at its or any Sublessee's expense, with
insurers of recognized responsibility, all-risk aircraft hull insurance
covering the Aircraft and all-risk coverage of Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar components
(including, without limitation, war risk and governmental confiscation and
expropriation (other than by the government of registry of the Aircraft) and
hijacking insurance, if and to the extent the same is maintained by Lessee (or,
if a Sublease is then in effect, any Sublessee) with respect to other aircraft
owned or operated by Lessee (or such Sublessee) on the same routes, except that
Lessee (or such Sublessee) shall maintain war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance if the Aircraft is operated on routes where
the custom is for major international air carriers flying comparable routes to
carry such insurance) which is of the type as from time to time applicable to
aircraft owned by Lessee of the same type which comprise Lessee's fleet;
provided, that such insurance shall at all times while the Aircraft is subject
to this Lease be for an amount (subject to self-insurance to the extent
permitted by Section 11(d)) not less than the Stipulated Loss Value for the
Aircraft. Any policies carried in accordance with this paragraph (b) covering
the Aircraft and any policies taken out in substitution or replacement for any
such
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policies (i) shall name Lessor, as owner trustee, the Indenture Trustee, the
Loan Participants and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) as additional
insureds, as their respective interests may appear (but without imposing on any
such party liability to pay premiums with respect to such insurance), (ii) may
provide for self-insurance to the extent permitted in Section 11(d), (iii)
shall provide that (A) in the event of a loss involving proceeds in excess of
$3,000,000 (or, if the Aircraft is then under a Sublease, in excess of
$1,500,000), the proceeds in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so long
as the Trust Indenture shall not have been discharged, the Indenture Trustee)
(except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be
held for the account of Lessor (or, so long as the Trust Indenture shall not
have been discharged, the Indenture Trustee) whether such payment is made to
Lessee (or any Sublessee) or any third party), it being understood and agreed
that in the case of any payment to Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, Lessor (or the Indenture Trustee) shall,
upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,000,000 (or, if the Aircraft is then under a Sublease, of $1,500,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless a Default or
an Event of Default shall have occurred and be continuing and the insurers have
been notified thereof by Lessor or the Indenture Trustee, (iv) shall provide
that if the insurers cancel such insurance for any reason whatever, or such
insurance lapses for non-payment of premium or if any material change is made
in the insurance which adversely affects the interest of Lessor, the Indenture
Trustee, the Loan Participants or the Owner Participant, such cancellation,
lapse or change shall not be effective as to Lessor, the Indenture Trustee, the
Loan Participants or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty days
(seven days in the case of hull war risk and allied perils coverage) after
receipt by Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change, provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable, (v)
shall provide that in respect of the respective interests of Lessor, the
Indenture Trustee, the Loan Participants and the Owner Participant (and, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if a Sublease is then in effect, any Sublessee) and
shall insure the respective interests of Lessor, the Indenture Trustee, the
Loan Participants and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), as they
appear, regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee), (vi) shall be primary without any right of contribution
from any other insurance which is carried
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<PAGE> 42
by Lessor, the Loan Participants, the Owner Participant or the Indenture
Trustee (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (vii) shall waive any right of subrogation of
the insurers against Lessor, the Loan Participants, the Owner Participant and
the Indenture Trustee (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor, the Indenture
Trustee, the Loan Participants, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee,
the Loan Participants or the Owner Participant. In the case of a loss with
respect to an engine (other than an Engine) installed on the Airframe, Lessor
shall hold any payment to it of any insurance proceeds in respect of such loss
for the account of Lessee or any other third party that is entitled to receive
such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to
the Airframe (or the Airframe and the Engines installed
thereon), (i) unless such property is replaced pursuant to the
last paragraph of Section 10(a), so much of such payments
remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) for reasonable costs and
expenses, as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a) hereof
shall be applied in reduction of Lessee's obligation to pay
such Stipulated Loss Value, if not already paid by Lessee, or,
if already paid by Lessee, shall be applied to reimburse
Lessee for its payment of such Stipulated Loss Value, and the
balance, if any, of such payments remaining thereafter will be
paid over to, or retained by, Lessee (or if directed by
Lessee, any Sublessee); or (ii) if such property is replaced
pursuant to the last paragraph of Section 10(a), such payments
shall be paid over to, or retained by, Lessee (or if directed
by Lessee, any Sublessee), provided that Lessee shall have
fully performed or, concurrently therewith, will fully perform
the terms of the last paragraph of Section 10(a) with respect
to the Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an
Engine under the circumstances contemplated by Section 10(b)
hereof, so much of such payments, remaining after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) for reasonable costs and expenses, shall be
paid over to, or retained by, Lessee (or if directed by
Lessee, any Sublessee), provided, that Lessee shall have fully
performed or, concurrently therewith, will fully perform, the
terms of Section 10(b) with respect to the Event of Loss for
which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect
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thereto will be applied in payment for repairs or for replacement property in
accordance with the terms of Sections 7 and 8, if not already paid for by
Lessee (or any Sublessee), and any balance (or if already paid for by Lessee
(or any Sublessee), all such insurance proceeds) remaining after compliance
with such Sections with respect to such loss shall be paid to Lessee (or any
Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the
ground and not in operation, Lessee may carry or cause to be
carried, in lieu of the insurance required by clause (I)
above, insurance otherwise conforming with the provisions of
said clause (I) except that the scope of the risks and the
type of insurance shall be the same as from time to time
applicable to aircraft owned by Lessee of the same type which
comprise Lessee's fleet similarly on the ground and not in
operation, provided that Lessee shall maintain insurance
against risk of loss or damage to the Aircraft in an amount
equal to the Stipulated Loss Value of the Aircraft during such
period that the Aircraft is on the ground and not in
operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1991, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "Insurance Brokers"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, that all information contained in the foregoing report shall not be
made available by Lessor, the Indenture Trustee, the Loan Participants or the
Owner Participant to anyone except (A) to permitted transferees of Lessor's,
the Loan Participants', the Owner Participant's or the Indenture Trustee's
interest, who agree to hold such information confidential, (B) to Lessor's, the
Loan Participants', the Owner Participant's or the Indenture Trustee's counsel
or independent certified public accountants or independent insurance advisors
who agree to hold such information confidential or (C) as may be required by
any statute, court or administrative order or decree or governmental ruling or
regulation. Lessee will cause such Insurance Brokers to agree to advise
Lessor, the Indenture Trustee and the Owner Participant in writing of any
default in the payment of any premium and of any other act or omission on the
part of Lessee of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft. To the
extent such agreement is reasonably obtainable, Lessee will also cause such
Insurance Brokers to agree to advise Lessor, the Indenture Trustee and the
Owner Participant in writing at least 30 days (seven days in the case of war
risk and allied perils coverage), prior to the expiration or termination date
of any insurance carried and maintained on the Aircraft pursuant to this
Section 11. In addition, Lessee will also cause such Insurance Brokers to
deliver to Lessor, the Indenture Trustee and the Owner Participant, on or prior
to the date of expiration of any insurance policy referenced in a previously
delivered certificate of insurance, a new certificate of insurance,
substantially in the same form as delivered by Lessee to such parties on the
Delivery Date. In the event that Lessee or any Sublessee shall fail to
maintain or cause to be maintained insurance as herein provided, Lessor or the
Indenture Trustee may at its sole option provide such insurance and, in such
event,
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Lessee shall, upon demand, reimburse Lessor or the Indenture Trustee, as
Supplemental Rent, for the cost thereof to Lessor or the Indenture Trustee, as
the case may be, without waiver of any other rights Lessor may have.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b) hereof insuring
for a maximum amount which is less than the Stipulated Loss Value of the
Aircraft) in the insurance policies covering the risks required to be insured
against pursuant to this Section 11 in amounts with respect to the Aircraft not
in excess of three percent (3%) of Lessee's tangible net worth determined in
accordance with generally accepted accounting principles consistently applied.
(e) Additional Insurance by Lessor and Lessee. Lessee (and
any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance with respect
to its interest in the Aircraft, provided that such insurance does not prevent
Lessee (or any Sublessee) from carrying the insurance required or permitted by
this Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written
consent of Lessor, other government of registry of the Aircraft or any agency
or instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention a Default or an Event of Default shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or any Sublessee) under this Lease and, if a Default or
an Event of Default shall have occurred and be continuing, applied against
Lessee's obligations hereunder as and when due. At such time as there shall
not be continuing any such Default or such Event of Default, such amount shall
be paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 12. Inspection. At all reasonable times, Lessor, the
Owner Participant or the Indenture Trustee or their respective authorized
representatives may inspect the Aircraft and inspect and make copies (at
Lessor's, the Owner Participant's or the Indenture Trustee's expense, as the
case may be) of the books and records of Lessee relating to the
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<PAGE> 45
maintenance of the Aircraft; any such inspection of the Aircraft shall be a
visual, walk-around inspection and shall not include opening any panels, bays
or the like without the express consent of Lessee; provided that no exercise of
such inspection right shall interfere with the normal operation of the Aircraft
by, or the business of, Lessee (or any Sublessee). Upon receipt by Lessee of a
written request from the Owner Participant specifying that the Owner
Participant desires to have an authorized representative observe the next
scheduled major overhaul to be performed on the Aircraft, Lessee shall
cooperate with the Owner Participant to enable the Owner Participant's
authorized representative to observe the next scheduled major overhaul to be
performed on the Aircraft; provided that Lessee shall be required to so
cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe one scheduled major overhaul during each
three year period of the Term and (notwithstanding the foregoing) one scheduled
major overhaul during the last year of the Term; provided that the Owner
Participant's authorized representative shall merely observe such major
overhaul, shall not interfere with or extend in any manner the normal conduct
or duration of the major overhaul and shall not be entitled to direct any of
the work performed in connection with such overhaul. None of Lessor, the Owner
Participant or the Indenture Trustee shall have any duty to make any such
inspection nor shall any of them incur any liability or obligation by reason of
not making such inspection.
SECTION 13. Assignment. Except as otherwise provided herein,
Lessee will not, without prior written consent of Lessor, assign in whole or in
part any of its rights or obligations hereunder. Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. Events of Default. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
(a) Lessee shall not have made a payment of Basic
Rent within 10 Business Days after the same shall have become
due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent after the same shall have become due and
such failure shall continue for 10 Business Days after
Lessee's receipt of written demand therefor by the party
entitled thereto (provided that any failure to pay any amount
owed by Lessee under the Tax Indemnity Agreement or any
failure of Lessee to pay to Lessor or the Owner Participant
when due any Excluded Payments (as defined in the Trust
Indenture) shall not constitute an Event of Default unless
notice is given by the
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<PAGE> 46
Owner Participant to Lessee and the Indenture Trustee that
such failure shall constitute an Event of Default); or
(c) Lessee shall have failed to perform or observe
(or caused to be performed and observed) any other covenant or
agreement (except the covenants set forth in the Tax Indemnity
Agreement and in clauses (iv)(B) and (v) of the first
paragraph of Section 5(a) hereof) to be performed or observed
by it under any Operative Document, and such failure shall
continue unremedied for a period of thirty days after written
notice thereof by Lessor or the Indenture Trustee; provided,
however, that if Lessee shall have undertaken to cure any such
failure which arises under clause (ii) or clause (iii) of the
first sentence of Section 7(a), or under the second sentence
of Section 7(a) as it relates to maintenance, service, repair
or overhaul or under Section 8 and, notwithstanding the
diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty day period but is
curable with future due diligence, there shall exist no Event
of Default under this Section 14 so long as Lessee is
proceeding with due diligence to cure such failure and the
last day of the Term has not yet occurred; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose) shall prove to have been incorrect in any
material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of
such incorrectness on the interests of the Owner Participant,
Lessor or the Certificate Holders) within thirty days after
the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such
incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under
the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States or
seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of
Lessee or for all or substantially all of its property, or
seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed
and unstayed for a period of 90 consecutive days or an order,
judgment or decree shall be entered in any proceeding by any
court of competent jurisdiction appointing, without the
consent of Lessee, a receiver, trustee or liquidator of
Lessee, or of any substantial part of its property, or
sequestering any substantial part of the property of Lessee
and any such order, judgment or decree or appointment or
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sequestration shall be final or shall remain in force
undismissed, unstayed or unvacated for a period of 90 days
after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case
under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an Event of Loss so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. Remedies. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one
or more of the following with respect to all or any part of the Airframe and
any or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then in effect; provided, however, that during any period
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 7(b) hereof and in possession of the United
States government or an agency or instrumentality of the United States, Lessor
shall not, on account of any Event of Default, be entitled to do any of the
following in such manner as to limit Lessee's control under this Lease (or any
Sublessee's control under any Sublease) of any Airframe or any Engines
installed thereon, unless at least 60 days' (or such lesser period as may then
be applicable under the Military Airlift Command program of the United States
Government) written notice of default hereunder shall have been given by Lessor
by registered or certified mail to Lessee (and any Sublessee) with a copy
addressed to the Contracting Office Representative for the Military Airlift
Command of the United States Air Force under any contract with Lessee (or any
Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at
Lessee's expense, cause Lessee to return promptly, and Lessee
shall return promptly, the Airframe or any Engine as Lessor
may so demand to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
the provisions of,
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<PAGE> 48
Section 5 as if such Airframe or Engine were being returned at
the end of the Term, or Lessor, at its option, may enter upon
the premises where all or any part of the Airframe or any
Engine is located and take immediate possession of and remove
the same by summary proceedings or otherwise (and/or, at
Lessor's option, store the same at Lessee's premises until
disposal thereof by Lessor), all without liability accruing to
Lessor for or by reason of such entry or taking of possession
or removing whether for the restoration of damage to property
caused by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or
private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Lease
Period Date not earlier than ten days from the date of such
notice, may demand that the Lessee pay to Lessor, and Lessee
shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installment of Basic Rent for the Aircraft due
for Lease Periods commencing on or after the Commencement Date
or the Lease Period Date specified as the payment date in such
notice), any unpaid Basic Rent due on Lease Period Dates prior
to the payment date so specified (including without limitation
any adjustments to Basic Rent payable pursuant to Section
3(d)) plus whichever of the following amounts Lessor, in its
sole discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from
such specified payment date until the date of actual payment
of such amount): (i) an amount equal to the excess, if any,
of the Stipulated Loss Value for the Aircraft, computed as of
the Lease Period Date specified as the payment date in such
notice, over the aggregate fair market rental value (computed
as hereafter in this Section 15 provided) of such Aircraft for
the remainder of the Term, after discounting such aggregate
fair market rental value to present value as of the Lease
Period Date specified as the payment date in such notice at an
annual rate equal to the Base Rate plus 1%; or (ii) an amount
equal to the excess, if any, of the Stipulated Loss Value for
such Aircraft, computed as of the Lease Period Date specified
as the payment date in such notice over the fair market sales
value of such Aircraft (computed as hereafter in this Section
provided) as of the Lease Period Date specified as the payment
date in such notice;
(d) in the event Lessor, pursuant to paragraph (b)
above, shall have sold the Airframe and/or any Engine, Lessor,
in lieu of exercising its rights under paragraph (c) above
with respect to such Aircraft, may, if it shall so elect,
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<PAGE> 49
demand that Lessee pay Lessor, and Lessee shall pay to Lessor,
on the date of such sale, as liquidated damages for loss of a
bargain and not as a penalty, any unpaid Basic Rent with
respect to the Aircraft due prior to such date plus the amount
of any deficiency between the net proceeds of such sale (after
deduction of all reasonable costs of sale) and the Stipulated
Loss Value of such Aircraft, computed as of the Stipulated
Loss Value Date on or immediately following the date of such
sale together with interest, if any, on the amount of such
deficiency, at the Past Due Rate, from the date of such sale
to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to
the Aircraft, and/or may exercise any other right or remedy
which may be available to it under applicable law or proceed
by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser,
as the case may be, under no compulsion to lease or purchase, as the case may
be, and an informed and willing lessor or seller in possession under no
compulsion to sell (and assuming no purchase option encumbrances on the
Aircraft), as the case may be, in each case based upon the actual condition and
location of the Aircraft, which value shall be determined by mutual agreement
or, in the absence of mutual written agreement, pursuant to an appraisal
prepared and delivered by a nationally recognized firm of independent aircraft
appraisers nominated by Lessor, and Lessor shall immediately notify Lessee of
such nomination. Unless Lessee shall have objected in writing within ten days
after its receipt of Lessor's notice, Lessor's nomination shall be conclusive
and binding. If Lessee shall object, however, Lessor and Lessee shall
endeavor, within ten days after such objection is made, to select a mutually
acceptable appraiser; provided, that if Lessee shall not so endeavor to make
such selection, Lessor's nomination referred to in the preceding sentence
hereof shall be conclusive and binding. If Lessor and Lessee fail to reach
agreement (except for the reason referred to in the proviso in the preceding
sentence), or if any appraiser selected fails to act for any reason, then the
question shall be determined by an appraisal (applying the definitions of "fair
market rental value" and "fair market sales value" as set forth above based
upon the actual condition of the Aircraft) mutually agreed to by two recognized
independent aircraft appraisers, one of which appraisers shall be chosen by
Lessor and one by Lessee within five Business Days after Lessor or Lessee shall
have received written notice from the other party of a demand that such an
appraisal be made, which notice shall specify the appraiser chosen by the party
giving the notice or, if such appraisers cannot agree on the amount of such
appraisal within twenty Business Days after the end of such five-day period,
each shall render its own appraisal and shall by mutual consent choose another
appraiser within five Business Days after the end of such twenty-day period.
If, within such five-day period, such two appraisers fail to appoint a third
appraiser, then either Lessor or Lessee, on behalf of both, may request such
appointment by the then President of the Association of the Bar of the City of
New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then
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either Lessor or Lessee may apply to the American Arbitration Association (or
any successor organization thereto) in New York, New York for the appointment
of such third appraiser. The decision of the third appraiser so appointed
shall be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. The cost of
such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above without duplication of amounts payable hereunder, for any and
all unpaid Rent due hereunder before, after or during the exercise of any of
the foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) may bid for and purchase such property. Lessor agrees to
give Lessee at least 15 days' written notice of the date fixed for any public
sale of any Airframe or Engine or of the date on or after which will occur the
execution of any contract providing for any private sale and any such public
sale shall be conducted in general so as to afford Lessee (and any Sublessee) a
reasonable opportunity to bid. Except as otherwise expressly provided above,
no remedy referred to in this Section 15 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the
execution and delivery of any amendment to this Lease, to the Trust Indenture
or to the Trust Agreement, Lessee will cause such Lease Supplement, Trust
Supplement (and, in the case of the initial Lease Supplement and Trust
Supplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. In addition, Lessee will promptly and duly execute and deliver to
Lessor such further documents and take such further action as Lessor or
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the Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor and the Indenture Trustee hereunder, including, without limitation,
if requested by Lessor or the Indenture Trustee, at the expense of Lessee, the
execution and delivery of supplements or amendments hereto or to the Trust
Indenture, each in recordable form, subjecting to this Lease and the Trust
Indenture, any airframe or engine substituted for the Airframe or any Engine
pursuant to the terms thereof and the recording or filing of counterparts
thereof, in accordance with the laws of such jurisdictions as Lessor or the
Indenture Trustee may from time to time deem advisable. Commencing in 1991,
on or before April 30 of each year during the Term, Lessee will deliver to
Lessor and the Indenture Trustee a certificate of Lessee, signed by the
President, a Vice President or the Chief Financial Officer of Lessee to the
effect that the signer is familiar with or has reviewed the relevant terms of
this Lease and the signer does not have actual knowledge of the existence, as
of the date of such certificate, of any condition or event which constitutes a
Default or an Event of Default or of an event which with the giving of notice
or lapse of time or both would become an Event of Default. Lessee agrees that
if the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, Treasurer or Assistant Treasurer of Lessee has actual knowledge of the
existence of a Default or an event which with the giving of notice or lapse of
time or both would become an Event of Default, then Lessee shall promptly give
to Lessor, the Owner Participant and the Indenture Trustee notice thereof and
such other information relating thereto as Lessor, the Owner Participant or the
Indenture Trustee shall reasonably request. Lessee agrees that if an officer
of Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee shall
reasonably request. Lessee will deliver to Lessor, the Owner Participant and
the Indenture Trustee (i) within 60 days after the end of each of the first
three quarterly periods of each fiscal year of Lessee, consolidated and
consolidating balance sheets of NWA Inc. ("NWA") and its consolidated
subsidiaries prepared by NWA in accordance with generally accepted accounting
principles as of the close of such period, together with the related
consolidated statements of income and surplus and cash flow for such period,
and (ii) within 120 days after the close of such fiscal year, consolidated and
consolidating balance sheets of NWA and its consolidated subsidiaries prepared
by NWA in accordance with generally accepted accounting principles as of the
close of such fiscal year, together with the related consolidated statements of
income and surplus and cash flow for such fiscal year, as audited and certified
by independent public accountants, including their certificate and accompanying
comment.
SECTION 17. Notices. All notices required under the terms
and provisions hereof shall be by cable, telex or other telecommunication means
(with such cable, telex or other telecommunication means to be confirmed in
writing), or if such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of written notice and
any such notice shall become effective when received, any telex to be deemed
received upon receipt by the party transmitting the telex of such other party's
callback code at the end of such telex (receipt of confirmation in writing not
being necessary to the effectiveness of any telex), addressed:
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(i) if to Lessee, at Minneapolis/St. Paul
International Airport, St. Paul, Minnesota 55111, Attention:
Chief Financial Officer (Telex No. 29-7024, Answerback NWAIR
STP A), or to such other address or telex number as Lessee
shall from time to time designate in writing to Lessor,
(ii) if to Lessor, at Corporate Trust Division, Blue
Hills Office Park, 150 Royall Street, Canton, Massachusetts
02021, Attention: Manager - Corporate Trust (Telex No.
499-6527; Answerback BOSBK BSN), or to such other address or
telex number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at
such address or telex number as such Loan Participant, the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at its address
or telex number set forth in Schedule I to the Participation
Agreement.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be
paid by Lessee to Lessor in funds of the type specified in Section 3(f).
Except as provided in Section 3(g) hereof, Lessee's obligation to pay all Rent
payable hereunder shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, in its individual capacity or as Owner Trustee under the Trust
Agreement, the Indenture Trustee (in its individual capacity or as Indenture
Trustee), any Loan Participant, the Owner Participant, or anyone else for any
reason whatsoever (whether in connection with the transactions contemplated
hereby or any other transactions), including, without limitation, any breach by
Lessor or the Owner Participant of their respective warranties, agreements or
covenants contained in any of the Operative Documents, (ii) any defect in the
title, registration, airworthiness, condition, design, operation, or fitness
for use of, or any damage to or loss or destruction of, the Aircraft, or any
interruption or cessation in or prohibition of the use or possession thereof by
Lessee (or any Sublessee) for any reason whatsoever, including, without
limitation, any such interruption, cessation or prohibition resulting from the
act of any government authority, (iii) any insolvency, bankruptcy,
reorganization or similar case or proceedings by or against Lessee (or any
Sublessee) or any other person, or (iv) any other circumstance, happening, or
event whatsoever, whether or not unforeseen or similar to any of the foregoing.
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 without limitation of the other rights or remedies of Lessor
hereunder, subject to the rights of Lessee to setoff under Section 3(g) hereof,
to pay to Lessor an amount equal to each Rent payment at the time such payment
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or in part. Lessee hereby waives, to the
extent permitted by applicable law, any and all rights which it may now have or
which at any time hereafter may be conferred upon it, by statute or
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otherwise, to terminate, cancel, quit or surrender this Lease except in
accordance with the express terms hereof.
SECTION 19. Renewal Option; Purchase Options; Valuation. (a)
Renewal Option. (1) Fair Market Renewal Term. Not less than 120 days before
the end of the Basic Term or any Renewal Term for the Aircraft, Lessee may
deliver to Lessor a written notice irrevocably electing to renew this Lease for
a renewal term of one year for a Basic Rent equal to the "fair market rental
value" of the Aircraft for such period (any such renewal term, a "Fair Market
Renewal Term") provided that Lessee shall not be entitled to renew this Lease
pursuant to this Section 19(a)(1) more than five times.
(2) Fixed Renewal Term. Not less than 120 days before the
end of the Basic Term, Lessee may deliver to Lessor a written notice
irrevocably electing to renew this Lease for a single renewal term having a
duration and at a Basic Rent as determined below (any such renewal term, a
"Fixed Renewal Term"). At least 270 days before the end of the Basic Term
Lessee shall, as a condition to its exercise of the option set forth in this
Section 19(a)(2), notify Lessor of its demand for an appraisal pursuant to
Section 19(c). The appraisers so appointed shall determine as evidenced by an
appraisal reasonably satisfactory to the Owner Participant's counsel the total
useful life, the remaining useful life of the Aircraft, the maximum Fixed
Renewal Term and the fair market sales value of the Aircraft at the beginning
and end of the Fixed Renewal Term. The duration of the Fixed Renewal Term
shall be a period specified by Lessee before the end of the Basic Term which is
not less than one year and not more than the lesser of (A) two years and (B)
that period of time (i) which would cause the Term, after giving effect to such
Fixed Renewal Term, to be equal to 80% of the total useful life of the Aircraft
as determined by the appraisers and (ii) at the expiration of which the
residual value of the Aircraft, as estimated by the appraisers, would be at
least equal to 20% of Lessor's Cost (without taking into account inflation or
deflation during the Term).
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(a)(1) or 19(a)(2) on or before the day specified
therefor, Lessee shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing an Event of Default and that all
necessary governmental authorizations and approvals shall have been received
and that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease
shall continue in full force and effect during the Renewal Term, except that
(x) Lessee shall pay Lessor Basic Rent for the Aircraft during the Renewal Term
in an amount equal in the case of a Fair Market Renewal Term to the "fair
market rental value" thereof determined in accordance with Section 19(c) and
equal in the case of a Fixed Renewal Term to one-half of the average Basic Rent
during the Basic Term (such average being determined as the total of all
payments of Basic Rent during the Basic Term added together and divided by 48),
which Basic Rent shall be payable in semi-annual installments in arrears unless
in the case of a Fixed
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Renewal Term, any portion of Basic Rent during the Basic Term is payable in
advance, in which case the same proportion of Basic Rent during such Fixed
Renewal Term shall also be payable in advance, each such installment being due
and payable on each Lease Period Date occurring during the Renewal Term,
commencing with the Lease Period Date immediately following the commencement of
the Renewal Term, and (y) the Stipulated Loss Values applicable during the
Renewal Term shall be determined separately for each Renewal Term by the Owner
Participant in good faith to reflect Stipulated Loss Values determined in
accordance with the following sentence. Stipulated Loss Values during a
Renewal Term shall on the date on which such Renewal Term begins be equal to
the fair market sales value of the Aircraft as of such date, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof, and shall decline ratably on a monthly basis to the fair market sales
value of the Aircraft as of the last day of such Renewal Term, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon at
least 120 days' irrevocable prior written notice to Lessor, to purchase the
Aircraft on the last Business Day of the Basic Term or any Renewal Term for a
purchase price equal to the fair market sales value of the Aircraft. Upon
payment to Lessor in immediately available funds of the full amount of the
purchase price and payment of any other amounts then due hereunder (including
all Rent and all costs or expenses of the Owner Participant in connection with
such purchase), Lessor will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso to the definition of Lessor
Liens), all of Lessor's right, title and interest in and to the Aircraft.
(c) Valuation. At any time not earlier than 365 days prior
to the date on which Lessee may purchase the Aircraft pursuant to Section 9(b)
or Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1)
hereof, Lessee may deliver to Lessor a revocable notice of its intent to
exercise its renewal option or purchase option. For all purposes of this
Section 19, including the appraisal referred to in this Section 19(c), in
determining "fair market rental value" or "fair market sales value", the
Aircraft shall be valued (i) as if in the condition and otherwise in compliance
with the terms of Section 5 upon a return of the Aircraft to the United States
and as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the
basis of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user and under no compulsion to sell or lease and
disregarding the purchase and renewal options of the lessee provided in this
Lease, and (iii) in the case of such valuation for determining "fair market
rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and
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maintain the insurance required by Section 11 hereof and to make certain
payments with reference to Stipulated Loss Value during the applicable Fair
Market Renewal Term. Upon receipt of such notice Lessor and Lessee shall
confer in good faith with a view to reaching agreement on the "fair market
rental value" or "fair market sales value" of the Aircraft. If the parties
have not so agreed by 270 days prior to the end of the Basic Term or the
Renewal Term in question (or by 270 days prior to the Termination Date, in the
case of Section 9(b)), then the question shall be determined by an appraisal
mutually agreed to by two recognized independent aircraft appraisers, one of
which appraisers shall be chosen by Lessor and one by Lessee within five
Business Days after Lessor or Lessee shall have received written notice from
the other party of a demand that such an appraisal be made, which notice shall
specify the appraiser chosen by the party giving the notice or, if such
appraisers cannot agree on the amount of such appraisal within twenty Business
Days after the end of such five-day period, each shall render its own appraisal
and shall by mutual consent choose another appraiser within five Business Days
after the end of such twenty-day period. If, within such five-day period, such
two appraisers fail to appoint a third appraiser, then either Lessor or Lessee,
on behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall
be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. Lessee and
Lessor shall share equally all expenses relating to such appraisal procedure
provided if Lessee elects not to renew this Lease or purchase the Aircraft
following such appraisal, Lessee shall pay all expenses of such appraisal.
(d) Special Purchase Option. On February 23, 2011 (or, if
February 23, 2011 is not a Business Day, the Business Day immediately preceding
February 23, 2011), Lessee shall have the option, upon at least 120 days'
irrevocable prior notice to Lessor and, if any Secured Certificates are then
outstanding, the Indenture Trustee, to purchase the Aircraft on such date for a
purchase price equal to the Special Purchase Price. In addition, if on such
date there shall be any Secured Certificates outstanding, Lessee shall have the
option to assume, pursuant to Section 8(x) of the Participation Agreement and
Section 2.15 of the Trust Indenture, all of the obligations of Lessor under the
Trust Indenture. If such assumption is made, Lessee shall pay Lessor a
purchase price equal to (I) the Special Purchase Price minus (II) an amount
equal to principal of, and accrued but unpaid interest on, any Secured
Certificates that are outstanding on such date. Upon such payment in full and
payment of any other amounts then due hereunder (including costs or expenses of
the Owner Participant in connection with such purchase, any installments of
Basic Rent due prior to such date and, if
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Basic Rent is payable in arrears on such date as indicated on Exhibit B, on
such date (but not any installment of Basic Rent due on such date if Basic Rent
is payable in advance on such date), and all unpaid Supplemental Rent due on or
prior to such date), Lessor will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso to the definition of
Lessor Liens), all of Lessor's right, title and interest in and to the Aircraft
and under the Trust Indenture and, unless there shall be any Secured
Certificates outstanding after such payment, exercise such rights as it has to
cause the Aircraft to be released from the Lien of the Trust Indenture.
SECTION 20. Security for Lessor's Obligation to Holders of
Secured Certificates. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this Lease, the Lease Supplements
and any amendments to this Lease and to mortgage its interest in the Aircraft
in favor of the Indenture Trustee, subject to the reservations and conditions
therein set forth. To the extent, if any, that this Lease, the Lease
Supplements and any amendments to this Lease constitute 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, the Lease Supplements and
any amendments to this Lease may be created through the transfer or possession
of any counterpart other than the original counterpart, which shall be
identified as the counterpart containing the receipt therefor executed by the
Indenture Trustee as Mortgagee under the Trust Indenture on the signature page
thereof. Lessee hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the terms of the
Trust Indenture. Subject to Section 3(f) hereof, Lessee agrees to pay directly
to the Indenture Trustee (or, after receipt by Lessee of notice from the
Indenture Trustee of the discharge of the Trust Indenture, to Lessor), all
amounts of Rent due or to become due hereunder and assigned to the Indenture
Trustee and Lessee agrees that the Indenture Trustee's right to such payments
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
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SECTION 22. Investment of Security Funds; Liability of Lessor
Limited. (a) Investment of Security Funds. Any moneys held by Lessor as
security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in obligations of, or guaranteed by, the
United States Government maturing within 90 days after such investment, open
market commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated P-1 or its equivalent by
Moody's Investors Service, Inc. or A-1 or its equivalent by Standard & Poor's
Corporation or certificates of deposit maturing within 90 days after such
investment issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital and
surplus in excess of $100,000,000 which banks or their holding companies have a
rating of Aa or its equivalent by Moody's Investors Service, Inc., or AA or its
equivalent by Standard & Poor's Corporation; provided, however, that the
aggregate amount at any one time so invested in certificates of deposit issued
by any one bank shall not be in excess of the lesser of $10,000,000 or 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless a Default or an Event of Default shall have occurred and be
continuing. Lessee shall be responsible for any net loss realized as a result
of any such investment and shall reimburse Lessor (or the Indenture Trustee, as
the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under
the Trust Agreement, and the institution acting as Lessor shall not be liable
in its individual capacity for any breach thereof except for its gross
negligence or willful misconduct or for breach of its covenants,
representations and warranties contained herein, to the extent covenanted or
made in its individual capacity.
SECTION 23. Service of Process. Lessor and Lessee each
hereby irrevocably submits itself to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated
orally, but only by an instrument in writing
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signed by Lessor, Lessee and any assignee of Lessor's rights hereunder. This
Lease shall constitute an agreement of lease, and nothing contained herein
shall be construed as conveying to Lessee any right, title or interest in the
Aircraft except as a lessee only. Neither Lessee nor any affiliate of Lessee
will file any tax returns in a manner inconsistent with the foregoing fact or
with Lessor's ownership of the Aircraft. The section and paragraph headings in
this Lease and the table of contents are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof
and all references herein to numbered sections, unless otherwise indicated, are
to sections of this Lease. This Lease has been delivered in the State of New
York and shall in all respects be governed by and construed in accordance with,
the laws of the State of New York including all matters of construction,
validity and performance. This Lease 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.
SECTION 25. Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 10 of the Participation Agreement) and without in
any way altering the terms of this Lease or Lessee's obligations hereunder.
One such appointment and designation of a successor Owner Trustee shall not
exhaust the right to appoint and designate further successor Owner Trustees
pursuant to the Trust Agreement, but such right may be exercised repeatedly as
long as this Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event
of Default shall have occurred and be continuing and notwithstanding any
default by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
the Aircraft during the Term of this Lease (it being understood that the
foregoing shall not be deemed to have modified in any respect the obligations
of Lessee pursuant to Section 20 hereof, which obligations are absolute and
unconditional), and this Lease shall not be terminated except as expressly
provided herein.
-58-
<PAGE> 59
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
THE FIRST NATIONAL BANK OF BOSTON
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY:
------------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:
------------------------------------
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of August, 1990.
THE CONNECTICUT BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION,
Indenture Trustee
BY:
------------------------------------
Title:
<PAGE> 60
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1990 A]
LEASE SUPPLEMENT NO. __
[NW 1990 A]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between The
FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement [NW 1990 A], dated as of August 23,
1990, between [____________________], as Owner Participant, and such Owner
Trustee (such Owner Trustee, in its capacity as such Owner Trustee, being
herein called "Lessor"), and NORTHWEST AIRLINES, INC. ("Lessee").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1990 A], dated as of August 23, 1990, relating to one
Boeing 747-451 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the Federal Aviation
Administration as one document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, lessor and lessee hereby agree as follows:
1. 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 747-451 aircraft (the "Aircraft"), which Aircraft as
of the date hereof consists of the following components:
- ----------------------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 61
(i) Airframe: FAA Registration No. ______; Manufacturer's
serial no. _____; and
(ii) Engines: four (4) Pratt & Whitney Model PW4056 engines
bearing, respectively, manufacturer's serial nos. P______, P______,
P______ and P______ (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as
otherwise provided in the Lease, the Term for the Aircraft shall commence on
the Delivery Date and end on _________ __, 2015.
3. Lessee hereby confirms its agreement to pay Lessor Basic
Rent for the Aircraft throughout the Term therefor in accordance with Section 3
of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted
the Aircraft for all purposes hereof and of the Lease as being airworthy, in
good working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that
nothing contained herein or in the Lease shall in any way diminish or otherwise
affect any right Lessee or Lessor may have with respect to the Aircraft against
the Boeing Company, or any subcontractor or supplier of the Boeing Company,
under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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.
A-2
<PAGE> 62
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
THE FIRST NATIONAL BANK OF BOSTON,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
BY
--------------------------------------
TITLE:
NORTHWEST AIRLINES, INC.,
Lessee
BY
--------------------------------------
TITLE:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this __th day of _______________, 19__.
THE CONNECTICUT BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION,
Indenture Trustee
BY
--------------------------------------
TITLE:
- ----------------------------------
(3) This language contained in the original counterpart only.
A-3
<PAGE> 63
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1990 A]
BASIC RENT AND
EXCESS AMOUNT SCHEDULE
<TABLE>
<CAPTION>
1 2 3
Basic Rent Excess Amount Lease
Commencement (Percentage of (Percentage of Period
Date Lessor's Cost) Lessor's Cost) Date
- ------------ -------------- -------------- ------
<S> <C> <C> <C>
</TABLE>
<PAGE> 64
BASIC RENT AND
EXCESS AMOUNT SCHEDULE
<TABLE>
<CAPTION>
1 2 3
Lease Basic Rent Excess Amount
Period (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------ -------------- --------------
<S> <C>
</TABLE>
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period
Date to succeeding Lease Period Date.
B-2
<PAGE> 65
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1990 A]
STIPULATED LOSS VALUE SCHEDULE
<TABLE>
<CAPTION>
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<S> <C>
</TABLE>
<PAGE> 66
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1990 A]
TERMINATION VALUE SCHEDULE
<TABLE>
<CAPTION>
Termination Termination Value
Date Percentage
----------- -----------------
<S> <C>
</TABLE>
<PAGE> 67
EXHIBIT E
RENT RECALCULATION AND
INDEMNIFICATION VERIFICATION
Any recalculation of Basic Rent, Excess Amounts, Stipulated
Loss Value percentages and Termination Value percentages pursuant to the Lease
and any calculation of any payment to the Owner Participant or Lessee under the
Tax Indemnity Agreement or Section 7(b) of the Participation Agreement shall be
determined by the Owner Participant, and shall maintain the Owner Participant's
Net Economic Return except as assumptions have been modified pursuant to
Section 3 of the Lease or pursuant to the Tax Indemnity Agreement or the
Participation Agreement, as the case may be; provided, however, Lessee may
request (A) Lessee's independent public accountants to verify such calculations
but without any requirement that the Owner Participant disclose to such persons
the methodology and assumptions and (B) if Lessee believes that such
calculations by the Owner Participant are in error then a nationally recognized
firm of accountants selected by Lessee and reasonably acceptable to the Owner
Participant shall be permitted to verify such calculations and the Owner
Participant will make available to such firm (subject to the execution by such
firm of a confidentiality agreement reasonably acceptable to the Owner
Participant) the methodology and assumptions and any changes made therein
pursuant to Section 3 of the Lease and, in the case of any payment due to the
Owner Participant or Lessee under the Tax Indemnity Agreement or Section 7(b)
of the Participation Agreement, any information reasonably necessary for such
verification requested by such firm. In the event of a verification under
clause (B) of this Exhibit E the determination by such firm of accountants
shall be final. Lessee will pay the reasonable costs and expenses of the
verification under clause (B) of this Exhibit E unless an error adverse to
Lessee is established by such firm, and if as a result of such verification
process the Basic Rent is adjusted and such adjustment causes the Net Present
Value of Rents to decline by 7 or more basis points or there is a material
error in the computation of the indemnity payment in the Owner Participant's
original statement in the Owner Participant's favor (in which event the Owner
Participant shall pay the reasonable costs and expenses of such verification
process). Such recalculated Basic Rent, Excess Amounts, Stipulated Loss Value
percentages and Termination Value percentages shall be set forth in a Lease
Supplement or an amendment to the Lease.
<PAGE> 68
EXHIBIT F
SCHEDULE OF PERMITTED SUBLESSEES
AER LINGUS IRISH
AEROLINEAS ARGENTINAS
AEROMEXICO, AEROVIAS DE MEXICO
AIR AFRIQUE
AIR CANADA
AIR EUROPA
AIR EUROPE
AIR 2000
AIR FRANCE
AIR NEW ZEALAND
ALITALIA - LINEE AEREE ITALIANE
AUSTRIAN AIRLINES
BRITISH AIRWAYS
CANADIAN AIRLINES INTERNATIONAL LTD.
CARGOLUX
CHINA AIRLINES
DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT
FINNAIR
THE FLYING TIGER LINE INC.
GARUDA
IBERIA - LINEAS AEREAS DE ESPANA
JAPAN AIR LINES
JAPAN AIR SYSTEM
KONINKLIJKE LUCHTVAART MAATSCHAPPIJ NV. (KLM)
KOREAN AIR LINES
LUXAIR
NORDAIR
OLYMPIC AIRWAYS SA
PHILIPPINE AIR LINES
QANTAS AIRWAYS LIMITED
SWISS AIR TRANSPORT COMPANY LTD.
THAI AIRWAYS INTERNATIONAL LTD.
UNION DE TRANSPORTS AERIENS
VARIG S.A.
SINGAPORE AIRLINES
AIR PORTUGAL - TAP
ALL NIPPON AIRWAYS
ANSETT AIRLINES OF AUSTRALIA
BRITANNIA AIRWAYS
<PAGE> 69
CAAC - CIVIL AVIATIONS ADMINISTRATION OF CHINA
CATHAY PACIFIC AIRWAYS
CONDOR FLUGDIENST
DAN-AIR SERVICES
ICELANDAIR
MONARCH AIRLINES
SABENA
SCANDINAVIAN AIRLINES SYSTEM - SAS
TRANS-AUSTRALIA AIRLINES - TAA
TRANSBRASIL
VASP
MEXICANA AIRLINES
ORION AIR
BWIA INTERNATIONAL
LAN - CHILE
AIRBORNE EXPRESS
FEDERAL EXPRESS
PUROLATOR
UNITED PARCEL SERVICE
F-2
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1990 A]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1990 A], dated as of June
3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement [NW 1990 A], dated as of August 23, 1990 (in
such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized
and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a
certain Lease Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL
LEASE"), between Lessee and The First National Bank of Boston, as owner trustee
(the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1990 A]
("LEASE SUPPLEMENT NO. 1") between The First National Bank of Boston and Lessee,
dated August 23, 1990, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the
Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N669US; manufacturer's serial No. 24224; and (ii) Engines: four
(4) Pratt & Whitney Model PW4056 engines bearing, respectively, manufacturer's
serial nos. P717658, P717662, P717667 and P717669;
WHEREAS, Section 17 of the Participation Agreement [NW 1990 A], dated
as of August 23, 1990 (the "PARTICIPATION AGREEMENT"), among Lessee, [
] (the "OWNER PARTICIPANT"), [ ] as Loan Participant
(the "ORIGINAL LOAN PARTICIPANT"), The First National Bank of Boston and The
Connecticut Bank and Trust Company, National Association, contemplates that
the Secured Certificates issued by the Owner Trustee under the Trust Indenture
and Security Agreement [NW 1990 A], dated as of August 23, 1990, between Owner
Trustee (in its individual capacity as expressly provided therein and as
trustee) and the Indenture Trustee may be refinanced under certain
circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW
1990 A], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State
Street Bank and Trust Company, as Pass Through Trustee under each of the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association (the "SUBORDINATION AGENT"), the Owner
Participant, State Street Bank and Trust Company (the "INDENTURE TRUSTEE") and
Northwest Airlines Corporation (the "GUARANTOR");
<PAGE> 2
WHEREAS, Lessor and Lessee desire to recalculate the Basic Rent,
Stipulated Loss Value and Termination Value percentages in order to reflect,
among other things, the interest rate of the refinanced Secured Certificates;
WHEREAS, in connection with the recalculation of the Basic Rent,
Stipulated Loss Value and Termination Value percentages, Lessor and Lessee
desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were attached
and made a part thereof counterparts of Lease Supplement No. 1, the Trust
Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, and
the Trust Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990,
was recorded by the Federal Aviation Administration (the "FAA") on August 23,
1990, and assigned Conveyance No. W11484;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Expenses", "Indemnitee", "Lease
Period", "Lease Period Date", "Loan Participant", "Net Present Value of Rents",
"Operative Documents", "Permitted Sublessee", "Special Purchase Price",
"Stipulated Loss Value", "Stipulated Loss Value Date", "Supplemental Rent" and
"Termination Value" in Section 1 of the Lease are hereby amended applicable on
and after the Closing Date, to read as follows:
"BUSINESS DAY" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close
in the City of New York, New York; Boston, Massachusetts; Salt Lake
City, Utah; or Minneapolis, Minnesota.
"EXPENSES" has the meaning specified in Section 7(c) of the
Participation Agreement.
"INDEMNITEE" means (i) the Owner Trustee, in its individual
capacity and as trustee under the Trust Agreement, (ii) the Indenture
Trustee, (iii) the Owner Participant, (iv) the Trust Estate, (v) the
Loan Participants and each other Certificate Holder, (vi) the
Subordination Agent, (vii) the Liquidity Provider, (viii) the Pass
Through Trustees, (ix) each Affiliate of the Persons described in
clauses (i) through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the
Persons described in clauses (i) through (viii), inclusive, (xii) the
successors and permitted assigns of the Persons described in clauses
(i) through (iv), inclusive, (xiii) the Trust Indenture Estate, (xiv)
the successors and permitted assigns of the Persons described in
clauses (v), (vi), (vii) and (viii); provided that the Persons
described in clauses (v), (vi), (vii), (viii), (x) and (xiii) are
Indemnitees only for
-2-
<PAGE> 3
purposes of Section 7(c) of the Participation Agreement, and provided,
further, that the Person described in clause (xiii) shall be an
Indemnitee only for purposes of Section 7(b) of the Participation
Agreement.
"LEASE PERIOD" means each of the consecutive periods
throughout the Basic Term and any Renewal Term ending on a Lease Period
Date, the first such period commencing on and including the
Commencement Date.
"LEASE PERIOD DATE" means August 23, 1991 and each succeeding
February 23 and August 23 to and including February 23, 1996, July 2,
1996 and each succeeding January 2 and July 2 to and including January
2, 2015, February 23, 2015 and each succeeding August 23 and February
23, to and including the last such date in the Term.
"LOAN PARTICIPANT" means for any period prior to the Closing
the Original Loan Participant and its successors and assigns, and from
and after the Closing each Purchaser and its successors and registered
assigns, including any Certificate Holder.
"NET PRESENT VALUE OF RENTS" means the net present value, as
of the Commencement Date, of Basic Rent set forth in Exhibit B hereto,
discounted at a rate per Lease Period equal to (a) 10.50% divided by
(b) the number of Lease Periods per year.
"OPERATIVE DOCUMENTS" means the Participation Agreement, the
documents referred to in Section 4(a)(v) of the Participation Agreement
(including any amendments, modifications or supplements thereto), the
Refunding Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document" shall mean
each of the Operative Documents, individually.
"PERMITTED SUBLESSEE" means any entity listed in Exhibit F
hereto and such other entities to which Lessor shall consent.
"SPECIAL PURCHASE PRICE" shall mean the amount denominated as
such in Exhibit B hereto.
"STIPULATED LOSS VALUE" with respect to the Aircraft as of any
date through and including February 23, 2015, means, but subject always
to the provisions of Section 3(d)(v), the amount determined by
multiplying Lessor's Cost by the percentage specified in Exhibit C
hereto opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted from time
to time as provided in Section 3(d) hereof and in Section 8 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after
February 23, 2015 shall be the amount determined as provided in Section
19(a) hereof.
-3-
<PAGE> 4
"STIPULATED LOSS VALUE DATE" means, (a) during the Interim
Term, during the Basic Term through the Closing Date and during any
Renewal Term, the twenty-third calendar day of each calendar month, and
(b) during the Basic Term after the Closing Date, the second calendar
day of each calendar month.
"SUPPLEMENTAL RENT" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than Advance
Rent and Basic Rent) which Lessee assumes or agrees to pay under any
Lessee Document to or on behalf of Lessor or any other Person, (b)
amounts payable by Lessor pursuant to clause (b) of the third paragraph
of Section 2.02 of the Trust Indenture, (c) Lessor's pro rata share of
all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, and
(d) Lessor's pro rata share of all compensation and reimbursement of
expenses and disbursements payable to the Subordination Agent under the
Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement. As used
herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" (as such term is
defined in the Intercreditor Agreement).
"TERMINATION VALUE" with respect to the Aircraft as of any
date through and including February 23, 2015, means, but subject always
to the provisions of Section 3(d)(v), the amount determined my
multiplying Lessor's Cost by the percentage specified in Exhibit D
hereto opposite the Termination Date with respect to which the amount
is determined (as such Exhibit D may be adjusted from time to time as
provided in Section 3(d) hereof and in Section 8 of the Tax Indemnity
Agreement).
(b) The following definitions are hereby inserted in Section 1 of the
Lease in alphabetical order to be applicable on and after the Closing Date:
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"CERTIFICATED AIR CARRIER" means a Citizen of the United
States holding a carrier operating certificate issued by the Secretary
of Transportation pursuant to Chapter 447 of Title 49, United States
Code, for aircraft capable of carrying ten or more individuals or 6,000
pounds or more of cargo or that otherwise is certified or registered to
the extent required to fall within the purview of 11 U.S.C. Section
1110 or any analogous successor provision of the Bankruptcy Code.
-4-
<PAGE> 5
"CITIZEN OF THE UNITED STATES" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"CLOSING" means the consummation of the refinancing operation
contemplated by Section 1 of the Refunding Agreement.
"CLOSING DATE" means the date on which the Closing shall
occur.
"GUARANTEE" means the Guarantee [NW 1990 A], dated as of the
Closing Date, made by the Guarantor, as such Guarantee may be amended
and supplemented from time to time pursuant to the applicable
provisions thereof.
"GUARANTOR" means Northwest Airlines Corporation, a Delaware
corporation.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider and
the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacement thereof, in each case as the
same may be amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A Liquidity
Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"MAJORITY IN INTEREST OF CERTIFICATE HOLDERS" has the meaning
set forth in the Trust Indenture.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that term in
the Trust Indenture.
"ORIGINAL LOAN PARTICIPANT" means [________________], a
banking institution organized under the laws of the [____________].
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and
Security Agreement [NW 1990 A], dated as of August 23, 1990, between
the Owner Trustee and The Connecticut Bank and Trust Company, National
Association, as amended, modified and supplemented prior to the Closing
Date.
-5-
<PAGE> 6
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in connection
with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through trust
agreement and each of the four separate pass through trust supplements
referred to on Schedule I to the Refunding Agreement to be entered into
by and between Lessee and the Pass Through Trustee in connection with
the Refinancing Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as trustee
under each Pass Through Trust Agreement, and each other person that may
from time to time be acting as successor trustee under any such Pass
Through Trust Agreement.
"PURCHASERS" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an authorized
representative of the Owner Participant delivered pursuant to Section
17(a)(1) of the Participation Agreement, setting forth, among other
things, the Refinancing Date, the principal amount of debt to be issued
by the Owner Trustee on the Refinancing Date, and the proposed revised
schedules of Excess Amounts, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization Schedules.
"REFINANCING DATE" means the proposed date on which the
outstanding Secured Certificates will be redeemed and refinanced
pursuant to Section 17 of the Participation Agreement.
"REFINANCING EXPENSES" means the costs, fees, commissions and
other expenses payable by the Owner Participant pursuant to Section
11(a) of the Refunding Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers pursuant to the
Trust Indenture Amendment and the Refunding Agreement on the Closing
Date.
"REFINANCING TRANSACTION" means a refinancing transaction
pursuant to Section 17 of the Participation Agreement involving, among
other things, (i) the redemption of the Secured Certificates issued on
August 23, 1990 and the concurrent issuance and sale of the Refinancing
Secured Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through Certificates by the
Pass Through Trustees.
-6-
<PAGE> 7
"REFUNDING AGREEMENT" means that certain Refunding Agreement
[NW 1990 A], dated as of June 3, 1996, among Lessor, Lessee, the
Guarantor, the Owner Participant, the Loan Participant, the Purchasers,
the Indenture Trustee and the Subordination Agent, as the same may from
time to time be supplemented or amended, or the terms thereof waived or
modified, to the extent permitted by, and in accordance with, the terms
thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust
Company of Connecticut, National Association, a national banking
association, as subordination agent under the Intercreditor Agreement,
or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and Restated
Trust Indenture and Security Agreement [NW 1990 A], dated as of the
Closing Date, between Lessor and State Street Bank and Trust Company,
as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to that term
in the Trust Indenture.
(c) The definitions of "Assumed Interest Rate", "Commitment", "Debt
Rate", "Interest Period" and "Rent Differential Amount" in Section 1 of the
Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTIONS 3(C), 3(D), 3(E), 3(F) AND 3(G) OF THE
LEASE.
(a) Section 3(c) of the Lease is hereby amended to read in its entirety
on and after the Closing Date as follows:
(c) Basic Rent. Lessee shall pay Basic Rent with respect to
each Lease Period during the Basic Term on each Lease Period Date
during the Basic Term, in consecutive installments in the amounts as
provided in the next sentence, each such installment to cover the Lease
Period specified in Exhibit B. Each such installment of Basic Rent
shall be equal to Lessor's Cost multiplied by the percentage for the
applicable Lease Period Date specified in Exhibit B hereto. In
addition, Lessee shall pay Basic Rent on the Closing Date in an amount
equal to Lessor's Cost multiplied by the percentage specified in
Exhibit B hereto for Basic Rent on the Closing Date.
(b) Section 3(d)(i) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs other than
on June 12, 1996, or (B) Refinancing Expenses paid by Lessor or the
Owner Participant pursuant to Section 11(a) of the Refunding Agreement
is determined
-7-
<PAGE> 8
to be other than 1.2994% of Lessor's Cost, then in each case, the Basic
Rent percentages set forth in Exhibit B and the Stipulated Loss Value
percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated by the Owner
Participant, on or prior to October 1, 1996 using the same methods and
assumptions used to calculate original Basic Rent and Stipulated Loss
Value and Termination Value percentages, in order to: (1) maintain the
Owner Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible consistent with
clause (1) hereof. In such recalculation there will be no change in the
amortization of the Secured Certificates.
(c) Section 3(d)(ii) of the Lease is hereby amended by deleting on and
after the Closing Date the words "or a refunding" in the first line thereof.
(d) Section 3(d)(iii) of the Lease is hereby amended by deleting on and
after the Closing Date the second sentence thereof.
(e) The second sentence of Section 3(e) of the Lease is hereby amended
to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay as Supplemental Rent the Make-Whole Amount,
if any, due pursuant to Section 2.10(b) or Section 2.11 of the Trust
Indenture in connection with a prepayment of the Secured Certificates
upon redemption of such Secured Certificates in accordance with such
Section 2.10(b) or Section 2.11."
(f) Section 3(f) of the Lease is hereby amended by deleting on and
after the Closing Date the first paragraph thereof and substituting therefor the
following:
(f) Payments in General. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by
wire transfer of immediately available funds prior to 10:30 A.M., New
York time, on the date of payment, to Lessor at its account at First
Security Bank of Utah, National Association, 79 South Main Street, Salt
Lake City, Utah 84111, ABA No. 124- 0000-12, Account No 051-0922115,
Attention: Corporate Trust Department, Credit Northwest/NW 1990 A (or
such other office of Lessor in the continental United States or such
other account as Lessor shall direct in a notice to Lessee at least 10
Business Days prior to the date such payment of Rent is due); provided,
that so long as the Trust Indenture shall not have been fully
discharged, Lessor hereby irrevocably directs and Lessee agrees, that,
unless the Indenture Trustee shall otherwise direct, all Rent payable
to Lessor and assigned to the Indenture Trustee pursuant to the Trust
Indenture shall be paid prior to 10:30 A.M., New York time, on the due
date thereof in funds of the type specified in this Section 3(f)
directly to the Indenture Trustee at its account at State Street Bank
and Trust Company, 225 Franklin Street, Boston,
-8-
<PAGE> 9
Massachusetts, 02110, ABA No. 011-00-0028, Account No. 99003-943-0,
Attention: Corporate Trust Department, Reference: Northwest/NW 1990A
(or such other account of the Indenture Trustee in the continental
United States as the Indenture Trustee shall direct in a notice to
Lessee at least 10 Business Days prior to the date such payment of Rent
is due). All payments of Supplemental Rent owing to the Indenture
Trustee or to a Loan Participant or any other Certificate Holder
pursuant to the Participation Agreement shall be made in Dollars in
immediately available funds prior to 10:30 A.M., New York time, on the
due date thereof to the above-referenced account of the Indenture
Trustee or at such other account of such other financial institution
located in the continental United States as the party entitled thereto
may so direct at least 10 Business Days prior to the due date thereof.
All payments of Supplemental Rent payable to the Owner Participant, to
the extent that such amounts constitute Excluded Payments (as defined
in the Trust Indenture), shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date
thereof, to the account of the Owner Participant specified in Schedule
I to the Participation Agreement (or to such other account as may be
specified in writing by the Owner Participant from time to time).
(g) Section 3(g) of the Lease is hereby deleted in its entirety on and
after the Closing Date.
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x) of the
Lease is hereby amended in its entirety on and after the Closing Date to read as
follows:
(x) so long as the term of any sublease does not extend beyond
the Term and so long as the Sublessee is not subject to a proceeding or
final order under applicable bankruptcy, insolvency or reorganization
laws on the date the sublease is entered into, Lessee may, at any time,
enter into any sublease with (1) a U.S. Air Carrier, (2) any Person
approved in writing by Lessor, which approval shall not be unreasonably
withheld or (3) after the Depreciation Period, with any Permitted
Sublessee, provided, however, that (A) no sublease entered into
pursuant to this clause (x) shall extend beyond the date which is six
months prior to the expiration of the Basic Term or any Renewal Term
then in effect unless the Owner Participant shall have previously
approved in writing the maintenance procedures of the Sublessee, or
Lessee shall have irrevocably committed to purchase the Aircraft or (if
permitted by the terms hereof) extend the Term of this Lease for a
period ending at least six months from the end of the proposed sublease
and (B) in the event that (x) there has been no downgrade of Lessee's
long term senior unsecured debt rating in the twelve month period
preceding the date of Lessee's entering into a sublease with a Person
described in clause (3) of this subparagraph and on such date such debt
is rated BB+ or lower by Standard & Poor's Ratings Services and Ba1 or
lower by Moody's Investors Service, Inc. or (y) there has been a
downgrade of Lessee's long term senior unsecured debt rating in the
twelve month period preceding the date of
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<PAGE> 10
Lessee's entering into a sublease with a Person described in clause (3)
of this subparagraph and on such date such debt is rated BB+ or lower
by Standard & Poor's Ratings Services or Ba1 or lower by Moody's
Investors Service, Inc., Lessee may not enter into such sublease with
such Person unless the country of such Sublessee's domicile imposes
aircraft maintenance standards 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 or the Luftfahrt Bundesamt of the Federal Republic of Germany,
and Lessor and the Owner Participant shall have received a favorable
opinion of counsel (which counsel and opinion are reasonably
satisfactory to Lessor and the Owner Participant) in the jurisdiction
of the Sublessee's domicile (a) that the terms (including, without
limitation, the governing law, service of process and
jurisdictional-submission provisions thereof) of the Sublease, the
Lease and the Trust Indenture are legal, valid, binding and enforceable
in such jurisdiction against third parties to substantially the same
extent as in the United States, (b) that it is not necessary for the
Owner Participant or Lessor to register or qualify to do business in
such jurisdiction, (c) that there is no tort liability of the owner of
an aircraft not in possession thereof under the laws of such
jurisdiction (it being understood that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner Participant
and Lessor, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant and Lessor is obtained to cover
such risk) and (d) that there exist no possessory rights in favor of
such Sublessee under the laws of such jurisdiction which would, upon
bankruptcy of Lessee or other default by Lessee or Sublessee, prevent
the return of the Aircraft to Lessor in accordance with and where
permitted by the terms of Sections 14 and 15 of the Lease upon the
exercise by Lessor of its remedies under Section 15 of the Lease and
the practical realization by Lessor of its rights and benefits under
said Section 15.
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
(a) Section 9(a)(1) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(1) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to elect to terminate this
Lease on the Lease Period Date occurring in January, 1997, January,
2000, January, 2003, January, 2006 or January, 2009. Lessee shall
exercise this option by purchasing the Aircraft pursuant to paragraph
(b) of this Section 9.
(b) Section 9(b) of the Lease is hereby amended by deleting on and
after the Closing Date the word "premium" therein and substituting therefor the
words "Make-Whole Amount" and by deleting on and after the Closing Date the
number "2.15" therein and substituting the number "2.13" therefor.
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<PAGE> 11
(c) Section 9(c) of the Lease is hereby amended by deleting on and
after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount".
SECTION 5. AMENDMENT OF SECTION 10 OF THE LEASE. Section 10(a) of the
Lease is hereby amended by (a) deleting on and after the Closing Date the words
"the third Business Day following receipt of insurance proceeds in respect of
such occurrence but not earlier than thirty days after such occurrence" in
clause (y) of the second sentence thereof and substituting therefor the words
"an earlier Business Day irrevocably specified fifteen days in advance by notice
from Lessee to Lessor and the Indenture Trustee" and (b) deleting on and after
the Closing Date subsections (5) and (6) of the last paragraph thereof in their
entirety and substituting therefor the following:
(5) furnish Lessor with copies of the documentation required
to be provided by Lessee pursuant to Section 5.06 of the Trust
Indenture, together with an opinion of counsel (which shall be
the General Counsel or an Associate General Counsel of Lessee
and, if not, other counsel chosen by Lessee and reasonably
acceptable to Lessor) addressed to Lessor and satisfactory to
Lessor stating the same legal opinions referred to in Section
5.06(5) of the Trust Indenture, and an opinion of counsel
chosen by Lessee and reasonably acceptable to the Owner
Participant as to the tax consequences (without any
requirement as to the nature of such tax consequences) to
Lessor and the Owner Participant of such substitution, and
Lessor simultaneously will comply with the terms of the Trust
Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso to the definition of Lessor
Liens), all of Lessor's right, title and interest, if any, in
and to the Aircraft or the Airframe and one or more Engines,
as the case may be, with respect to which such Event of Loss
occurred and furnish to or at the direction of Lessee a bill
of sale in form and substance reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer,
(6) furnish Lessor with an opinion of counsel (which shall be
Cadwalader, Wickersham & Taft and, if not, other counsel
chosen by Lessee and reasonably acceptable to Lessor)
reasonably satisfactory to Lessor to the effect that Lessor
and the Indenture Trustee as assignee of Lessor should be
entitled to the benefits of 11 U.S.C. Section 1110 with
respect to the substitute airframe, provided that such opinion
need not be delivered to the extent that immediately prior to
such substitution the benefits of 11 U.S.C. Section 1110 were
not, by reason of a change of law or judicial interpretation
thereof, available to Lessor and, so long as any Secured
Certificates are outstanding, the Indenture Trustee as
assignee of Lessor's rights under the Lease with respect to
the Aircraft and
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<PAGE> 12
SECTION 6. AMENDMENT OF SECTION 11 OF THE LEASE. (a) Section 11 of the
Lease is hereby amended by (i) deleting on and after the Closing Date the words
"Delivery Date" in clause (a)(I)(i)(y) thereof and substituting therefor the
words "Closing Date", and (ii) deleting on and after the Closing Date the word
"owned" in the fifteenth line of clause (a)(I), in the nineteenth line of clause
(b)(I) and in the seventh line of clause (b)(II), and substituting therefor the
word "operated" in each such clause.
(b) Section 11(c) of the Lease is hereby amended by deleting on and
after the Closing Date the words and punctuation "Marsh & McLennan,
Incorporated" in the first sentence thereof and substituting therefor the words
"Rollins Hudig Hall".
(c) Section 11(d) of the Lease is hereby amended in its entirety on and
after the Closing Date to read as follows:
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment of franchise provisions or otherwise
(including, with respect to insurance maintained pursuant to Section
11(b), insuring for a maximum amount which is less than the Stipulated
Loss Value of the Aircraft) in the insurance covering the risks
required to be insured against pursuant to this Section 11 under a
program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a)
and Section 11(b) exceed during any policy year, with respect to all of
the aircraft in Lessee's fleet (including, without limitation, the
Aircraft), the lesser of (a) 50% of the largest replacement value of
any single aircraft in Lessee's fleet or (b) 1-1/2% of the average
aggregate insurable value (during the preceding policy year) of all
aircraft (including, without limitation, the Aircraft) on which Lessee
carries insurance. In addition, Lessee (and any Sublessee) may
self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or
liability insurance deductible imposed by the aircraft or liability
insurers.
(d) Section 11 of the Lease is hereby amended by deleting on and after
the Closing Date the words and punctuation "the Loan Participants," each place
they appear therein.
SECTION 7. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of
the Lease is hereby amended by (i) adding on and after the Closing Date the
words and punctuation ", the Refunding Agreement" after the words "Participation
Agreement" and (ii) adding on and after the Closing Date the words "and except
for representations or warranties contained in the Pass Through Trust Agreement
or the Underwriting Agreement (as defined in the Refunding Agreement) or any
document or instrument furnished pursuant to either thereof" after the word
"purpose" at the end of the first parenthetical phrase therein.
SECTION 8. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the
Lease is hereby amended to read in its entirety on and after the Closing Date as
follows:
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<PAGE> 13
"Section 17. Notices. All notices required under the terms and
provisions hereof shall be by telecopier or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable by registered, first-class airmail, with postage
prepaid, or by personal delivery of written notice and any such notice shall
become effective when received, addressed:
(i) if to Lessee, for U.S. Mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at
2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention:
Senior Vice President - Finance and Treasurer, (Telecopy No. (612)
726-0665), or to such other address, telex number or telecopy number as
Lessee shall from time to time designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department [NW 1990A] (Telecopy
No. (801) 246-5053), or to such other address or telecopy number as
Lessor shall from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at such address or telecopy number as
such Loan Participant, the Indenture Trustee or the Owner Participant
shall have furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at its address or telecopy
number set forth on the signature pages of the Refunding Agreement."
SECTION 9. AMENDMENT OF SECTION 19(D) OF THE LEASE. The first and
second sentences of Section 19(d) of the Lease are hereby amended to read in
their entirety on and after the Closing Date as follows:
On January 2, 2011 (or, if January 2, 2011 is not a Business Day, the
Business Day immediately succeeding January 2, 2011), Lessee shall have
the option, upon at least 120 days' irrevocable prior notice to Lessor
and, if any Secured Certificates are then outstanding, the Indenture
Trustee, to purchase the Aircraft on such date for a purchase price
equal to the Special Purchase Price. In addition, if on such date there
shall be any Secured Certificates outstanding, Lessee shall have the
option to assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.13 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture.
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<PAGE> 14
SECTION 10. AMENDMENT OF SECTION 22(A) OF THE LEASE. The first
sentence of Section 22(a) of the Lease is hereby amended to read in its entirety
on and after the Closing Date as follows:
Any moneys held by Lessor as security hereunder for future payments to
Lessee at a time when there is not continuing an Event of Default
shall, until paid to Lessee, be invested by Lessor or, if the Trust
Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and
in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the
United States of America and agencies guaranteed by the United States
government having a final maturity of ninety (90) days or less from
date of purchase thereof; (ii) certificates of deposit issued by,
bankers' acceptances of, or time deposits with, any bank, trust company
or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined
capital and surplus and retained earnings as of its last report of
condition of at least $500,000,000 and having a rating of Aa or better
by Moody's Investors Service, Inc. ("MOODY'S") or AA or better by
Standard & Poor's Corporation ("S&P") and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii)
commercial paper of any holding company of a bank, trust company or
national banking association described in (ii) and commercial paper of
any corporation or finance company incorporated or doing business under
the laws of the United States of America or any state thereof having a
rating assigned to such commercial paper of A1 by S&P or P1 by Moody's
and having a final maturity of ninety (90) days or less from the date
of purchase thereof; provided, however, that the aggregate amount at
any one time so invested in certificates of deposit issued by any one
bank shall not be in excess of 5% of such bank's capital and surplus.
SECTION 11. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the
Lease is hereby amended by (i) deleting on and after the Closing Date the word
"or" between the words "Trust Agreement" and the words "the Trust Indenture" and
substituting a comma therefor and (ii) inserting on and after the Closing Date
the words "or the Refunding Agreement" after the words "Trust Indenture".
SECTION 12. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are applicable on
and after the Closing Date. Exhibits B, C and D to the Lease are applicable
until the Closing Date.
(b) The parties hereto agree that Exhibits B, C and D attached hereto
reflect the recalculation of Basic Rent, Stipulated Loss Value and Termination
Value percentages to take into account the interest rates borne by the Secured
Certificates as of the Closing Date and the actual amount of Transaction
Expenses.
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<PAGE> 15
(c) Exhibit F to the Lease is hereby amended on and after the Closing
Date by adding the words "Air China" thereto.
SECTION 13. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease
set forth in Sections 1 through 12 hereof shall be effective as of the hereof.
SECTION 14. RATIFICATION. Except as amended hereby, the Lease as
heretofore supplemented continues and shall remain in full force and effect in
all respects.
SECTION 15. MISCELLANEOUS. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Amendment may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by Lessor, Lessee and any assignee of
Lessor's rights hereunder. Nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee. The section and paragraph headings in this Amendment and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof and all references herein
to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 16
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment
to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By:
---------------------------------------
Title:
NORTHWEST AIRLINES, INC.
Lessee
By:
---------------------------------------
Title:
(1) Receipt of this original counterpart of the foregoing Amendment is
hereby acknowledged this _____ day of ______________, 1996.
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By:
----------------------------------------
Title:
- --------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1990 A]
This GUARANTEE [NW 1990 A], dated as of June 12, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, has
entered into a Lease Agreement [NW 1990 A], dated as of August 23, 1990, between
the Lessee, as lessee, and The First National Bank of Boston, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "ORIGINAL OWNER TRUSTEE"), as lessor, and a
Lease Supplement No. 1 [NW 1990 A], dated August 23, 1990 (such Lease Agreement,
as so supplemented, the "ORIGINAL LEASE"), relating to one (1) Boeing 747-451
aircraft, together with four (4) Pratt & Whitney Model PW4056 engines (such
aircraft and engines, and any substitute Airframe and Engines under the Lease,
being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL
PARTICIPATION AGREEMENT"), among the Lessee, [ ],
as Owner Participant (the "OWNER PARTICIPANT"), and certain other parties; and
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and The Connecticut
Bank and Trust Company, National Association, as indenture trustee (the
"ORIGINAL INDENTURE TRUSTEE"), entered into the Trust Indenture and Security
Agreement [NW 1990 A], dated as of August 23, 1990, as supplemented by the Trust
Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990
(collectively, the "ORIGINAL INDENTURE"), pursuant to which the Original Owner
Trustee issued secured certificates substantially in the form set forth in
Article II thereof (the "ORIGINAL SECURED CERTIFICATES"); and
WHEREAS, pursuant to an Instrument of Assignment and
Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of
July 14, 1991, State Street Bank and Trust Company (the "INDENTURE TRUSTEE")
succeeded to the Original Indenture Trustee, as indenture trustee under the
Original Indenture; and
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance among the Owner Participant, the Original
Owner Trustee and First Security Bank of Utah, National Association (the "OWNER
TRUSTEE"), dated May 28, 1996, the Owner Trustee succeeded to all of the
estates, properties, rights, powers, duties and trusts of the Original Owner
Trustee as trustee under the Original Trust Agreement and the other Operative
Documents to which the Original Owner Trustee was a party; and
<PAGE> 2
WHEREAS, the Guarantor, the Lessee, the Owner Trustee, the
Owner Participant, the Indenture Trustee and certain other parties have entered
into a Refunding Agreement [NW 1990 A], dated as of June 3, 1996 (the "REFUNDING
AGREEMENT"), providing for a refinancing as contemplated by Section 17 of the
Original Participation Agreement; and
WHEREAS, it is a condition precedent to the obligations of the
parties thereto to consummate the transactions contemplated by the Refunding
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, pursuant to the Refunding Agreement, (a) the Original
Participation Agreement is being amended (as so amended, the "PARTICIPATION
AGREEMENT"), (b) the Original Lease was amended on June 3, 1996 (as so amended,
the "LEASE"), (b) the Original Secured Certificates are being redeemed, the
Original Indenture is being amended and restated (as so amended and restated,
the "TRUST INDENTURE"), and new secured certificates in four series
substantially in the form set forth in Section 2.01 of the Trust Indenture (the
"SECURED CERTIFICATEs") will be issued, and (c) the Owner Trustee as lessor
under the lease (the "LESSOR") will assign by way of collateral security certain
of its right, title and interest in and to this Guarantee to the Indenture
Trustee pursuant the Trust Indenture, as security for the obligations of the
Lessor referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Refunding Agreement and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully
aware of the terms and conditions of the Lease, the Participation Agreement and
the other Operative Documents and the transactions and the other documents
contemplated thereby, and does hereby irrevocably and fully and unconditionally
guarantee, as primary obligor and not as surety merely, to the Parties, as their
respective interests may appear, the payment by the Lessee of all payment
obligations when due under the Lease (including, without limitation, Basic Rent
and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement
and the other Operative Documents to which the Lessee is a party (such
obligations of the Lessee guaranteed hereby being hereinafter referred to,
individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL
OBLIGATIONS") in accordance with the terms of the Operative Documents, and the
timely performance of all other obligations of the Lessee thereunder
(individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL
OBLIGATIONS" or, collectively with the Financial Obligations, the
"OBLIGATIONS"). The Guarantor does hereby agree that in the event that the
Lessee fails to pay any Financial Obligation when due for any reason (including,
without limitation, the liquidation, dissolution,
- 2 -
<PAGE> 3
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceedings affecting the status, existence, assets or obligations of, the
Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such proceeding)
within five days after the date on which such Financial Obligation became due
and payable and the applicable grace period has expired, the Guarantor shall pay
or cause to be paid forthwith, upon the receipt of notice from any Party (such
notice to be sent to the Lessee (to the extent such Party is not stayed or
prevented from doing so by operation of law) and the Guarantor) stating that
such Financial Obligation was not paid when due and for five days after the
applicable grace period has expired, the amount of such Financial Obligation.
The Guarantor hereby agrees that in the event the Lessee fails to perform any
Nonfinancial Obligation for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party in
any such proceeding) within 10 Business Days after the date on which such
Nonfinancial Obligation is required to be performed (for avoidance of doubt, to
include any applicable grace period), the Guarantor shall cause such
Nonfinancial Obligation to be performed within 10 Business Days following the
receipt of notice from any Party (such notice to be sent to the Lessee (to the
extent such Party is not stayed or prevented from doing so by operation of law)
and the Guarantor) stating that such Nonfinancial Obligation was not performed
when so required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not be,
to the fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in accordance with the terms of
the Operative Documents) without the consent of the Guarantor, or by any
priority or preference to which any other obligations of the Lessee may be
entitled over the Lessee's obligations under the Lease and the other Operative
Documents to which the Lessee is a party, or by any other circumstance that
might otherwise constitute a legal or equitable defense to or discharge of the
obligations of a surety or guarantor including, without limitation, any defense
arising out of any laws of the United States of America or any State thereof
which would excuse, discharge, exempt, modify or delay the due or punctual
payment and performance of the obligations of the Guarantor hereunder. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not, to the fullest extent permitted by
law, affect the liability of the Guarantor hereunder: (a) the extension of the
time for or waiver of, at any time or from time to time, without notice to the
Guarantor, the Lessee's performance of or compliance with any of its obligations
under the Operative Documents (except that such extension or waiver shall be
- 3 -
<PAGE> 4
given effect in determining the obligations of the Guarantor hereunder), (b) any
assignment, transfer, sublease or other arrangement by which the Lessee
transfers possession or loses control of the use of the Aircraft, (c) any defect
in the title, condition, design, operation or fitness for use of, or damage to
or loss or destruction of, the Aircraft, whether or not due to the fault of the
Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or
with any other Person, or any sale, transfer, lease or disposal of any of its
assets or (e) any change in the ownership of any shares of capital stock of the
Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any unpaid
amounts due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim for
personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate (as such
term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain
or assert a claim for personal judgment against any other Person liable for the
Obligations, or make any effort at collection of the Obligations from any such
other Person, or exercise or assert any other right or remedy to which any Party
is or may be entitled in connection with the Obligations or any security or
other guaranty therefor, or (v) assert or file any claim against the assets of
the Lessee or any other guarantor or other Person liable for the Obligations, or
any part thereof, before or as a condition of enforcing the liability of the
Guarantor under this Guarantee or requiring payment of said Obligations by the
Guarantor hereunder, or at any time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted by
law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be prevented
by applicable law from exercising its remedies (or any of them) under Section 15
of the Lease, the Lessor (or any assignee thereof, including, without
limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive
hereunder from the Guarantor, upon demand therefor the sums that would otherwise
have been due from the Lessee under the Lease had such remedies been able to be
exercised. The Guarantor hereby unconditionally waives, to the fullest extent
permitted by law, any requirement that, as a condition precedent to the
enforcement of the obligations of the Guarantor hereunder, the Lessee or all or
any one or more of any other guarantors of any of the Obligations be joined as
parties to any proceedings for the enforcement of any provision of this
Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall
not be deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any other Person.
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<PAGE> 5
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent
permitted by law, all other demands or notices whatsoever, other than the
request for payment hereunder and notice provided for in Section 1 hereof. The
obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect of
any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim by
the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or
in the event of any proceedings for voluntary liquidation, dissolution
or other winding-up of the Lessee, whether or not involving insolvency
or bankruptcy proceedings, in which case the Obligations shall be paid
and performed in full before any payment in respect of a claim by the
Guarantor shall be made by or on behalf of the Lessee.
4. AMENDMENTS, ETC. No amendment of or supplement to this
Guarantee, or waiver or modification of, or consent under, the terms hereof,
shall be effective unless evidenced by an instrument in writing signed by the
Guarantor and each Party against whom such amendment, supplement, waiver,
modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party,
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<PAGE> 6
as the case may be, any amount owing to such Person as Supplemental Rent for
indemnities provided in Section 7 of the Participation Agreement or the Tax
Indemnity Agreement or otherwise not constituting part of the Trust Indenture
Estate (as such term is defined in the Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in
the Trust Indenture, the Lessor will assign, and create a security interest in,
certain of its rights hereunder to and for the benefit of the Indenture Trustee.
From and after the execution and delivery of the Trust Indenture, and until
receipt by the Guarantor of a written notice from the Indenture Trustee to the
effect that the Trust Indenture has been fully satisfied and discharged, no
remedy or election hereunder may be exercised by the Lessor or consent given by
the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing in
good standing pursuant to the laws of the State of Delaware. It has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to
enter into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval of,
or exemption by, or the giving of notice to, or the registration with
or the taking of any other action in respect of, any Federal, state,
municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to authorize
the execution, delivery and performance (other than as contemplated by
the Operative Documents in the case of the performance of the
Non-Financial Obligations) by it of this Guarantee, or for the
legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee, the
performance of its obligations hereunder, nor its consummation of the
transactions contemplated hereby, will conflict with or result in any
breach of, or constitute a default under, or result in any creation or
imposition of any Lien upon any of its property or assets under, any
applicable laws or any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it may be
bound or to which any of its property or assets may be subject, or its
Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation
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<PAGE> 7
enforceable in accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any Party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038-4892, Attention: Managing Attorney, or such office of the
Guarantor in New York City as from time to time may be designated by the
Guarantor in writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to the
fullest extent permitted by applicable laws. The headings in this Guarantee are
for purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
10. NOTICES. All requests, notices or other communications
hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and Treasurer
Telecopy No.: (612) 726-0665
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<PAGE> 8
If to a Party:
to the address or telecopy number set forth
in or pursuant to the Refunding Agreement.
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other or
further exercise of such right or remedy or the exercise of any other right or
remedy.
12. SURVIVAL. All representations and warranties contained
herein or made in writing by the Guarantor in connection herewith shall survive
the execution and delivery of this Guarantee regardless of any investigation
made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or any provision in any other Operative Document,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL
(AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any
Party any and all reasonable costs and expenses (including reasonable legal fees
and expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:______________________________________
Name: Thomas S. Schreier, Jr.
Title: Vice President - Finance and
Assistant Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:____________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:____________________________
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1990 A]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[ ], as Owner Participant
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1990 A]
THIS PARTICIPATION AGREEMENT [NW 1990 A] dated as of August
23, 1990, among (i) Northwest Airlines, Inc., a corporation existing pursuant
to the laws of the State of Minnesota (herein called "Lessee"), (ii) the
institution listed on Schedule I hereto and identified therein as the "Owner
Participant" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below (herein called the "Owner Participant"), (iii) the
institutions listed on Schedule I and identified therein as "Loan
Participants", (iv) The First National Bank of Boston, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee under the Trust Agreement (herein, in such
latter capacity, together with any successor owner trustee, called the "Owner
Trustee"), and (v) The Connecticut Bank and Trust Company, National
Association, a national banking association, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "Indenture Trustee");
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other
things, certain Boeing 747-451 aircraft, including the Aircraft which has been
delivered by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering
into a Purchase Agreement Assignment [NW 1990 A], dated as of
the date hereof (herein called the "Purchase Agreement
Assignment"), whereby Lessee assigns to the Owner Trustee
certain rights and interests of Lessee under the Purchase
Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and
Agreement [NW 1990 A] (herein called the "Consent and
Agreement"), substantially in the form attached to the
Purchase Agreement Assignment (herein called the "Consent and
Agreement").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1990
A], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "Trust
Agreement", such term to include, unless the context
<PAGE> 2
otherwise requires, any Trust Supplement referred to below), with the
Owner Trustee, pursuant to which Trust Agreement the Owner Trustee agrees,
among other things, to hold the Trust Estate defined in Section 1.1 thereof
(herein called the "Trust Estate") for the use and benefit of the Owner
Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture and Security Agreement [NW 1990 A], dated as of the
date hereof (said Trust Indenture and Security Agreement, as the same may be
amended or supplemented from time to time, being herein called the "Trust
Indenture" such term to include, unless the context otherwise requires, the
Trust Supplement referred to below) pursuant to which the Owner Trustee issues
to each of the Loan Participants one or more secured certificates (herein
called collectively, the "Secured Certificates", and individually, a "Secured
Certificate") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"Trust Supplement") covering the Aircraft, supplementing the Trust Agreement
and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1990 A], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "Lease", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "Delivery Date") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft.
(a) Participation by Loan Participants. Subject to the terms and conditions of
this Agreement, each Loan Participant agrees to finance, in part, the Owner
Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to
the Owner Trustee (herein called a "Loan") in the amount set forth on Schedule
II opposite the name of such Loan Participant. Each Loan Participant shall make
such Loan to the Owner Trustee on a date to be designated pursuant to
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<PAGE> 3
Section 2 hereof, but in no event later than August 31, 1990, by transferring to
the account of the Owner Trustee at Bankers Trust Company, New York, New York
(ABA No. 02-100-1033), not later than 10:30 a.m., New York City time on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite the Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee,
at the direction of the Owner Participant, shall issue Secured Certificates to
the Loan Participants under the Trust Indenture to evidence the obligation of
the Owner Trustee to repay the Loans together with interest thereon. The Owner
Trustee agrees to pay the Secured Certificates in installments in the amounts
and on the dates provided in the Trust Indenture together with interest thereon
and all other amounts payable with respect thereto, all as more fully provided
in the Trust Indenture.
(b) Participation by Owner Participant. Subject to the terms
and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than August 31,
1990, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York (ABA No. 02-100-1033), not later than 10:30 a.m.,
New York City time, on the Delivery Date immediately available funds in Dollars
in the amount set forth opposite the Owner Participant's name in Schedule II
hereto.
(c) General Provisions. The amount of the participation of
each of the Loan Participants and the Owner Participant to be made as provided
above in the payment of Lessor's Cost for the Aircraft is hereinafter called
such party's "Commitment" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft.
(d) Determination of Interest Rate. The Debt Rate applicable
to the Secured Certificates for each Interest Period and the length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
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<PAGE> 4
SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to
give each Participant, the Owner Trustee and the Indenture Trustee at least two
Business Days' telex, telegraphic or other written notice of the Delivery Date
for the Aircraft, which Delivery Date shall be a Business Day, which notice
shall specify the amount of Lessor's Cost and the amount of each Participant's
Commitment for such Aircraft. As to each Participant, the making of its
Commitment for such Aircraft available in the manner required by Section 1
shall constitute a waiver of such notice.
SECTION 3. Instructions to the Owner Trustee. The Owner
Participant agrees that its releasing the amount of its Commitment for the
Aircraft to the account of the Owner Trustee in accordance with the terms of
Section 1 shall constitute, subject to satisfaction or waiver of the conditions
set forth in Section 4(a), without further act, authorization and direction by
the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Bill of Sale;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill
of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application,
the Lease Supplement and the Trust Supplement, in each case covering
the Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture;
and
(vi) to take such other action as may be required to be taken
by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. Conditions. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of the
Loan Participants and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(6), (x) (insofar as it
relates to representations and warranties contained in the Tax Indemnity
Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi)
and (xxvii) shall not be a condition precedent to the obligations of the Loan
Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner
Participant), (xiv) and (xvii) shall not be a condition precedent to the
obligation of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant
to Section 2 hereof (or shall have waived such notice either in
writing or as provided in Section 2).
(ii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations or guidelines or interpretations thereof by appropriate
regulatory authorities which, in the opinion of such Loan Participant
or the Owner Participant, as the case may be, or their respective
counsel, would make it a violation of law or regulations or guidelines
for such Loan Participant or the Owner Participant to make its
Commitment available in accordance with Section 2 hereof or, in the
case of such Loan Participant, to acquire a Secured Certificate or to
realize the benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the Loan
Participants and the Owner Participant and shall be in full force and
effect and executed counterparts shall have been delivered to the Loan
Participants and the Owner Participant, or their respective counsel,
provided that only each Loan Participant shall receive an executed
original of its respective Secured Certificate and provided further
that a copy of the Purchase Agreement shall only be delivered to and
retained by the Owner Trustee (but the Indenture Trustee shall also
retain a copy of the Purchase Agreement which may be inspected and
reviewed by the Indenture Trustee if and only if there shall occur and
be continuing an Event of Default under the Lease), and the Tax
Indemnity Agreement shall only be delivered to Lessee and the Owner
Participant and their respective counsel:
(1) the Purchase Agreement (insofar as it
relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
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<PAGE> 6
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the Aircraft
in the form agreed to by the Loan Participants, the Owner
Participant and Lessee (herein called the "Acceptance
Certificate") duly completed and executed by the Owner
Trustee or its agent, which may be a representative of
Lessee, and by such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates; and
(13) the Consent and Agreement.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "Operative
Documents" and, individually, as an "Operative Document".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act, shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Loan Participants shall have been executed and delivered by Lessee
or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner 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 By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified by a Vice
President, the Secretary or an Assistant Secretary of Lessee,
duly authorizing the sale of the Aircraft and the lease by
Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the
Bill of Sale, the FAA Bill of Sale, the Lease, the Lease
Supplement covering the Aircraft, the Purchase Agreement
Assignment, the Tax Indemnity Agreement and each other
document required to be executed and delivered by Lessee on
or before the Delivery Date in accordance with the provisions
hereof and thereof;
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<PAGE> 7
(2) such other documents and evidence with respect
to Lessee, the Manufacturer, the Owner Trustee, the Owner
Participant, the Indenture Trustee, and the Loan Participants
as the Loan Participants or the Owner Participant, or their
respective counsel, may reasonably request in order to
establish the authority of such parties to consummate the
transactions contemplated by this Agreement and the taking of
all corporate proceedings in connection therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease
Supplement covering the Aircraft and any other documents to
be executed on behalf of Lessee in connection with the
transactions contemplated hereby and as to the signatures of
such person or persons.
(viii) All appropriate action required to have been taken prior
to the Delivery Date in connection with the transactions contemplated
by this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision
or instrumentality of the United States, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities
required to be in effect on the Delivery Date in connection with the
transactions contemplated by this Agreement shall have been issued,
and all such orders, permits, waivers, authorizations, exemptions and
approvals shall be in full force and effect on the Delivery Date.
(ix) On the Delivery Date the following statements shall be
true, and the Loan Participants and the Owner Participant shall have
received evidence satisfactory to it to the effect that:
(1) the Owner Trustee has good and marketable title
(subject to filing and recording the FAA Bill of Sale with
the Federal Aviation Administration) to the Aircraft on such
Delivery Date, free and clear of Liens other than the rights
of Lessee under the Lease and Lease Supplement covering the
Aircraft, the mortgage and security interests created by the
Trust Indenture, the rights of the Owner Participant under
the Trust Agreement and the Trust Supplement, and Liens
permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
and
(3) application for registration of the Aircraft in
the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
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<PAGE> 8
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and
as of such date except to the extent that such representations and
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, or would result from the purchase, sale or lease of the
Aircraft, which constitutes (or would, with the passage of time or the
giving of notice or both, constitute) an Event of Default as defined
in the Trust Indenture, except that the Aircraft may be operated
outside the United States prior to receipt of a flying time wire, if
necessary, all steps to obtain the issuance of which will have been,
on the Delivery Date, taken or caused to be taken by Lessee.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee,
and reasonably satisfactory as to scope and substance to the Loan
Participants and the Owner Participant, from Messrs. Cadwalader,
Wickersham & Taft, special counsel for Lessee, as to New York and
certain federal law matters, and Lessee's in-house or other counsel,
as to Minnesota and certain federal law matters, to the collective
effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and
perform its obligations under the Lessee Documents. Lessee is
an "air carrier" within the meaning of the Federal Aviation
Act holding a certificate issued pursuant to Section 401
thereof;
(2) the execution, delivery and performance of the
Lessee Documents by Lessee have been duly authorized by all
necessary corporate action on the part of Lessee, do not
require any approval of stockholders of Lessee or, to the
knowledge of such counsel, any approval or consent of any
trustee or holders of any indebtedness or obligations of
Lessee (or that any such approval or consent as is required
has been obtained), and neither the execution and delivery of
any thereof by Lessee nor the performance by Lessee of its
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel,
judgment or order applicable to or binding on Lessee or (B)
to the knowledge of such counsel, contravenes or results in
any breach of, or constitutes any default under, or results
in the creation of any Lien (other than Permitted Liens) upon
any property of Lessee under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement, or any other agreement or
instrument, corporate charter, by-law or permit issued by any
Minnesota or United States governmental authority to which
Lessee is a party or by which Lessee or its properties may be
bound or affected;
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<PAGE> 9
(3) neither the execution and delivery by Lessee of
the Lessee Documents nor the performance by Lessee of its
obligations thereunder requires the consent or approval of,
or the giving of notice to, or the registration with, or the
taking of any other action in respect of any Federal or state
governmental authority in the United States, except for (A)
the registration of the Aircraft (including the placement on
board of the owner's copy of the application for registration
of the Aircraft and, if necessary, a flying time wire),
recordations and other actions referred to in paragraph 5
below, (B) the maintenance of an airworthiness certificate
with respect to the Aircraft, (C) such other approvals as
might be required under then existing law in the event of
change of the citizenship of the Owner Trustee, the
reregistration or change in registration of the Aircraft or
the substitution of another party for the Owner Trustee and
(D) periodic or other reporting requirements under 14 CFR
Section 47.51 required after the commencement of the Term of
the Lease in connection with the foregoing;
(4) the Purchase Agreement (insofar as it relates to
the Aircraft) has been duly entered into and delivered by
Lessee, and each of the other Lessee Documents has been duly
entered into and delivered by Lessee and each of such other
Lessee Documents constitutes the legal, valid and binding
obligations of Lessee enforceable against Lessee in
accordance with its respective terms, except as limited by
(A) general principles of equity, (B) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate
for the practical realization of the benefits provided
thereby, but no opinion is expressed as to the amount or
priority of any recovery under any particular circumstances,
in particular, no opinion is expressed as to the effect on
such remedies of Section 1-201(37) of the Uniform Commercial
Code, as in effect in any jurisdiction, and (D) in the case
of indemnity provisions contained in such documents, as
limited by public policy considerations; and
(5) subject to the registration of the Aircraft with
the Federal Aviation Administration in the name of the Owner
Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made
a part thereof and (C) the Trust Indenture with the Trust
Agreement and the Trust Supplement attached thereto and made
a part thereof, with respect to such portion of the Aircraft
as is covered by the recording system established by the
Federal Aviation Administration pursuant to Section 503(a) of
the Federal Aviation Act by virtue of the same constituting
an "aircraft" or an "aircraft engine" as defined in the
Federal Aviation Act, no further filing or recording of any
document (including any financing statement with respect to
the Lease under Article 9 of the Uniform Commercial Code of
-9-
<PAGE> 10
Massachusetts or Minnesota), is necessary in any applicable
jurisdiction within the United States in order (x) to
establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee or any third parties or (y) to
create and perfect the Indenture Trustee's security interest
in such portion of the Aircraft as against the Owner Trustee
or any third parties. With respect to such portion of the
Aircraft, if any, as may not be deemed to constitute an
"aircraft" or "aircraft engine" as defined in the Federal
Aviation Act, except for the filing of financing statements
in the States of Massachusetts and Minnesota and such other
states as may be specified in such counsel's opinion, and for
the filings of periodic continuation statements with respect
to such filings as and when required, (x) under the federal
laws of the United States and the laws of the State of New
York no filing or recording of any document (including any
financing statement) is necessary under Article 9 of the
Uniform Commercial Code in order to establish the Owner
Trustee's title to such portion of the Aircraft as against
Lessee and any third parties in any applicable jurisdiction
within the United States, and (y) under the federal laws of
the United States and the laws of the State of New York no
filing or recording of any document (including any financing
statement) is necessary or advisable under Article 9 of the
Uniform Commercial Code in order to create or perfect the
Indenture Trustee's security interest in such portion of the
Aircraft as against the Owner Trustee and any third parties
in any applicable jurisdiction within the United States.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Loan
Participants or the Owner Participant may reasonably request. Such
opinion with respect to the matters specified in this paragraph (xi)
may rely exclusively (A) upon the opinion of special counsel in
Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section
4(a) with respect to the matters stated therein, and (B) upon the
opinion of Messrs. Csaplar & Bok with respect to the opinion in
paragraph (5) above insofar as it relates to the laws of the
Commonwealth of Massachusetts and (C) upon the representations and
warranties set forth herein, including, without limitation, in Section
8 hereof, with respect to matters of fact, and may state that no
opinion is expressed as to laws other than laws of the State of New
York (in the case of such special counsel's opinion), the State of
Minnesota (in the case of Lessee's in-house or other counsel's
opinion), the Commonwealth of Massachusetts (in the case of both of
such opinions, and exclusively in reliance as aforesaid) and the
Federal laws of the United States. Such counsel may assume that,
except for the filings and recordations contemplated herein, there are
no filings or recordations with respect to the Aircraft, the Lease,
the Lease Supplement covering the Aircraft, the Trust Agreement, the
Trust Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of the Commonwealth of
Massachusetts, or in such other filing offices in such other
jurisdictions as shall be identified in such counsel's opinion.
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<PAGE> 11
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to such
parties, from a counsel to the Manufacturer, with respect to the
Manufacturer Documents, the Manufacturer's FAA Bills of Sale, the
delivery of the Aircraft to Lessee and such other matters as such
parties may reasonably request.
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to such
parties, from Messrs. Csaplar & Bok, counsel for the Owner Trustee, to
the effect that:
(1) The First National Bank of Boston is a national
banking association duly organized and validly existing in
good standing under the laws of the United States of America,
is a "citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation Act and has full
power, authority and legal right to execute, deliver and
carry out in its capacity as Owner Trustee or in its
individual capacity, as the case may be, the terms of the
Owner Trustee Documents other than the Secured Certificates;
(2) each of the Owner Trustee Documents other than
the Secured Certificates has been duly authorized, executed
and delivered by The First National Bank of Boston, in its
individual capacity, as Owner Trustee, or both, as the case
may be, and each such agreement constitutes the legal, valid
and binding obligation of The First National Bank of Boston,
in its individual capacity, as Owner Trustee, or both, as the
case may be, enforceable against The First National Bank of
Boston, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with its respective
terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and, in the case of indemnity provisions contained
herein and therein, as limited by public policy
considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be
limited or rendered unenforceable by applicable laws, which
laws, however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the Secured Certificates have been duly
authorized and the Owner Trustee has duly issued, executed
and delivered the Secured Certificates being issued and
delivered on the Delivery Date pursuant to the terms and
provisions of this Agreement;
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<PAGE> 12
(4) the execution, delivery and performance by the
Owner Trustee and by The First National Bank of Boston in its
individual capacity, or both, as the case may be, of the
Owner Trustee Documents and the consummation of the
transactions by the Owner Trustee and by The First National
Bank of Boston in its individual capacity contemplated
thereby are not in violation of the Charter or By-Laws of The
First National Bank of Boston or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to such counsel to which The First National Bank of
Boston in its individual capacity or as the Owner Trustee is
a party or by which it is bound, or of any Federal or
Massachusetts law, governmental rule or regulation governing
the banking or trust powers of The First National Bank of
Boston in its individual capacity or as the Owner Trustee or
any judgment applicable to it and known to such counsel;
(5) neither the execution and delivery by the Owner
Trustee and, where appropriate, by The First National Bank of
Boston in its individual capacity, or both, as the case may
be, of the Owner Trustee's Documents nor the consummation of
any of the transactions by the Owner Trustee, by The First
National Bank of Boston in its individual capacity, or both,
as the case may be, contemplated thereby (A) requires the
consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action with
respect to, any governmental authority or agency under any
existing Federal or Massachusetts law governing the banking
or trust powers of The First National Bank of Boston in its
individual capacity or as the Owner Trustee (except for
filings pursuant to the Uniform Commercial Code, and except
for compliance with requirements of the Federal Aviation Act
as to which such counsel may express no opinion) or (B)
contravenes any Federal or Massachusetts law, rule or
regulation;
(6) assuming compliance with the applicable laws of
New York, the Trust Agreement, as supplemented by the Trust
Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(7) assuming compliance with the applicable laws of
New York, the Trust Indenture duly creates for the benefit of
the Indenture Trustee the security interests which the Trust
Indenture purports to create; and the Indenture Trustee is
entitled to the benefits and security afforded by the Trust
Indenture;
(8) the Secured Certificates are valid and binding
obligations of the Owner Trustee, enforceable as against the
Owner Trustee in accordance with their terms, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
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<PAGE> 13
(9) assuming that Massachusetts law were to govern
the perfection of the security interests in the Trust
Indenture Estate under the Trust Indenture, except for (i)
the Indenture Trustee's taking of possession of the original
counterparts of the Lease and the Lease Supplement covering
the Aircraft (insofar as the Lease and the Lease Supplement
covering the Aircraft may constitute chattel paper (as such
term is defined in the Uniform Commercial Code as in effect
in Massachusetts)) and all monies and securities (including
instruments) required to be deposited with the Indenture
Trustee, and (ii) the filing of the Uniform Commercial Code
financing statements with the Secretary of State of the
Commonwealth of Massachusetts and the Boston City Clerk with
respect to the security interests created in the Trust
Indenture Estate under the Trust Indenture, naming the Owner
Trustee as debtor and the Indenture Trustee as secured party,
which filing has been duly effected, no other filing or
recording or refiling or rerecording is necessary in the
Commonwealth of Massachusetts to create, perfect or maintain
the perfected status of such security interest (except for
the timely filing of continuation statements in respect of
such financing statements);
(10) based upon applicable Massachusetts statutory and
case law, the choice of New York law to govern the
Participation Agreement, the Lease, and each other Operative
Document to which the Owner Trustee or The First National
Bank of Boston in its individual capacity, or both, is a
party is, under the laws of the Commonwealth of
Massachusetts, a valid choice of law and will be honored by
the courts of the Commonwealth of Massachusetts;
(11) the Owner Trustee has received from Lessee such
title to the Aircraft as Lessee had immediately prior to the
conveyance to the Owner Trustee, subject to the rights of the
Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the
Trust Supplement; and
(12) no taxes, fees or other charges will be imposed
by Massachusetts or any political subdivision or taxing
authority thereof on or with respect to the execution,
delivery or performance of any of the Operative Documents,
except such taxes, fees or other charges which would have
been imposed had the Owner Trustee not been located in, and
not performed its duties under the Trust Agreement or the
Trust Indenture, in Massachusetts, and the trust created
pursuant to the Trust Agreement will not be subject to any
such taxes, fees or other charges on, based on or measured by
the net income of the Trust Estate (as distinguished from the
net income of the Owner Participant) solely by reason of the
Owner Trustee's location in Massachusetts (assuming for
purposes of this opinion that the Owner Participant, the
Owner Trustee and the Trust Estate would not be subject to
any such tax, fee or other charge if the Owner Trustee
performed its duties under the Trust Agreement and the Trust
Indenture from an office located outside Massachusetts).
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<PAGE> 14
Such opinion shall be to such further effect with respect to such
other matters incident to the matters covered thereby as the Loan
Participants, the Owner Participant, the Indenture Trustee or Lessee
may reasonably request. Such opinion may state that (A) no opinion is
expressed as to laws other than the laws of the Commonwealth of
Massachusetts and the Federal laws of the United States (other than
the Federal Aviation Act except as it relates to U.S. citizenship) and
(B) no opinion is expressed as to the priority of security interests
or as to title to any part of the Trust Estate. Such opinion may
assume (M) the due authentication of the Secured Certificates by the
Indenture Trustee, (N) that the Operative Documents are legal, valid
and binding under the laws of the State of New York and (O) the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant and of the other Operative Documents by each of the
parties thereto other than The First National Bank of Boston in its
individual capacity and as the Owner Trustee.
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to such parties, from Messrs. Sidley & Austin, special
counsel for the Owner Participant, and from the Owner Participant's
in-house or other counsel to the collective effect that:
(1) the Owner Participant is a duly incorporated and
validly existing corporation in good standing under the laws
of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents;
(2) the Owner Participant Documents have been duly
authorized, executed and delivered by the Owner Participant
and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitute legal, valid
and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their
respective terms;
(3) neither the execution and delivery by the Owner
Participant of the Owner Participant Documents nor the
consummation of any of the transactions by the Owner
Participant contemplated thereby (A) requires the consent or
approval of, the giving of notice to, or the registration
with, or the taking of any other action with respect to, any
governmental authority or agency of the United States or of
the State in which the principal office of the Owner
Participant is located (or any governmental subdivision
thereof) (except as shall have been duly obtained or given,
specifying the same), or (B) violates any law, governmental
rule or regulation of the United States or the State in which
the principal office of the Owner Participant is located (or
any governmental subdivision thereof);
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<PAGE> 15
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement and the Trust Agreement), and the due
authentication of the Secured Certificates by the Indenture
Trustee, the Trust Agreement, as supplemented by the Trust
Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create, and the
Owner Trustee Documents constitute legal, valid and binding
obligations of the Owner Trustee, enforceable against the
Owner Trustee in accordance with their respective terms; and
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee as aforesaid, the Trust
Indenture duly creates for the benefit of the Indenture
Trustee the security interests which the Trust Indenture
purports to create and the Indenture Trustee is entitled to
the benefits and security afforded by the Trust Indenture;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's obligations in
connection with this Agreement as the Loan Participants, the Indenture
Trustee, the Owner Trustee or Lessee may reasonably request. Such
opinions may rely (A) in the case of the opinion of Messrs. Sidley &
Austin, upon the opinion of in-house or other counsel for the Owner
Participant with respect to the matters stated therein, provided such
opinion of Messrs. Sidley & Austin states that such counsel believe
that they, the Loan Participants, the Indenture Trustee, the Owner
Trustee and Lessee are justified in relying upon such opinion of such
other counsel, and (B) upon the representations and warranties set
forth herein, including, without limitation, in Section 8 hereof, as
to matters of fact. Such opinions may state that (M) no opinion is
expressed as to laws other than the laws of the States of New York and
Delaware, and the Federal laws of the United States, (N) no opinion is
expressed as to the priority of security interests or as to title to
any part of the Trust Estate, (O) the enforceability of the Owner
Participant Documents and the Owner Trustee Documents against the
Owner Participant and the Owner Trustee, respectively, (i) may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and (ii) may be subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), (P) in the case of indemnity
provisions contained in the Owner Participant Documents and the Owner
Trustee Documents, as limited by public policy considerations and (Q)
certain rights, remedies and waivers contained in the Owner
Participant Documents and the Owner Trustee Documents may be limited
or rendered unenforceable by applicable laws and judicial decisions
governing such provisions, which laws and decisions, however, do not
in the opinion of such counsel make the remedies (taken as a whole)
provided in such documents inadequate for the practical realization of
the benefits provided thereby, but no opinion is expressed as to the
amount or priority of any recovery under any particular circumstances.
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<PAGE> 16
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to such
parties, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the
Trust Supplement attached thereto and the Trust Indenture,
with the Trust Agreement and the Trust Supplement attached
thereto are in due form for recording by and have been duly
filed for recordation with the Federal Aviation
Administration in accordance with the provisions of the
Federal Aviation Act;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of
all Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Trust Indenture as supplemented by the Trust
Supplement creates a duly and validly perfected first
priority mortgage in the Aircraft and a duly perfected
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease as supplemented by the
Lease Supplement (insofar as such assignment affects an
interest covered by the recording system established by the
Federal Aviation Administration pursuant to Section 503(a) of
the Federal Aviation Act), subject only to the Lease and to
Liens permitted by the Lease and the Trust Indenture, it
being understood that no opinion need be expressed as to the
validity or enforceability of such security interest or
assignment under local law or as against third parties in
respect of the Aircraft when the same is outside the United
States;
(5) none of the Trust Indenture, the Trust Agreement, the
Trust Supplement, the Lease or the Lease Supplement is
required to be filed or recorded in any other place within the
United States in order to perfect the mortgage of the Aircraft
or the assignment of the Lease as supplemented by the Lease
Supplement (insofar as such assignment affects an interest
covered by the recording system established by the Federal
Aviation Administration pursuant to
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<PAGE> 17
Section 503(a) of the Federal Aviation Act), under the
applicable laws of any jurisdiction within the United States;
and
(6) no authorization, approval, consent, license or
order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States, and may assume that the
Aircraft is not registered in any other country. Said opinion may also
contain a statement to the effect that such opinion is limited to the
records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the
filing of notice thereof with the Federal Aviation Administration,
such as Federal tax liens and liens arising under Section 1368(a) of
Title 29 of the United States Code and possessory artisans' liens, and
is subject to the accuracy of Federal Aviation Administration
personnel in the filing, indexing and recording of instruments filed
with the Federal Aviation Administration and in the search for
encumbrance cross-reference index cards for the Engines. Said opinion
may also rely on the opinion obtained by such counsel from the
Aeronautical Center Counsel of the Federal Aviation Administration,
satisfactory in form and scope to such counsel, and on past practice
of the Federal Aviation Administration which is consistent with such
Aeronautical Center Counsel opinion.
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to such parties, from Messrs.
Day, Berry & Howard, special counsel for the Indenture Trustee, to the
effect that:
(1) The Connecticut Bank and Trust Company, National
Association, is a national banking association, duly
organized and validly existing in good standing under the
laws of the United States of America and has the corporate
power and authority to enter into and perform its obligations
under the Indenture Trustee Documents and, in its capacity as
Indenture Trustee, to authenticate the Secured Certificates
to be delivered on the Delivery Date;
(2) the Indenture Trustee Documents, and the
authentication of the Secured Certificates to be delivered on
the Delivery Date have been duly authorized by all necessary
corporate action on the part of The Connecticut Bank and
Trust Company, National Association, and neither the
execution and delivery thereof nor the performance by The
Connecticut Bank and Trust Company, National Association, in
its individual capacity or as Indenture
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<PAGE> 18
Trustee, as the case may be, of any of the terms and
provisions thereof will violate any Federal or Connecticut law
or regulation relating to the banking or trust powers of The
Connecticut Bank and Trust Company, National Association, or
contravene or result in any breach of, or constitute any
default under, the Charter or By-Laws of The Connecticut Bank
and Trust Company, National Association;
(3) Neither the execution and delivery by The
Connecticut Bank and Trust Company, National Association, in
its individual capacity or as Indenture Trustee of the
Indenture Trustee Documents, or the certificates of
authentication on the Secured Certificates to be delivered on
the Delivery Date, nor the performance by The Connecticut
Bank and Trust Company, National Association, in its
individual capacity or as Indenture Trustee, as the case may
be, of any of the transactions contemplated thereby requires
or required the consent or approval of, the giving of notice
to, the registration with, the recording or filing of any
document with, or the taking of any other action in respect
of, any Federal or Connecticut governmental authority or
agency governing the banking or trust powers of The
Connecticut Bank and Trust Company, National Association; and
(4) Each of the Indenture Trustee Documents and the
certificate of authentication on the Secured Certificates
delivered on the Delivery Date has been duly executed and
delivered by The Connecticut Bank and Trust Company, National
Association, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each such
agreement is the legal, valid and binding obligation of each
other party thereto, is the legal, valid and binding
obligation of The Connecticut Bank and Trust Company,
National Association, in its individual capacity or as
Indenture Trustee, as the case may be, enforceable against
The Connecticut Bank and Trust Company, National Association,
in its individual capacity or as Indenture Trustee in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Loan Participants, the Owner
Participant, the Owner Trustee and Lessee may reasonably request. Such
opinion may state that no opinion is expressed as to laws other than
the laws of the State of Connecticut and the Federal laws of the
United States.
(xvii) The Loan Participants shall have received from Messrs.
White & Case, special counsel for the Loan Participants, a favorable
opinion satisfactory in substance and form to the Loan Participants,
as to such matters incident to the transactions contemplated hereby as
such parties may reasonably request.
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<PAGE> 19
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President or any Vice
President of Lessee, dated the Delivery Date, addressed to the Loan
Participants and the Owner Participant and certifying as to the
matters stated in paragraphs (viii), (x) (A) (insofar as it relates to
Lessee) and (xxii) of this Section 4(a). Copies of the orders,
permits, waivers, authorizations, exemptions and approvals referred to
in Section 4(a)(viii) shall have been furnished to the Loan
Participants and the Owner Participant.
(xix) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b) of this Agreement, be deemed to
have reaffirmed the representations and warranties made by it in
Section 8 of this Agreement.
(xx) The Owner Participant shall have received an opinion, in
form and substance satisfactory to the Owner Participant, from AVMARK,
Inc., independent aircraft appraisers, or such other recognized
aircraft appraiser agreed upon by the Owner Participant and Lessee, to
the effect that (A) the Aircraft will have, at the end of the Basic
Term, (i) at least 20% of its original economic life remaining and
(ii) a fair market value of at least 20% of Lessor's Cost (without
taking into account any increase or decrease for inflation or
deflation during the Interim Term and Basic Term or the terms of any
purchase option provided in the Lease) and taking into account any
costs to the Owner Trustee or the Owner Participant of removal and
delivery of the Aircraft to the Owner Trustee at the end of the Basic
Term; (B) the fair market value of the Aircraft on the Delivery Date
is equal to Lessor's Cost; (C) it will be commercially feasible for a
third party to utilize the Aircraft at the end of the Basic Term; and
(D) a reasonable current estimate of the fair market value of the
Aircraft at February 23, 2011 taking a reasonable estimate of
inflation and deflation into account is not more than 56.0% of
Lessor's Cost.
(xxi) The Loan Participants and Owner Participant shall have
received an independent insurance broker's report, in form and
substance satisfactory to the Loan Participants and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event of
Loss (or event which with the passage of time would become an Event of
Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $127,500,000.
(xxiv) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
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<PAGE> 20
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from Messrs.
Sidley & Austin, special counsel to the Owner Participant, a favorable
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its special
counsel, there shall have been, since the date hereof, no amendment,
modification, addition, or change in or to the provisions of the
Internal Revenue Code of 1986, as amended through the date hereof, and
the regulations promulgated under the Code (including temporary
regulations), Internal Revenue Service Revenue Procedures or Revenue
Rulings, or other administrative interpretations, applicable judicial
precedents or Executive Orders of the President of the United States,
all as in effect on the date hereof, the effect of which might
preclude the Owner Participant from obtaining any of the income tax
benefits and consequences assumed to be available to the Owner
Participant as set forth in Section 1 of the Tax Indemnity Agreement.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease Supplement covering the Aircraft
and the Trust Supplement covering the Aircraft pursuant to the Federal Aviation
Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee and Lessee an opinion as to the due and valid
registration of the Aircraft in the name of the Owner Trustee, the due
recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement,
such Trust Supplement, the Lease and the Trust Agreement and the lack of filing
of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It is
agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner
Trustee, (B) to accept delivery of the Aircraft under the Lease and (C) to
enter into its other Operative Documents, are all subject to the fulfillment to
the satisfaction of Lessee prior to or on the Delivery Date of the following
conditions precedent:
(i) All appropriate action required to have been taken on or
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or
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<PAGE> 21
political agency, subdivision or instrumentality of the United States,
and all orders, permits, waivers, exemptions, authorizations and
approvals of such entities required to be in effect on the Delivery
Date in connection with the transactions contemplated by this Agreement
shall have been issued, and all such orders, permits, waivers,
exemptions, authorizations and approvals shall be in full force and
effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii)
and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have
been duly authorized, executed and delivered by the respective party
or parties thereto (other than Lessee) in the manner specified in
Section 4(a)(v), shall each be satisfactory in form and substance to
Lessee, shall be in full force and effect on the Delivery Date, and an
executed counterpart of each thereof (other than the Secured
Certificates) shall have been delivered to Lessee or its special
counsel.
(iv) Lessee shall have received a copy of the resolutions or
other instruments satisfactory to Lessee of the Board of Directors of
the Owner Participant, or other evidence of authority satisfactory to
Lessee, certified as of the Delivery Date by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing or
evidencing authority for the execution, delivery and performance by
the Owner Participant of all of the Operative Documents to which the
Owner Participant is a party, and a copy of the general authorizing
resolutions of the boards of directors of the Indenture Trustee and
the Owner Trustee, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Indenture Trustee and the Owner
Trustee, respectively, which authorize the execution, delivery and
performance by the Indenture Trustee of the Indenture Trustee
Documents and the Secured Certificates and by the Owner Trustee of the
Owner Trustee Documents, together with such other documents and
evidence with respect to the Indenture Trustee, the Owner Participant
and the Owner Trustee as Lessee or its special counsel may reasonably
request in order to establish the consummation of the transactions
contemplated by this Agreement, the taking of all corporate
proceedings in connection therewith and compliance with the conditions
herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and Lessee shall have received a certificate signed by the
Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively, addressed to Lessee and
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<PAGE> 22
certifying as to the foregoing matters with respect to the Indenture
Trustee, the Owner Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance satisfactory to Lessee and Lessee's
special counsel.
(vii) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(viii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations by appropriate regulatory
authorities which would make it a violation of law or regulations for
Lessee to enter into any transaction contemplated by the Operative
Documents.
(ix) In the opinion of Lessee and its special counsel, there
shall have been, since the date hereof, no amendment, modification,
addition or change in or to the Internal Revenue Code of 1986, as
amended through the date hereof, the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service
Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have received an opinion from a recognized
independent aircraft appraiser selected by Lessee to the effect (A)
that the Aircraft will have, at the end of the Basic Term, at least
25% of its economic life remaining, (B) the fair market value of the
Aircraft on the Delivery Date is equal to Lessor's Cost, (C) the fair
market value of the Aircraft on the 20th anniversary of the
Commencement Date (taking into account a reasonable estimate for
inflation during the Interim Term and the Basic Term but without
taking into account any purchase or renewal options provided in the
Lease) is equal to or less than 56.0% of Lessor's Cost and to such
other effect as Lessee shall reasonably require.
(xi) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. Confidentiality of Appraisal and Participation
Agreement. The Owner Trustee, the Participants, the Certificate Holders and the
Indenture Trustee shall keep the appraisal referred to in Section 4(a)(xx)
hereof and this Agreement confidential and shall not disclose, or cause to be
disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner Trustee's, a Loan Participant's, a Certificate Holder's,
the
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<PAGE> 23
Owner Participant's or the Indenture Trustee's interest who agree to hold such
information confidential, (B) to the Owner Trustee's, a Loan Participant's, a
Certificate Holder's, the Owner Participant's or the Indenture Trustee's
counsel or special counsel, independent insurance brokers or other agents who
agree to hold such information confidential, (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation or to any regulatory authorities having jurisdiction over them or
(D) such other Persons as reasonably deemed necessary by Owner Trustee, the
Participants, the Certificate Holders or the Indenture Trustee in order to
protect the interests of any of such parties or for the purposes of enforcing
such documents by the Owner Trustee or the Indenture Trustee; provided,
however, that any and all disclosures of all or any part of the appraisal
referred to in Section 4(a)(xx) hereof and this Agreement which are permitted
by (C) or (D) above shall be made only to the extent necessary to meet the
specific requirements or needs of the Persons to whom such disclosures are
hereby permitted; and provided further that this Section 5 shall not apply to
the Owner Participant with respect to the appraisal referred to in Section
4(a)(xx) hereof.
SECTION 6. Extent of Interest of Certificate Holders. No
Certificate Holder (as defined in the Trust Indenture) shall have any further
interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the principal of and
interest on all Secured Certificates held by such holder and all other sums
payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan
Participants and, by its acceptance of a Secured Certificate, each Certificate
Holder agrees that it will look solely to the income and proceeds from the
Trust Indenture Estate to the extent available for distribution to such
Certificate Holder as provided in Article III of the Trust Indenture and that
neither the Owner Participant nor the Owner Trustee shall be personally liable
to the Loan Participants or any Certificate Holder for any amounts payable
under the Secured Certificates, the Trust Indenture or hereunder, except as
expressly provided in the Operative Documents.
(a) In General. Lessee represents, warrants and covenants to each of the
Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner
Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is an "air
carrier" within the meaning of the Federal Aviation Act operating
under a certificate of public convenience and necessity issued by the
Civil Aeronautics Board; has its chief executive office (as such term
is used in Article 9 of the Uniform Commercial Code) located at Eagan,
Minnesota; and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee's Documents;
(ii) the execution, delivery and performance by Lessee of the
Lessee Documents will, on the Delivery Date, have been duly authorized
by all necessary corporate action on the part of Lessee, do not
require any stockholder approval, or
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<PAGE> 24
approval or consent of any trustee or holders of any indebtedness or
obligations of Lessee except such as have been duly obtained or by the
Delivery Date will have been duly obtained, and none of such agreements
contravenes any law, judgment, government rule, regulation or order
binding on Lessee or the certificate of incorporation or by-laws of
Lessee or contravenes the provisions of, or constitutes a default
under, or results in the creation of any Lien (other than Permitted
Liens) upon the property of Lessee under, any indenture, mortgage,
contract or other agreement to which Lessee is a party or by which it
or its properties may be bound or affected;
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in
respect of any Federal, State or foreign government authority or
agency, except for (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee, which
orders, permits, waivers, exemptions, authorizations and approvals
have been duly obtained and are, or will on the Delivery Date be in
full force and effect (other than a flying time wire, all steps to
obtain the issuance of which will have been, on the Delivery Date,
taken or caused to be taken by Lessee) and (B) any normal periodic and
other reporting requirements under the applicable rules and
regulations of the Federal Aviation Administration to the extent
required to be given or obtained only after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
special counsel to Lessee in Section 4(a)(xi));
(v) except as may have been disclosed prior to the date of
execution and delivery hereof to the Loan Participants and the Owner
Participant in writing by a letter delivered to the Loan Participants
and the Owner Participant prior to the execution and delivery hereof
and making reference to this Agreement, there are no pending or
threatened actions or proceedings before any court or administrative
agency which might materially adversely affect the financial condition
or the ability of Lessee to perform its obligations under the
Operative Documents;
(vi) except for (A) the registration of the Aircraft pursuant
to the Federal Aviation Act, (B) the filing for recording pursuant to
said Act of the Trust Agreement, the Lease with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and made a part thereof, the Trust Indenture with the
Trust Agreement and the Trust Supplement attached thereto and made a
part thereof and the FAA Bill of Sale, (C) the filing of financing
statements (and continuation statements at periodic intervals) with
respect to the security and other interests created by such documents
under the Uniform Commercial Code of Minnesota and Massachusetts and
such other states as may be specified in the opinion furnished
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<PAGE> 25
pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession
by the Indenture Trustee of the original counterpart of each of the
Lease and the Lease Supplement covering the 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 Owner Trustee's title to and the
Indenture Trustee's security interest in the Aircraft as against
Lessee and any third parties in any applicable jurisdictions in the
United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving
of notice or the passage of time or both would constitute an Event of
Default under the Lease) which is presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent by
the sale of the Aircraft; after the sale of the Aircraft the capital
of Lessee will not be unreasonably small for the conduct of the
business in which Lessee is engaged or is about to engage; Lessee has
no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated statement of financial position of NWA
Inc. ("NWA") and its consolidated subsidiaries as of December 31, 1989
and the related consolidated statements of earnings, cash flow and
changes in financial position of NWA for the year then ended, which
have been audited by independent certified public accountants, and (b)
the consolidated statement of financial position of Wings Holdings,
Inc. ("Holdings") and its consolidated subsidiaries as of June 30,
1990 and the related consolidated statements of earnings, cash flow
and changes in financial position for the six-month period then ended,
copies of which have been furnished to the Owner Participant and each
Loan Participant, fairly present the financial condition of NWA and of
Lessee (or in the case of the June 30, 1990 statements, Holdings, NWA
and Lessee) as at such date and the results of operations and cash
flow of NWA and of Lessee (or in the case of the June 30, 1990
statements, Holdings, NWA and Lessee) for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied and since June 30, 1990 there has been no
material adverse change to the financial condition, earnings, cash
flow or results of operation of Holdings, NWA or Lessee;
(x) on the Delivery Date, the Owner Trustee will receive
good and marketable title to the Aircraft free and clear of all Liens,
except Liens permitted by clause (v) of Section 6 of the Lease, the
rights of Lessee under the Lease and the Lease Supplement covering the
Aircraft, the Lien of the Trust Indenture and the beneficial interest
of the Owner Participant in the Aircraft;
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<PAGE> 26
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation G of the Board of Governors of the
Federal Reserve System;
(xii) Lessee is not in default in the performance of any term
or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due and
for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture
or loss of the Aircraft; and
(xiv) Lessee is not in material breach of any agreement to
which it is a party, which breach would have a material adverse effect
on the financial condition of Lessee or materially adversely affect
the ability of Lessee to perform its obligations under the Operative
Documents.
(b) General Tax Indemnity [Intentionally Omitted].
(c) General Indemnity. [Reserved]
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<PAGE> 27
(d) Income Tax. For purposes of this Section 7, the term
Income Tax means any Tax based on or measured by income or receipts (other than
sales or use Taxes) (including, without limitation, capital gains taxes,
minimum taxes, income taxes collected by withholding and taxes on tax
preference items), and Taxes which are capital, doing business, excess profits
or net worth taxes and interest, additions to tax, penalties, or other charges
in respect thereof.
SECTION 8. Representations, Warranties and Covenants. (a) The
Owner Participant represents that it is acquiring its interest in the Trust
Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Secured Certificates
or any similar securities for sale to, or solicited any offer to acquire any of
the same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended.
(b) Lessee represents and warrants that neither Lessee nor
anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate for sale to, or solicited any offer to acquire any
of the same from, anyone other than the Owner Participant, not more than 10
institutions believed capable of evaluating and bearing the risks of investment
in the transaction contemplated hereby and not more than 35 banking and
non-bank financial institutions and finance corporations that are not
"accredited investors" within the meaning of Regulation D under the Securities
Act of 1933, as amended. Lessee represents that neither Lessee nor anyone
acting on behalf of Lessee has directly or indirectly offered any Secured
Certificate or Secured Certificates or any similar security for sale to, or
solicited any offer to acquire any of the same from, anyone other than the Loan
Participants and not more than 10 institutions believed capable of evaluating
and bearing the risks of investment in the transaction contemplated hereby.
(c) Each of the Owner Participant and The First National Bank
of Boston, in its individual capacity, represents and warrants to the other
parties to this Agreement that it is, and on the Delivery Date will be, a
"citizen of the United States" as defined in Section 101(16) of the Federal
Aviation Act. The Owner Participant agrees, solely for the benefit of Lessee
and the Loan Participants, that if (i) it shall cease to be, or believes itself
likely to cease to be, a "citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation
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<PAGE> 28
Act and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner Participant shall (at its
own expense and without any reimbursement or indemnification from Lessee)
promptly effect voting trust or other similar arrangements or take any other
action as may be necessary to prevent any deregistration or maintain the United
States registration of the Aircraft. It is agreed that: (A) the Owner
Participant shall be liable to pay on request to each of the other parties
hereto and to each holder of a Secured Certificate for any damages suffered by
any such other party or holder as the result of the representation and warranty
of the Owner Participant in the first sentence of this Section 8(c) proving to
be untrue as of the Delivery Date; and (B) the Owner Participant shall be liable
to pay on request to Lessee, any Sublessee and the Loan Participants for any
damages which may be incurred by Lessee, any Sublessee or the Loan Participants
as a result of the Owner Participant's failure to comply with its obligations
pursuant to the second sentence of this Section 8(c). Each party hereto agrees,
upon the request and at the sole expense of the Owner Participant, to cooperate
with the Owner Participant in complying with its obligations under the
provisions of the second sentence of this Section 8(c). The First National Bank
of Boston, in its individual capacity, agrees that if at any time a responsible
officer or responsible employee of the Corporate Trust Department of The First
National Bank of Boston shall obtain actual knowledge that The First National
Bank of Boston has ceased to be a "citizen of the United States" within the
meaning of Section 101(16) of the Federal Aviation Act, it will promptly resign
as Owner Trustee (if and so long as such citizenship is necessary under the
Federal Aviation Act as in effect at such time or, if it is not necessary, if
and so long as the Owner Trustee's citizenship would have any material adverse
effect on the Loan Participants, Lessee or the Owner Participant), effective
upon the appointment of a successor Owner Trustee in accordance with Section
9.01 of the Trust Agreement. If the Owner Participant or The First National Bank
of Boston, in its individual capacity, does not comply with the requirements of
this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants
hereby agree that an Event of Default (or an event which would constitute an
Event of Default but for lapse of time or the giving of notice or both) shall
not have occurred and be continuing under the Lease due to non-compliance by
Lessee with the registration requirements in the Lease.
(d) The First National Bank of Boston in its individual
capacity represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Documents to which it is a
party are kept is Boston, Massachusetts. The First National Bank of Boston in
its individual capacity agrees that it will not change the location of such
office to a location outside of Boston, Massachusetts without prior written
notice to all parties. The First National Bank of Boston in its individual
capacity further represents and warrants that (A) on the Delivery Date the
Owner Trustee shall have received whatever title to the Aircraft as was
conveyed to it by Lessee, and (B) the Trust Agreement, and, assuming due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant, the other Owner Trustee Documents, when executed and delivered,
shall have been duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such instruments on behalf of the Owner
Trustee. The First National Bank of Boston in its
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individual capacity represents that it has not offered any interest in the Trust
Estate or any Secured Certificates or any similar securities for sale to, or
solicited any offer to acquire the same from, anyone, and that no responsible
officer or responsible employee of the Corporate Trust Department of The First
National Bank of Boston has knowledge of any such offer or solicitation except
as described in Section 8(b).
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
for sale to, or solicited any offer to buy any Secured Certificate from, any
person or entity.
(f) The Owner Participant and each of the Loan Participants
agree that, if, at any time after the Depreciation Period, (i) Lessee has
requested their consent to the registration of the Aircraft, at Lessee's
expense, in a country other than the United States in the name of the Owner
Trustee (or, if appropriate in the name of Lessee or a Sublessee as a "lessee"
or a "sublessee") and (ii) they have not determined, acting reasonably, that
such other country would not provide substantially equivalent protection for
the rights of owner participants, lessors or lenders in similar transactions as
provided under United States law, the Owner Participant and the Loan
Participants will not unreasonably withhold their consent to such change of
registration (it being agreed that if such country is not the United Kingdom, a
member of the European Economic Community or a party to the Convention on the
International Recognition of Rights in Aircraft, Geneva, 1948, Lessee's
inability to deliver an opinion (reasonably satisfactory in form and substance
to the Owner Participant and the Loan Participants) of counsel acceptable to
the Owner Participant and the Loan Participants in such proposed country of
registry to the effect that the courts of such country would give effect to the
title, registry and priority of the lien under the Trust Indenture
substantially to the same extent as if such country were a party to said
Convention shall constitute reasonable grounds for a determination that such
country would not provide such protection), and if said consent is given, the
Owner Participant and the Loan Participants will instruct, respectively, the
Owner Trustee and the Indenture Trustee to take whatever action is necessary or
appropriate to effectuate such change of registration; provided, however, that
prior to any such change in the country of registry of the Aircraft, the Owner
Participant and the Loan Participants shall have received:
(i) assurances reasonably satisfactory to them (A) to the
effect that the insurance provisions of the Lease have been complied
with after giving effect to such change of registry, (B) of the
payment by Lessee of any expenses of the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Loan Participants in connection
with such change of registry, (C) to the effect that the original
indemnities in favor of the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Loan Participants, under this Agreement, the
Trust Indenture and the Tax Indemnity Agreement afford each such party
substantially the same protection as provided prior to such change of
registry, (D) as to the continued status of the Trust Indenture as a
first priority lien on the Trust Indenture Estate, (E) that such
change will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Indenture Trustee, the
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Owner Trustee (or any successor, assign or affiliate thereof) or the
Trust Estate pursuant to Section 7(b) hereof and (F) that such new
country of registry imposes aircraft maintenance standards not
materially different from those of the FAA; and
(ii) a favorable opinion of counsel reasonably satisfactory
to the Owner Participant and the Loan Participants in the new
jurisdiction of registry (A) that the terms (including, without
limitation, the governing-law, service-of-process and
jurisdictional-submission provisions thereof) of the Lease and the
Trust Indenture are legal, valid, binding and enforceable in such
jurisdiction, (B) that it is not necessary for the Owner Participant,
the Owner Trustee, the Indenture Trustee, or the Loan Participants to
register or qualify to do business in such jurisdiction, (C) that
there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction (it being
understood that, in the event such latter opinion cannot be given in a
form satisfactory to the Owner Participant, such opinion shall be
waived if insurance reasonably satisfactory to the Owner Participant
is available to cover such risk), and (D) to such further effect with
respect to such other matters as the Owner Participant or the Loan
Participants may reasonably request.
(g) The Owner Participant represents and warrants to Lessee,
the Indenture Trustee, the Loan Participants and the Owner Trustee, in its
capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of organization, and has the corporate power and
authority to carry on its business as now conducted, to own or hold
under lease its properties and to enter into and perform its
obligations under the Owner Participant Documents;
(ii) the Owner Participant Documents have been duly
authorized by all necessary corporate action on the part of the Owner
Participant, do not require any approval not already obtained of
stockholders of the Owner Participant or any approval or consent not
already obtained of any trustee or holders of any indebtedness or
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and neither the execution and
delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by the Owner Participant with any
of the terms and provisions thereof will contravene any United States
Federal or state law, judgment, governmental rule, regulation or order
applicable to or binding on the Owner Participant (it being understood
that no representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales
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<PAGE> 31
contract, bank loan or credit agreement, corporate charter, by-law or
other agreement or instrument to which the Owner Participant is a party
or by which it or its properties may be bound or affected;
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with the terms
thereof (subject to the qualifications set forth in clause (2) of the
opinion of special counsel to the Owner Participant in Section
4(a)(xiv));
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the ability of the Owner Participant to perform its obligations under
the Owner Participant Documents; and
(v) upon the execution and delivery of the Trust Indenture,
the lien of the Trust Indenture on the collateral purported to be
created thereby will be free and clear of Lessor Liens attributable to
the Owner Participant.
(h) Each of The First National Bank of Boston in its
individual capacity and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each of The
First National Bank of Boston in its individual capacity and the Owner
Participant agrees that it will promptly, at its own expense, take such action
as may be necessary duly to discharge such Lessor Lien attributable to it. Each
of The First National Bank of Boston in its individual capacity and the Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from such Lessor Liens
attributable to it. The Owner Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from any Taxes or Expenses (as such terms are defined in Section 7
hereof) imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof but excluding Taxes
referred to in Section 7(b)(ii)(3) hereof.
(i) The Connecticut Bank and Trust Company, National
Association, in its individual capacity, covenants and agrees that it shall not
cause or permit to exist any Lien, arising as a result of (A) claims against
the Indenture Trustee not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust Indenture, (B) acts of
the Indenture Trustee not permitted by, or failure of the Indenture Trustee to
take any action required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitute gross negligence or willful
misconduct, (C) claims against the Indenture Trustee relating to Taxes or
Expenses (as such terms are defined in Section 7 hereof) which are excluded
from the indemnification provided by Section 7 pursuant to said Section 7, or
(D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the
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Operative Documents other than a transfer of the Aircraft pursuant to Section 9,
10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing
pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section
15 of the Lease while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due pursuant to the Trust
Indenture.
(j) Each Loan Participant represents, warrants, covenants and
agrees as to itself: (i) that this Agreement has been duly authorized, executed
and delivered by such Loan Participant and this Agreement constitutes a legal,
valid and binding obligation of such Loan Participant enforceable against such
Loan Participant in accordance with its terms except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (ii) that such Loan Participant is duly
organized and validly existing under the laws of a State in the United States
except that Algemene Bank Nederland N.V. represents and warrants that it is a
duly organized and validly existing banking institution under the laws of the
Netherlands acting through its Cayman Islands branch; and (iii) that such Loan
Participant has full power, authority and legal right to execute, deliver and
carry out the terms of this Agreement.
(k) Each Loan Participant represents and warrants that the
Secured Certificate to be issued to it pursuant to the Trust Indenture is being
acquired by it for investment and not with a view to resale or distribution (it
being understood that such Loan Participant may pledge or assign as security
its interest in each Secured Certificate issued to it), provided, that the
disposition of its property shall at all times be and remain within its
control, except that the Loan Participants may sell, transfer or otherwise
dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to the
Trust Agreement shall be strictly limited to the Trust Estate (excluding the
Excluded Payments) and (ii) make (and hereby agree to make), with respect to
the Trust Indenture Estate, the election provided for in Section 1111(b)(2) of
Title 11 of the United States Code. It is hereby agreed by the Indenture
Trustee, and by the acceptance of the Secured Certificates the Certificate
Holders hereby agree, that if (i) all or any part of the Trust Estate becomes
the property of, or the Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision or any comparable proceeding, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Secured Certificates or to the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Owner Participant under
this Participation
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<PAGE> 33
Agreement), to make payment on account of any amount payable as principal or
interest on the Secured Certificates and (iii) any holder(s) of the Secured
Certificates or the Indenture Trustee actually receives any Excess Payment (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of (ii) above, then
such holder(s) or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee or the Owner Participant (whichever shall have made
such payment) such Excess Payment. It is hereby further agreed by the Indenture
Trustee, and by acceptance of the Secured Certificates the Certificate Holders
hereby further agree, that if at any time any of such parties shall have a right
to any Excess Payment, such right shall be expressly subject to and subordinate
to the rights of the Owner Trustee and the Owner Participant to recover the
Owner Participant's interest in the Trust Estate. For purposes of this Section
8(l), "Excess Payment" means the amount by which such payment exceeds the amount
which would have been received by the holder(s) of the Secured Certificates or
the Indenture Trustee if the Owner Trustee (in its individual capacity) or the
Owner Participant had not become subject to the recourse liability referred to
in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder
of a Secured Certificate or the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of the Owner Trustee
(in its individual capacity) or the Owner Participant under this Agreement or
the Trust Indenture (and any exhibits or annexes thereto).
(m) The Indenture Trustee represents, in its individual
capacity, to Lessee, the Owner Trustee and each Participant as follows:
(i) it is a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act, will notify promptly all
parties to this Agreement if in its reasonable opinion its status as a
"citizen of the United States" is likely to change and that it will
resign as Indenture Trustee as provided in Section 8.02 of the Trust
Indenture if it should cease to be a "citizen of the United States";
(ii) it is a national banking association duly organized and
validly existing in good standing under the laws of the jurisdiction
of its incorporation and has the corporate power and authority to
enter into and perform its obligations under the Trust Indenture and
this Agreement and to authenticate the Secured Certificates to be
delivered on the Delivery Date;
(iii) the Indenture Trustee Documents, and the authentication
of the Secured Certificates to be delivered on the Delivery Date have
been duly authorized by all necessary corporate action on its part,
and neither the execution and delivery thereof nor its performance of
any of the terms and provisions thereof will violate any Federal or
Connecticut law or regulation relating to its banking or trust powers
or contravene or result in any breach of, or constitute any default
under its Charter or By-Laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by
which it or its properties may be bound or affected; and
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<PAGE> 34
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by The Connecticut Bank and Trust Company,
National Association, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each such agreement is
the legal, valid and binding obligation of each other party thereto,
is the legal, valid and binding obligation of The Connecticut Bank and
Trust Company, National Association, in its individual capacity or as
Indenture Trustee, as the case may be, enforceable against The
Connecticut Bank and Trust Company, National Association, in its
individual capacity or as Indenture Trustee, as the case may be, in
accordance with its terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors'
rights.
(n) The Owner Participant will not, directly or indirectly,
sell, assign, convey or otherwise transfer any of its right, title or interest
in and to this Agreement, the Trust Estate or the Trust Agreement or any
proceeds therefrom to any person or entity, unless (i) the proposed transferee
is a "Transferee" (as defined below) and (ii) Lessee shall have (1) received an
opinion (in form and substance reasonably satisfactory to Lessee) of counsel to
the Owner Participant (who shall be reasonably satisfactory to Lessee) to the
effect that such transfer will not result in any risk of loss of the benefits
(including, without limitation, recapture of investment tax credit) to, or any
increase in the tax liability of, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any loss of tax benefits to, and increase in
the tax liability of, Lessee. A "Transferee" shall mean either (A) a bank or
other financial institution with a combined capital, surplus and undivided
profits of at least $60,000,000 or a corporation whose Net Worth is at least
$60,000,000 determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution or
corporation, provided that such bank, financial institution or corporation
furnishes to the Owner Trustee, the Loan Participants, the Indenture Trustee
and Lessee a guaranty with respect to the Owner Participant's obligations, in
the case of the Owner Trustee, under the Trust Agreement and, in the case of
the Loan Participants, the Indenture Trustee and Lessee, the Owner
Participant's obligations hereunder, including but not limited to, under
Section 8(c) and Section 8(h) hereof, in form and substance reasonably
satisfactory to Lessee, the Owner Trustee and the Majority in Interest of
Certificate Holders; provided, however, that any Transferee shall not be an
airline, a commercial air carrier, an air freight forwarder, an entity engaged
in the business of parcel transport by air or other similar person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person. Each such transfer to a Transferee shall be subject to the conditions
that (M) upon giving effect to such transfer, the Transferee is a "citizen of
the United States" within the meaning of Section 101(16) of the Federal
Aviation Act, and has full power and authority to enter into the transactions
contemplated hereby, (N) the Transferee has the requisite power and authority
to enter into and carry out the transactions contemplated hereby and such
Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture
Trustee and the Loan Participants an opinion of counsel in form and substance
reasonably satisfactory to such persons as to the due authorization, delivery,
legal, valid and binding
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<PAGE> 35
effect and enforceability of the agreement or agreements referred to in the next
clause with respect to the Transferee, (O) the Transferee enters into an
agreement or agreements, in form and substance reasonably satisfactory to the
Owner Trustee, the Majority in Interest of Certificate Holders, Lessee and the
Indenture Trustee, whereby the Transferee confirms that it shall be deemed a
party to this Agreement and a party to the Trust Agreement and agrees to be
bound by all the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in, the Owner Participant Documents (to
the extent of the participation so transferred to it) and makes the
representations and warranties made by the Owner Participant thereunder, (P)
such transfer does not affect registration of the Aircraft under the Federal
Aviation Act, or any rules or regulations promulgated thereunder or create a
relationship which would be in violation thereof or violate any provision of the
Securities Act of 1933, as amended, or any other applicable Federal or state
law, (Q) the transferor Owner Participant assumes the risk of any loss of
Interest Deductions, Amortization Deductions, FSC Benefits and ACRS Deductions
and the risk of any Inclusion Event (each as defined in the Tax Indemnity
Agreement) resulting from such transfer, and (R) the transferor Owner
Participant pays all of its expenses (including, without limitation, fees and
expenses of counsel) incurred by the transferor Owner Participant in connection
with such transfer and causes to be paid all of the expenses (including, without
limitation, fees and expenses of counsel) incurred by the Transferee in
connection with such transfer. Upon any such transfer by the Owner Participant
as above provided, the Transferee shall be deemed the Owner Participant for all
purposes hereof and of the other Operative Documents and each reference herein
to the transferor Owner Participant shall thereafter be deemed for all purposes
to be to the Transferee and the transferor Owner Participant shall be relieved
of all obligations of the transferor Owner Participant under the Owner
Participant Documents arising after the date of such transfer except to the
extent fully attributable to or arising out of acts or events occurring prior
thereto and not assumed by the Transferee (in each case, to the extent of the
participation so transferred). If the Owner Participant intends to transfer any
of its interests hereunder, it shall give 25 days' prior written notice thereof
to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee. For purposes of this
paragraph, "Net Worth" shall mean the excess of total assets over total
liabilities, each to be determined in accordance with generally accepted
accounting principles consistently applied.
(o) Notwithstanding the provisions of Section 8(x) hereof,
unless waived by the Loan Participants, Lessee shall not be entitled to assume
the Secured Certificates on a Termination Date or on the date for purchase of
the Aircraft pursuant to Section 19(d) of the Lease if on such Termination Date
or such date pursuant to Section 19(d) of the Lease an Event of Default shall
have occurred and be continuing or any condition or event shall exist which,
with the passage of time or giving of notice or both, would become such an
Event of Default.
(p) The First National Bank of Boston and The Connecticut
Bank and Trust Company, National Association, each in its individual capacity,
agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
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<PAGE> 36
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section
2.14 of the Trust Indenture) unless such entity (A) makes (or is deemed to have
made) a representation and warranty as of the date of transfer that either no
part of the funds to be used by it for the purchase of such Secured Certificate
(or any part thereof) constitutes assets of any "employee benefit plan" or that
such transfer will not result in a prohibited transaction (as defined in
Section 4975 of the Code and ERISA) or (B) at the election of the transferee,
provides the Owner Participant and Lessee with such information as is
reasonably sufficient to enable the Owner Participant and Lessee to determine
that such transfer will not cause the Owner Participant, Lessee or such entity
to engage in a prohibited transaction (as so defined). The Owner Participant
agrees that it will not transfer any of its right, title or interest in and to
this Agreement, the Trust Estate or the Trust Agreement or any proceeds
therefrom to any entity unless such entity (A) makes (or is deemed to have
made) a representation and warranty as of the date of transfer that either no
part of the funds to be used by it for the purchase of such right, title and
interest (or any part thereof) constitutes assets of any "employee benefit
plan" or that such transfer will not result in a prohibited transaction (as
defined in Section 4975 of the Code and ERISA) or (B) at the election of the
transferee, provides the Loan Participant and Lessee with such information as
is reasonably sufficient to enable the Loan Participant and Lessee to determine
that such transfer will not cause the Loan Participant, Lessee or such entity
to engage in a prohibited transaction (as so defined).
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement, (ii) the initial purchase by the Loan
Participant of the Secured Certificates, and (iii) the initial acquisition by
the Owner Participant of its beneficial interest in the Trust Estate will
involve any prohibited transaction within the meaning of Section 406(a) of
ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation
being made in reliance upon and subject to the accuracy of the representations
contained in subparagraph (A) of this Section 8(q).
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel,
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<PAGE> 37
independent insurance brokers or other agents who agree to hold such information
confidential, and (E) in the case of the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to it under the Purchase
Agreement Assignment and not specifically reserved to Lessee under Section 1
thereof, to bona fide potential purchasers of the Aircraft.
(s) [Intentionally omitted]
(t) Each Loan Participant covenants and agrees that it shall
not cause or permit to exist a Loan Participant Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each Loan
Participant agrees that it will promptly, at its own expense, take such other
action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it.
(u) The Connecticut Bank and Trust Company, National
Association, in its individual capacity covenants and agrees that it shall not
cause or permit to exist any Indenture Trustee's Liens with respect to the
Trust Indenture Estate or the Trust Estate. The Connecticut Bank and Trust
Company, National Association, in its individual capacity agrees that it will
promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. The Connecticut Bank and Trust
Company, National Association, in its individual capacity agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Indenture Estate or the Trust Estate resulting from such Indenture
Trustee's Liens.
(v) The First National Bank of Boston in its individual
capacity represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, each of the other Owner Trustee Documents has been duly
executed and delivered by one of its officers who is duly authorized
to execute and deliver such instruments on behalf of the Owner
Trustee;
(ii) the lien of the Trust Indenture on the collateral
purported to be created thereby will be free and clear of Lessor Liens
attributable to The First National Bank of Boston in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against The First
National Bank of Boston in its individual capacity arising out of any
event or condition not related to the ownership, leasing, use or
operation of the Aircraft or to any other transaction contemplated by
this Agreement or any of the Operative Documents, including any Lien
resulting from the nonpayment by The First National Bank of Boston in
its individual capacity of any Taxes (as defined in Section 7(b)(i)
hereof) imposed or measured by its net income;
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<PAGE> 38
(iii) there has not occurred any event which constitutes (or
to the best of its knowledge would, with the passage of time or the
giving of notice or both, constitute) an Event of Default as defined
in the Trust Indenture which has been caused by or relates to The
First National Bank of Boston in its individual capacity and which is
presently continuing;
(iv) it is a banking association duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to enter into
and perform its obligations under each of the Owner Trustee Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the
terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or
contravene or result in any breach of, or the provisions of any
indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected; and
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by it and, assuming that each such agreement is
the legal, valid and binding obligation of each other party thereto,
each thereof is the legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance with its
terms except as limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to
or affecting the enforcement of creditors' rights.
(w) The Owner Participant covenants and agrees that if (i)
Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the
Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease
and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to
Lessee written notice of Lessor's election to retain title to the Aircraft and
(iii) the Owner Trustee has failed to make, on or before the Termination Date,
any payment required to be made by the Owner Trustee pursuant to Section 9(c)
in connection with its retention of title to the Aircraft, the Owner
Participant will indemnify Lessee for any losses, damages, costs or expenses of
any kind (including any additional rents paid by Lessee and any fees and
expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by the Owner Trustee. The Owner Participant further
covenants and agrees to pay those costs and expenses specified to be paid by
the Owner Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to terminate the Lease pursuant to Section 9(a) of the
Lease and to purchase the Aircraft pursuant to Section 9(b) of the Lease, (b)
to purchase the Aircraft pursuant to Section 19(b) of the Lease or (c) to
terminate the Lease and purchase the Aircraft pursuant to Section 19(d) of the
Lease,
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then each of the parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee (including,
without limitation, such bills of sale and other instruments and documents as
Lessee shall reasonably request to evidence (on the public record or otherwise)
such transfer and the vesting of all right, title and interest in and to the
Aircraft in Lessee), and if Lessee, in connection with such purchase, elects to
assume the obligations of the Owner Trustee pursuant to the Trust Indenture and
the Secured Certificates each of the parties will execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, maintaining the security interest in the
Aircraft created by the Trust Indenture, releasing the Owner Participant and the
Owner Trustee from all future obligations in respect of the Secured
Certificates, the Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such assumption by Lessee.
Lessee agrees that if it so elects to purchase the Aircraft pursuant to Section
9(b) of the Lease and assume the obligations of the Owner Trustee pursuant to
the Trust Indenture and the Secured Certificates, the Aircraft will not
thereafter be the subject of any leveraged-lease or sale and lease-back
transaction in which Lessee or any Affiliate of Lessee is the lessee, a
sublessee or a guarantor of the obligations of any lessee or sublessee.
(y) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a citizen of the United States as defined in Section
101(16) of the Federal Aviation Act and shall be a United States
certificated air carrier under Section 401 of the Federal Aviation Act
of 1958, as amended;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
reasonably satisfactory to such Participant containing an assumption
by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President or any Vice President and by the Secretary or an Assistant
Secretary of Lessee, and an opinion of counsel reasonably satisfactory
to the Participants, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned
in clause (ii)
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above comply with this Section 8(y) and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this Section 8(y), the successor corporation or Person
formed by such consolidation or into which Lessee is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, Lessee under this Agreement with the
same effect as if such successor corporation or Person had been named as Lessee
herein. No such conveyance, transfer or lease of substantially all of the
assets of Lessee as an entirety shall have the effect of releasing Lessee or
any successor corporation or Person which shall theretofore have become such in
the manner prescribed in this Section 8(y) from its liability in respect of any
Operative Document to which it is a party.
(z) Lessee, at its expense, will take, or cause to be taken,
such action with respect to the recording, filing, re-recording and refiling of
the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the
Trust Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in
effect, the perfection of the security interests created by the Trust Indenture
and any security interest that may be claimed to have been created by the Lease
and the interest of the Owner Trustee in the Aircraft or will furnish to the
Owner Trustee and the Indenture Trustee timely notice of the necessity of such
action, together with such instruments, in execution form, and such other
information as may be required to enable them to take such action. Lessee will
notify the Owner Trustee, the Owner Participant and the Indenture Trustee of
any change in the location of its chief executive office (as such term is used
in Article 9 of the Uniform Commercial Code) promptly after making such change
or in any event within the period of time necessary under applicable law to
prevent the lapse of perfection (absent refiling) of financing statements filed
under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amounts, Stipulated Loss Value and Termination Value, and the
Owner Participant hereby agrees to make such recalculations as and when
contemplated by the Lease and subject to all the terms and conditions of the
Lease and promptly to take such further actions as may be necessary or
desirable to give effect to and to cause the Owner Trustee to give effect to
the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee, and
only with Lessee, and not for the benefit of any other party to this
Participation Agreement, that it will pay in full to Lessee upon the
termination of the Lease the funds required for the payment of that portion, if
any, of the Reimbursement Amount for which Lessee has not previously received
an offset pursuant to Section 3(g) of the Lease. The Owner Participant shall
also have the right to reimburse Lessee at any time for all or any portion of
the Reimbursement Amount for which Lessee has not received an offset pursuant
to Section 3(g) of the Lease.
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(cc) The Owner Participant hereby agrees to notify Lessee or
cause Lessee to be notified by telex or telegram not later than 10:00 a.m. New
York time on the third Business Day prior to the day for which an Excess Amount
is indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) The Loan Participants agree to notify each of the
Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the
actual interest expected to accrue on the Secured Certificates during each
Interest Period promptly after the commencement of such Interest Period and
after the occurrence of any event that would cause such actual interest
expected to accrue during such Interest Period to change from the amount
previously notified.
(ee) The Owner Participant hereby agrees with Lessee that it
will pay, or cause to be paid, all costs and expenses that are for the account
of the Owner Trustee pursuant to Section 5(d) of the Lease.
(ff) [Intentionally omitted]
(gg) The Bank hereby represents to each party hereto that it
is not (i) a citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code, (ii) a corporation, partnership or other entity created
or organized under the laws of the United States or any political subdivision
thereof or therein or (iii) any estate or trust that is subject to United
States federal income taxation regardless of the source of its income.
(hh) The Bank and each subsequent Loan Participant hereby
represents, warrants and agrees that it shall not transfer any interest in any
Secured Certificate unless and until the transferee agrees in writing (copies
of which shall be provided by the Indenture Trustee to Lessee, the Owner
Trustee and the Owner Participant) to make the representations contemplated to
be made by a Loan Participant in this Agreement and to be bound by the terms of
this Agreement and the Trust Indenture (including, without limitation, the
representations and covenants set forth in Section 8(e), 8(j) (or,
alternatively, 8(gg)), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section
8(hh) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(ii) Lessee agrees that with respect to each Sublease having
a term of longer than three months, Lessee shall provide the Sublessee of such
Sublease with a copy of the Lease, and each such Sublease shall contain, in
boldface type, the language set forth in Exhibit A attached hereto.
SECTION 9. Certain Covenants of Owner Participant, Loan
Participants and Owner Trustee Concerning Reoptimization. (a) In the event of an
adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner
Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized
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representative of the Owner Participant (the "Reoptimization Certificate")
setting forth the proposed revised schedules of debt amortization and Basic
Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages.
Within forty-five days of its receipt of the Reoptimization Certificate, Lessee
may demand a verification, pursuant to Exhibit E of the Lease, of the
information set forth in the Reoptimization Certificate. Upon the acceptance by
Lessee of the accuracy of the information set forth in the Reoptimization
Certificate or the determination pursuant to such verification procedures of
such information, the Owner Participant will cause the Owner Trustee (M) to
execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess
Amounts, Stipulated Loss Value and Termination Value percentages, and (N) to
exchange new Secured Certificates containing reoptimized amortization schedules
for the Secured Certificates outstanding immediately prior to such
reoptimization.
(b) In connection with reoptimization adjustments of Basic
Rent, Stipulated Loss Value and Termination Value percentages pursuant to this
Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree
to changes in the amortization schedule of the Secured Certificates, and (N)
each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided, that such changes do
not (X) change the final maturity of any Secured Certificates except that such
final maturity may be extended up to an additional two years in connection with
the first refinancing under Section 17 hereof or (Y) reduce Basic Rent, the
Stipulated Loss Value or the Termination Value percentages below the amount
necessary (together with the Excess Amount and all other amounts simultaneously
payable by Lessee) to permit payment of all amounts payable pursuant to the
Secured Certificates or (Z) increase or decrease the weighted average lives of
the Secured Certificates as of the Commencement Date by more than 1.5 years;
provided, further, that changes in the amortization schedule may be made on two
occasions only.
SECTION 10. Other Documents. Each of the Owner Participant
and the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants
to comply with all of the terms of the Trust Agreement (as the same may
hereafter be amended or supplemented from time to time in accordance with the
terms thereof) applicable to it; and (B) agrees with Lessee, the Loan
Participants and the Indenture Trustee not to amend, supplement or otherwise
modify any provision of the Trust Agreement in a manner adversely affecting
such party without the prior written consent of such party. Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture Trustee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (i) amend or modify Article III or IX of the
Trust Indenture, (ii) make any amendment which will affect the stated principal
amount or interest on the Secured Certificates or (iii) amend or modify the
provisions of Sections 2.05 or 10.05 of the Trust Indenture. The Indenture
Trustee and the Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative Documents
to which Lessee is not a party. Notwithstanding anything to the contrary
contained herein, in the Trust Agreement or in any other Operative Document,
the Owner Participant will not consent to or direct a change in the situs of
the Trust Estate without the prior written consent of Lessee. Each Loan
Participant
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agrees that it will not take any action in respect of the Trust Indenture Estate
except through the Indenture Trustee pursuant to the Trust Indenture or as
otherwise permitted by the Trust Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and
agrees with each of the Loan Participants, the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of Lessee in
respect of the transactions contemplated by any Operative Documents. Lessee,
forthwith upon delivery of the Aircraft under Lease, shall cause the Aircraft
to be duly registered, and at all times thereafter to remain duly registered,
in the name of the Owner Trustee, except as otherwise required or permitted
hereunder or under the Lease, under the Federal Aviation Act, or shall furnish
to the Owner Trustee such information as may be required to enable the Owner
Trustee to make application for such registration, and shall promptly furnish
to the Owner Trustee such information as may be required to enable the Owner
Trustee to timely file any reports required to be filed by it as the lessor
under the Lease or as the owner of the Aircraft with any governmental
authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments to
the Trust Indenture and this Agreement 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. Upon the execution and delivery of the
FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the
Trust Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; first, the
FAA Bill of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the
Trust Indenture, with the Trust Agreement and the Trust Supplement attached.
Lessee agrees to furnish the Owner Participant, the Loan Participants, the
Owner Trustee and the Indenture Trustee with copies of certified copies of the
foregoing documents as promptly as practicable following the issuance of same
by the Federal Aviation Administration.
SECTION 12. Owner for Federal Tax Purposes. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee will be the lessee thereof,
and each party hereto agrees to characterize the Lease as a lease for Federal
income tax purposes.
SECTION 13. Certain Definitions; Notices; Consent to
Jurisdiction. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall
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have the meanings attributed thereto in the Lease. The term "Trust Office" shall
have the meaning set forth in the Trust Agreement and the term "Trust Indenture
Estate" shall have the meaning set forth in the Trust Indenture. Unless the
context otherwise requires, any reference herein to any of the Operative
Documents refers to such document as it may be amended from time to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by prepaid Telex, TWX or
telegram (with messenger delivery specified in the case of a telegram), or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this
Section 13(b). Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 13(b), notices,
demands, instructions and other communications in writing shall be given to or
made upon the respective parties hereto at their respective addresses (or to
their respective Telex, TWX or telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures
of such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(c) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and to the non-exclusive jurisdiction of
the Supreme Court of the State of New York, New York County, for the purposes
of any suit, action or other proceeding arising out of this Agreement, the
Lease, the Tax Indemnity Agreement or any other Operative Document, the subject
matter of any thereof or any of the transactions contemplated hereby or thereby
brought by any party or parties thereto, or their successors or assigns, and
(B) hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Agreement, the Lease, the Tax Indemnity Agreement or any
other Operative Document or the subject matter of any thereof or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts. Lessee hereby generally consents to service of process at Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention:
Managing Attorney, or such office of Lessee in New York City as from time to
time may be designated by Lessee in writing to the Owner Participant, the Owner
Trustee, and the Indenture Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to
any Taxes (as defined in Section 7(b) hereof) for which it is indemnified
pursuant to Section 7(b) hereof and if, as a consequence
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thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the
situs of the trust may be moved with the written consent of the Owner
Participant (which consent shall not be unreasonably withheld) and the Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Loan Participants may
reasonably request, (B) the rights and obligations under the Operative
Documents of the Owner Participant and the Loan Participants shall not be
altered as a result of the taking of such action, (C) the lien of the Trust
Indenture on the Trust Indenture Estate shall not be adversely affected by such
action, and (D) the Owner Participant and the Loan Participants shall have
received an opinion or opinions of counsel (satisfactory to the Owner
Participant and the Loan Participants), in scope, form and substance
satisfactory to the Owner Participant and the Loan Participants to the effect
that (I) the trust, as thus removed, shall remain a validly established trust,
(II) any amendments to the Trust Agreement necessitated by such removal shall
have been duly authorized, executed and delivered by the parties thereto and
shall constitute the valid and binding obligations of such parties, enforceable
in accordance with their terms, (III) such removal will not result in the
imposition of, or increase in the amount of, any Tax for which Lessee is not
required to indemnify the Owner Participant, the Loan Participants, the Owner
Trustee or the Trust Estate pursuant to Section 7(b) hereof (taking into
account any additional indemnification provided by Lessee pursuant to clause
(A) of this sentence), (IV) such removal will not result in any Loss of
Interest Deductions or MACRS Deductions or FSC Benefits or an Inclusion Event
(as defined in the Tax Indemnity Agreement) with respect to which Lessee is not
required to indemnify the Owner Participant pursuant to Section 4 of the Tax
Indemnity Agreement (taking into account any additional indemnification
provided by Lessee pursuant to clause (A) of this sentence), (V) if such
removal involves the replacement of the Owner Trustee, an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
the Loan Participants and to the Owner Participant covering the matters
described in Section 4(a)(xiii) hereof and (VI) covering such other matters as
the Loan Participants and the Owner Participant may reasonably request, and (E)
Lessee shall indemnify and hold harmless the Owner Participant and the Loan
Participants on a net after-tax basis against any and all reasonable and actual
costs and expenses including counsel fees and disbursements, registration fees,
recording or filing fees and taxes incurred by the Owner Trustee, the Owner
Participant, and the Loan Participants in connection with such change of situs.
SECTION 15. Miscellaneous. (a) Each of the Loan Participants
and the Owner Participant covenants and agrees that it shall not unreasonably
withhold its consent to any consent requested of the Owner Trustee, as Lessor,
or the Indenture Trustee under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture
Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee and the Owner Participant provided for in this Agreement, and Lessee's,
the Owner Trustee's, the Loan Participants', the Indenture Trustee's and the
Owner Participant's obligations under any and all thereof, shall
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survive the making available of the respective Commitments by the Loan
Participants and the Owner Participant, the delivery or return of the Aircraft,
the transfer of any interest of the Owner Participant in the Trust Estate or the
Aircraft or any Engine or the transfer of any interest by any Loan Participant
in any Secured Certificate or the Trust Indenture Estate and the expiration or
other termination of this Agreement or any other Operative Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, Lessee and its successors and
assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture and the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement. This Agreement shall in
all respects be governed by, and construed in accordance with, the laws of the
State of New York, including all matters of construction, validity and
performance. This Agreement is being delivered in the State of New York.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Agreement or such
other agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this
Agreement and the other Operative Documents.
SECTION 16. Expenses. (a) Invoices and Payment. Each of the
Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the
Loan Participants shall
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promptly submit to the Owner Trustee for its prompt approval (which shall not be
unreasonably withheld) copies of invoices of the Transaction Expenses for which
it is responsible for providing information as they are received (but in no
event later than October 15, 1990). The Owner Participant agrees to transfer to
the Owner Trustee promptly but in any event no later than November 1, 1990 such
amount as shall be necessary in order to enable the Owner Trustee to pay
Transaction Expenses. To the extent of funds received by it, the Owner Trustee
agrees to pay all invoices of Transaction Expenses that have been approved by it
promptly upon receipt thereof.
(b) Payment of Other Expenses. Notwithstanding the provisions
of Section 16(a), Lessee agrees to pay the fees, expenses and disbursements of
Messrs. Cadwalader, Wickersham & Taft, special counsel for Lessee. The fees,
expenses and disbursements of Messrs. Cadwalader, Wickersham & Taft shall not
constitute Transaction Expenses.
SECTION 17. Refinancings
(a) Lessee shall have the right to refinance the Secured
Certificates no more than four times by giving written notice to the Owner
Participant and the Owner Trustee that there be effected a voluntary redemption
of the Secured Certificates by the Owner Trustee, whereupon the Owner
Participant agrees to negotiate promptly in good faith to conclude an agreement
with Lessee as to the terms of such refinancing operation (including the terms
of any debt to be issued in connection with such refinancing); provided, that
the terms, conditions and other circumstances relating to any such refinancing
shall not, in the opinion of the Owner Participant, be such that could have a
material adverse effect on the Owner Participant; and provided, further, that
no such refinancing shall require an increase in the amount of the Owner
Participant's investment in the beneficial ownership of the Aircraft. Upon such
agreement:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "Refinancing
Certificate") setting forth (i) the proposed date on which the outstanding
Secured Certificates will be redeemed, any new debt will be issued and the
other aspects of such refinancing will be consummated (such date, the
"Refinancing Date") and (ii) the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted Debt/Equity
Ratio, (B) the principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
decreased and (D) the proposed revised schedules of Basic Rent percentages,
debt amortization, Stipulated Loss Value percentages and Termination Value
percentages. The Refinancing Certificate shall not provide for a Debt/Equity
Ratio of more than 4:1. Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification pursuant to Exhibit E to the
Lease of the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such verification
procedures), as to the Debt/Equity Ratio, the principal amount of
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debt to be issued by the Owner Trustee on the Refinancing Date and the revised
Basic Rent percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages (such information, whether as set forth or as so
determined, the "Refinancing Information") the appropriate parties will take the
actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into a financing or
loan agreement (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate
and/or the Aircraft and its resale to the Owner Trustee) with the institution
or institutions to be named therein providing for (i) the issuance and sale by
the Owner Trustee to such institution or institutions on the Refinancing Date
of debt securities in an aggregate principal amount specified in the
Refinancing Information which amount shall be equal to the aggregate principal
amount of all Secured Certificates outstanding on the Refinancing Date (such
debt securities, the "New Debt") except that the principal amount of New Debt
may exceed the principal amount of all outstanding Secured Certificates in
connection with the first refinancing under this Section 17, (ii) the
application of the proceeds of the sale of the New Debt to the redemption of
all such Secured Certificates on the Refinancing Date and (iii) the payment of
the excess, if any, of such proceeds over the amounts necessary to effect such
redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide
for the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) unless otherwise agreed by the Owner Participant, Lessee
shall pay all of the expenses of such refinancing (including the fees, expenses
and disbursements of counsel); and
(6) when calculating any of the information required to be
set forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the Lease
or such assumptions are the subject of the recalculations being conducted by
the Owner Participant), and (B) minimizes the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (A). All adjustments to
Basic Rent shall also be in compliance with the tests of Section Section
4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev.
Proc.
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<PAGE> 49
75-28 Section 4.08(1) shall be applied on a prospective basis from the date of
such adjustment) and no such adjustment shall cause the Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning of Section
467 of the Code.
(b) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-------------------------------------------
Title:
Address: Minneapolis/St. Paul
International Airport
St. Paul, Minnesota 55111
Attn: Chief Financial Officer
Telex No. 29-7024
Answerback: NWAIR STP A
[_______________________],
Owner Participant
By:
-------------------------------------------
Title:
Address:
Telecopy No.:
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION,
Indenture Trustee
By:
-------------------------------------------
Title:
Address: One Constitution Plaza
Hartford, CT 06115
Attn: Corporate Trust Department
Telex No. 6813218 CBT HFD
Telecopy: (203) 244-6999
-Signature Page-
<PAGE> 51
THE FIRST NATIONAL BANK OF BOSTON
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
-------------------------------------
Title:
Address: Corporate Trust Division
Blue Hills Office Park
150 Royall Street
Canton, Massachusetts 02021
Attn: Manager - Corporate Trust
[__________________________________],
Loan Participant
By:
-------------------------------------
Title:
By:
-------------------------------------
Title:
Address:
Telex:
Answerback:
Telecopy:
-Signature Page-
<PAGE> 52
SCHEDULE I
Names and Addresses
Lessee: Northwest Airlines, Inc.
Minneapolis/St. Paul International Airport
St. Paul, Minnesota 55111
Attn: Chief Financial Officer
Telex: 29-7024
Answerback: NWAIR STP A
Owner Participant:
Indenture Trustee: The Connecticut Bank and Trust Company,
National Association
One Constitution Plaza
Hartford, CT 06115
Attn: Corporate Trust Department
Telecopy: (203) 244-6999
<PAGE> 53
<TABLE>
<S> <C>
Owner Trustee: The First National Bank of Boston
Corporate Trust Division
Blue Hills Office Park
150 Royall Street
Canton, Massachusetts 02021
Attn: Manager - Corporate Trust
Telex: 499-6527
Answerback: BOSBK BSN
Telecopy: (617) 575-2078
Payments made to the Owner Trustee as
provided in Section 3(f) of the Lease
shall be made to The First National
Bank of Boston,
Attn: Corporate Trust Division;
reference: Northwest Airlines, Inc.
Trust 1990 A
Loan Participant:
</TABLE>
I-2
<PAGE> 54
SCHEDULE II
Commitments
<TABLE>
<CAPTION>
Percentage of
Loan Participant: Lessor's Cost
- ---------------- -------------
<S> <C>
-------------
Owner Participant:
- -----------------
-------------
Total Commitments: 100%
</TABLE>
<PAGE> 55
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1990 A]
SUBLESSEE HEREBY ACKNOWLEDGES, ACCEPTS AND AGREES: (I) THAT
SUBLESSEE HAS RECEIVED AND REVIEWED THE LEASE AGREEMENT [NW 1990 A] DATED AS OF
AUGUST 23, 1990 (THE "HEAD LEASE") BETWEEN NORTHWEST AIRLINES, INC., AS LESSEE
THEREUNDER ("SUBLESSOR"), AND THE FIRST NATIONAL BANK OF BOSTON, IN ITS
CAPACITY AS TRUSTEE, AS LESSOR THEREUNDER ("HEAD LESSOR"), WITH RESPECT TO THE
BOEING 747-451 AIRCRAFT BEARING ORIGINAL UNITED STATES REGISTRATION NUMBER
N669US (THE "AIRCRAFT") BEING SUBLEASED BY SUBLESSEE HEREUNDER; (II) TO BE
BOUND BY THE TERMS OF THE HEAD LEASE; (III) THAT HEAD LESSOR IS THE OWNER OF
THE AIRCRAFT; (IV) THAT THE PROVISIONS OF THIS SUBLEASE AND SUBLESSEE'S RIGHTS
HEREUNDER (INCLUDING SUBLESSEE'S RIGHT TO QUIET ENJOYMENT OF THE AIRCRAFT) ARE
SUBJECT AND SUBORDINATE TO THE TERMS OF THE HEAD LEASE AND HEAD LESSOR'S RIGHTS
THEREUNDER; (V) THAT IN THE EVENT THAT THERE IS AN EVENT OF DEFAULT (AS DEFINED
IN THE HEAD LEASE) UNDER THE HEAD LEASE, HEAD LESSOR SHALL BE ENTITLED TO
EXERCISE ALL OF HEAD LESSOR'S RIGHTS HEREUNDER, UNDER THE HEAD LEASE AND UNDER
APPLICABLE LAW WITH RESPECT TO THE AIRCRAFT (INCLUDING REPOSSESSION OF THE
AIRCRAFT), WHICH RIGHTS MAY BE EXERCISED NOTWITHSTANDING (X) COMPLIANCE BY
SUBLESSEE WITH THE TERMS OF THIS SUBLEASE OR THE HEAD LEASE OR (Y) ANY COVENANT
OF QUIET ENJOYMENT FOR THE BENEFIT OF SUBLESSEE CONTAINED IN THIS SUBLEASE OR
THE HEAD LEASE; AND (VI) THAT IN THE EVENT THAT SUBLESSEE SUFFERS ANY DAMAGE OR
LOSS (INCLUDING CONSEQUENTIAL DAMAGES AND THE LOSS OF THE BENEFIT OF A BARGAIN)
IN CONNECTION WITH THE EXERCISE BY HEAD LESSOR OF ANY OF HEAD LESSOR'S RIGHTS
SPECIFIED IN THE FOREGOING CLAUSES OR IN THE HEAD LEASE OR UNDER APPLICABLE
LAW, SUBLESSEE SHALL HAVE A CLAIM WITH RESPECT TO ANY SUCH DAMAGE OR LOSS
SOLELY AGAINST SUBLESSOR AND NOT AGAINST THE AIRCRAFT, HEAD LESSOR, THE OWNER
PARTICIPANT (AS DEFINED IN THE HEAD LEASE), THE OWNER TRUSTEE (AS SO DEFINED),
THE LOAN PARTICIPANTS (AS SO DEFINED), THE INDENTURE TRUSTEE (AS SO DEFINED) OR
ANY AFFILIATE (AS SO DEFINED) OF THE FOREGOING.
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1990 A]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1990 A],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ] (the
"OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as
defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(in such capacity, the "PASS THROUGH TRUSTEE") under each of the four separate
Pass Through Trust Agreements (as defined below), (v) STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and
(vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as
Indenture Trustee (the "INDENTURE TRUSTEE") under the Indenture (as defined
below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, The First National
Bank of Boston, in its individual capacity and as owner trustee (the "ORIGINAL
OWNER TRUSTEE"), [ ], as the loan
participant (the "ORIGINAL LOAN PARTICIPANT") and The Connecticut Bank and Trust
Company, National Association, in its individual capacity and as indenture
trustee (the "ORIGINAL INDENTURE TRUSTEE") entered into the Participation
Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and the Original
Indenture Trustee, entered into the Trust Indenture and Security Agreement [NW
1990 A], dated as of August 23, 1990, as supplemented by Trust Agreement and
Indenture Supplement [NW 1990 A], dated August 23, 1990 (the "ORIGINAL
INDENTURE"), pursuant to which the Original Owner Trustee issued to the Original
Loan Participant secured certificates substantially in the form set forth in
Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan
then being made by the Original Loan Participant in participating in the payment
of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and Lessee entered
into the Lease
<PAGE> 2
Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23, 1990, as
supplemented by Lease Supplement No. 1 [NW 1990 A] dated August 23, 1990 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Original Owner Trustee agreed to lease to Lessee, and Lessee agreed
to lease from the Original Owner Trustee, the Aircraft commencing on the
Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Original Owner
Trustee entered into the Trust Agreement [NW 1990 A], dated as of August 23,
1990 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Original Owner
Trustee agreed, among other things, to hold the Trust Estate defined in Section
1.01 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23,
1990 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance, dated May 28, 1996, the Owner Trustee
succeeded to all of the estates, properties, rights, powers, duties and trusts
of the Original Owner Trustee under the Trust Agreement and the other Operative
Documents to which the Original Owner Trustee was a party;
WHEREAS, pursuant to an Instrument of Assignment and
Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of
July 14, 1991, the Indenture Trustee succeeded to the Original Indenture
Trustee, as indenture trustee under the Original Indenture;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and the Owner Trustee pursuant to such Section 17 of
its desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee have entered into the Refunding Agreement [NW 1990 A], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1990 A], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue
-2-
<PAGE> 3
new secured certificates substantially in the form set forth in Section 2.01
thereof (the "REFINANCING SECURED CERTIFICATES") in four series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1990 A], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Participant and the Owner Trustee have entered into the
First Amendment to Trust Agreement [NW 1990 A], dated as of the date hereof (the
"TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by
the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1990 A], dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Guarantor has entered into the Guarantee;
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), four separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust (other than Northwest Airlines 1996-1D
Pass Through Trust, with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass
-3-
<PAGE> 4
Through Trustee, the Liquidity Provider and the Subordination Agent entered into
the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR
AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 5 of the Original Participation Agreement is
hereby amended to delete the phrase "and this Agreement" wherever it appears and
to add the following sentence at the end:
The identity of the Owner Participant shall not be disclosed
in any prospectus, offering memorandum or similar document or
supplement or amendment thereto to be used in connection with
the public offering of securities representing interests in
the Secured Certificates.
SECTION 3. AMENDMENT OF SECTION 7(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b) of the Original Participation Agreement is
hereby amended by (i) adding the words "or the issuance or transfer of the Pass
Through Certificates" after the words "transfer thereof" in clause (i)(E)
thereof, (ii) deleting from clause (ii)(3) thereof the words "a Loan Participant
or any Certificate Holder", (iii) deleting from clause (ii)(5) thereof the words
and punctuation "a Loan Participant, any Certificate Holder,", and (iv) deleting
from clause (ii)(9) thereof the words and punctuation ", a Loan Participant or
any Certificate Holder" and the words "of either".
SECTION 4. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is
hereby amended by (i) deleting the word "and" between the words "expenses" and
"Transaction Expenses" in the second parenthetical phrase of the first paragraph
thereof and substituting a comma therefor, (ii) inserting after the phrase "to
Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) inserting the words and punctuation "and, only in the case of the
Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the
Liquidity Facilities" after the words "in respect thereof" in the first clause
(A) thereof, and (iv) adding the words and punctuation "the Intercreditor
Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after
-4-
<PAGE> 5
the words "Operative Documents" in the second clause (A) thereof and in the
second clause (B) thereof.
SECTION 5. AMENDMENT OF SECTION 8(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. The second, third, fourth, fifth and sixth sentences of
Section 8(c) of the Original Participation Agreement are hereby amended in their
entirety to read as follows:
The Owner Participant agrees, solely for the benefit of Lessee
and the Loan Participants, that if (i) it shall cease to be,
or believes itself likely to cease to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore
become ineligible for registration in the name of the Owner
Trustee under the Federal Aviation Act and regulations then
applicable thereunder, then the Owner Participant shall (at
its own expense and without any reimbursement or
indemnification from Lessee) promptly effect a voting trust,
voting powers agreement or other similar arrangements or take
any other action as may be necessary to prevent any
deregistration and to maintain the United States registration
of the Aircraft. It is agreed that: (A) the Owner Participant
shall be liable to pay on request to each of the other parties
hereto and to each holder of a Secured Certificate for any
damages suffered by any such other party or holder as the
result of the representation and warranty of the Owner
Participant in the first sentence of this Section 8(c) proving
to be untrue as of the Delivery Date; and (B) the Owner
Participant shall be liable to pay on request to Lessee, any
Sublessee and the Loan Participants for any damages which may
be incurred by Lessee, any Sublessee or the Loan Participants
as a result of the Owner Participant's failure to comply with
its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to cooperate
with the Owner Participant in complying with its obligations
under the provisions of the second sentence of this Section
8(c). First Security Bank of Utah, National Association, in
its individual capacity, agrees that if at any time a
responsible officer or responsible employee of the Corporate
Trust Department of First Security Bank of Utah, National
Association, shall obtain actual knowledge that First Security
Bank of Utah, National Association, has ceased to be a Citizen
of the United States without making use of a voting trust,
voting powers agreement or similar arrangement, it will
promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in
effect at such time or, if it is not necessary, if and so long
as the Owner Trustee's citizenship would have any material
adverse effect on the Loan Participants, Lessee or the Owner
Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or First Security Bank of
Utah, National Association, in its individual capacity, does
not comply with the requirements of this Section 8(c), the
Owner Trustee, the Indenture Trustee and the Participants
hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the
giving of notice or both) shall not have occurred and be
-5-
<PAGE> 6
continuing under the Lease due to non-compliance by Lessee
with the registration requirements in the Lease.
SECTION 6. AMENDMENT OF SECTION 8(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. The second sentence of Section 8(d) of the Original
Participation Agreement is hereby amended in its entirety to read as follows:
First Security Bank of Utah, National Association in
its individual capacity, agrees that it will not change the
location of its principal place of business or the place where
its records concerning the Aircraft and all of its interest
in, to and under the Operative Documents to which it is a
party are kept to a location outside of Salt Lake City, Utah,
without prior written notice to all parties.
SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
The Owner Participant and the Indenture Trustee agree
that, if, at any time after the Depreciation Period, (i)
Lessee has requested their consent to the registration of the
Aircraft, at Lessee's expense, in a country other than the
United States in the name of the Owner Trustee (or, if
appropriate in the name of Lessee or a Sublessee as a "lessee"
or a "sublessee") and (ii) the Owner Participant has not
determined, acting reasonably, that such other country would
not provide substantially equivalent protection for the rights
of owner participants or lessors in similar transactions as
provided under United States law, the Owner Participant will
not unreasonably withhold its consent to such change of
registration (it being agreed that if such country is not the
United Kingdom, a member of the European Economic Community or
a party to the Convention on the International Recognition of
Rights in Aircraft, Geneva, 1948, Lessee's inability to
deliver an opinion (reasonably satisfactory in form and
substance to the Owner Participant) of counsel acceptable to
the Owner Participant in such proposed country of registry to
the effect that the courts of such country would give effect
to the title, registry and priority of the lien under the
Trust Indenture substantially to the same extent as if such
country were a party to said Convention shall constitute
reasonable grounds for a determination that such country would
not provide such protection), and if said consent is given,
the Owner Participant will instruct the Owner Trustee to, and
the Indenture Trustee shall, take whatever action is necessary
or appropriate to effectuate such change of registration;
provided, however, that prior to any such change in the
country of registry of the Aircraft, the Owner Participant and
the Indenture Trustee shall have received:
(i) assurances reasonably satisfactory to the
Owner Participant (A) to the effect that the insurance
provisions of the Lease have been complied
-6-
<PAGE> 7
with after giving effect to such change of registry,
(B) of the payment by Lessee of any expenses of the
Owner Participant, the Owner Trustee, the Indenture
Trustee and the Loan Participants in connection with
such change of registry, (C) to the effect that the
original indemnities in favor of the Owner Participant,
the Owner Trustee, the Indenture Trustee and the Loan
Participants, under this Agreement, the Trust Indenture
and the Tax Indemnity Agreement afford each such party
substantially the same protection as provided prior to
such change of registry, (D) as to the continued status
of the Trust Indenture as a first priority lien on the
Trust Indenture Estate, (E) that such change will not
result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to
indemnify the Owner Participant, the Loan Participants,
the Indenture Trustee, the Owner Trustee (or any
successor, assign or affiliate thereof) or the Trust
Estate pursuant to Section 7(b) hereof and (F) that
such new country of registry imposed aircraft
maintenance standards not materially different from
those of the FAA; and
(ii) a favorable opinion of counsel reasonably
satisfactory to the Owner Participant in the new
jurisdiction of registry (A) that the terms (including,
without limitation, the governing-law,
service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Trust
Indenture are legal, valid, binding and enforceable in
such jurisdiction, (B) that it is not necessary for the
Owner Participant, the Owner Trustee or the Indenture
Trustee to register or qualify to do business in such
jurisdiction, (C) that there is no tort liability of
the owner of an aircraft not in possession thereof
under the laws of such jurisdiction (it being
understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner
Participant, such opinion shall be waived if insurance
reasonably satisfactory to the Owner Participant is
available to cover such risk), and (D) to such further
effect with respect to such other matters as the Owner
Participant may reasonably request.
SECTION 8. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
Each of First Security Bank of Utah, National
Association, in its individual capacity and the Owner
Participant covenants and agrees that it shall not cause or
permit to exist a Lessor Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each
of First Security Bank of Utah, National Association, in its
individual capacity and the Owner Participant agrees that it
will promptly, at its own expense, take such action as may be
necessary duly to discharge such Lessor Lien attributable to
it. Each of First Security Bank of Utah, National Association,
in its individual capacity and the Owner Participant agrees to
make restitution to the Trust Estate for any
-7-
<PAGE> 8
actual diminution of the assets of the Trust Estate resulting
from such Lessor Liens attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Estate
resulting from any Taxes or Expenses (as such terms are
defined in Section 7 hereof) imposed on the Trust Estate
against which Lessee is not required to indemnify the Trust
Estate pursuant to Section 7 hereof but excluding Taxes
referred to in Section 7(b)(ii)(3) hereof.
SECTION 9. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is
hereby amended by deleting the words and punctuation "The Connecticut Bank and
Trust Company, National Association" and replacing them with the words "State
Street Bank and Trust Company".
SECTION 10. AMENDMENT OF SECTION 8(j) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(j) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
(j) Each Loan Participant, by its acceptance of a
Secured Certificate, represents and warrants as to itself: (i)
that this Agreement constitutes a legal, valid and binding
obligation of such Loan Participant enforceable against such
Loan Participant in accordance with its terms except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law); (ii) that such Loan Participant is duly organized and
validly existing under the laws of the jurisdiction of its
incorporation; and (iii) that such Loan Participant has full
power, authority and legal right to carry out the terms of
this Agreement.
SECTION 11. AMENDMENT OF SECTION 8(k) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(k) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the
Trust Indenture is being acquired by it without a view to
resale or distribution (it being understood that such Loan
Participant may pledge or assign as security its interest in
the Secured Certificate issued to it), provided, that the
disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may
sell, transfer or otherwise dispose of any Secured Certificate
or any portion thereof, or grant participations therein, in a
manner which in itself does not violate the registration
requirements under the Securities Act of 1933, as amended.
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<PAGE> 9
SECTION 12. AMENDMENT OF SECTION 8(m) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(m)(i) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
it is a Citizen of the United States, will notify promptly all
parties to this Agreement if in its reasonable opinion its
status as a Citizen of the United States without making use of
any voting trust, voting powers agreement or similar
arrangement is likely to change and that it will resign as
Indenture Trustee as provided in Section 8.02 of the Trust
Indenture if it should cease to be a Citizen of the United
States without making use of any voting trust, voting powers
agreement or similar arrangement;
SECTION 13. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by deleting all of the words appearing after the first sentence
and substituting therefor the following:
A "Transferee" shall mean either (A) a bank or other
financial institution with a combined capital surplus and
undivided profits of at least $60,000,000 or a corporation
whose Net Worth is at least $60,000,000 determined in
accordance with generally accepted accounting principles, or
(B) any subsidiary of such a bank, financial institution or
corporation, provided that such bank, financial institution or
corporation furnishes to the Owner Trustee, the Indenture
Trustee and Lessee a guaranty with respect to the Owner
Participant's obligations, in the case of the Owner Trustee,
under the Trust Agreement and, in the case of the Indenture
Trustee and Lessee, the Owner Participant's obligations
hereunder, including but not limited to, under Section 8(c)
and Section 8(h) hereof, in form and substance reasonably
satisfactory to Lessee, the Owner Trustee and the Indenture
Trustee; provided, however, that any Transferee shall not be
an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel
transport by air or other similar person or a corporation or
other entity controlling, controlled by or under common
control with such an airline, a commercial air carrier, an air
freight forwarder, an entity engaged in the business of parcel
transport by air or other similar person. Each such transfer
to a Transferee shall be subject to the conditions that (M)
upon giving effect to such transfer, the Transferee is a
Citizen of the United States, and has full power and authority
to enter into the transactions contemplated hereby, (N) the
Transferee has the requisite power and authority to enter into
and carry out the transactions contemplated hereby and such
Transferee shall have delivered to Lessee, the Owner Trustee
and the Indenture Trustee an opinion of counsel in form and
substance reasonably satisfactory to such persons as to the
due authorization, delivery, legal, valid and binding effect
and enforceability of the agreement or agreements referred to
in the next clause with respect to the Transferee, (O) the
Transferee enters into an agreement or agreements, in form and
substance reasonably satisfactory to
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<PAGE> 10
the Owner Trustee, Lessee and the Indenture Trustee, whereby
the Transferee confirms that it shall be deemed a party to
this Agreement and a party to the Trust Agreement and agrees
to be bound by all the terms of, and to undertake all of the
obligations of the transferor Owner Participant contained in,
the Owner Participant Documents (to the extent of the
participation so transferred to it) and makes the
representations and warranties made by the Owner Participant
thereunder, (P) such transfer does not affect registration of
the Aircraft under the Federal Aviation Act, or any rules or
regulations promulgated thereunder or create a relationship
which would be in violation thereof or violate any provision
of the Securities Act of 1933, as amended, or any other
applicable Federal or state law, (Q) the transferor Owner
Participant assumes the risk of any loss of Interest
Deductions, Amortization Deductions, FSC Benefits and ACRS
Deductions and the risk of any Inclusion Event (each as
defined in the Tax Indemnity Agreement) resulting from such
transfer, and (R) the transferor Owner Participant pays all of
its expenses (including, without limitation, fees and expenses
of counsel) incurred by the transferor Owner Participant in
connection with such transfer and causes to be paid all of the
expenses (including, without limitation, fees and expenses of
counsel) incurred by the Transferee in connection with such
transfer. Upon any such transfer by the Owner Participant as
above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative
Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be
to the Transferee and the transferor Owner Participant shall
be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents and the
Refunding Agreement arising after the date of such transfer
except to the extent fully attributable to or arising out of
acts or events occurring prior thereto and not assumed by the
Transferee (in each case, to the extent of the participation
so transferred). If the Owner Participant intends to transfer
any of its interests hereunder, it shall give 25 days' prior
written notice thereof to the Indenture Trustee, the Owner
Trustee and the Lessee, specifying the name and address of the
proposed Transferee. For purposes of this paragraph, "Net
Worth" shall mean the excess of total assets over total
liabilities, each to be determined in accordance with
generally accepted accounting principles consistently applied.
SECTION 14. AMENDMENT OF SECTION 8(p) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(p) of the Original Participation Agreement is
hereby amended to read in its entirety as follows:
First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its
individual capacity, agrees for the benefit of Lessee to
comply with the terms of the Trust Indenture which it is
required to comply with in its individual capacity.
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<PAGE> 11
SECTION 15. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
The Owner Participant represents and warrants that it
is not acquiring its interest in the Trust Estate, any Secured
Certificate or any interests represented thereby with the
assets of any "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of
Section 4975(e)(1) of the Code. Each Loan Participant, by its
acceptance of a Secured Certificate, agrees that it will not
transfer any Secured Certificate (or any part thereof) to any
entity (except pursuant to Section 2.14 of the Trust
Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer
that either no part of the funds to be used by it for the
purchase of such Secured Certificate (or any part thereof)
constitutes assets of any "employee benefit plan" or that such
transfer will not result in a prohibited transaction (as
defined in Section 4975 of the Code and Section 406 of ERISA);
provided, that no such transfer shall be effective, and the
Indenture Trustee shall not register any Secured Certificate
until the intended transferee has made, or is deemed to have
made, one of the representations referred to above. The Owner
Participant agrees that it will not transfer any of its right,
title or interest in and to this Agreement, the Trust Estate
or the Trust Agreement or any proceeds therefrom to any entity
unless such entity makes (or is deemed to have made) a
representation and warranty as of the date of transfer that
either no part of the funds to be used by it for the purchase
of such right, title and interest (or any part thereof)
constitutes assets of any "employee benefit plan" or that such
transfer will not result in a prohibited transaction (as
defined in Section 4975 of the Code and Section 406 of ERISA);
provided, that no such transfer shall be effective and any
attempt by the Owner Participant to make such a transfer shall
be null and void and of no effect until the intended
transferee has made, or is deemed to have made, one of the
representations referred to in this sentence. The Pass Through
Trustee agrees that it will not agree to any amendment,
modification or waiver of Section 1.01(e)(i) of the initial
supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass
Through Trust Agreement without the prior written consent of
the Owner Participant.
SECTION 16. AMENDMENT OF SECTION 8(u) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(u) of the Original Participation Agreement is
hereby amended by deleting the words and punctuation "The Connecticut Bank and
Trust Company, National Association" each time they appear therein and replacing
them with the words "State Street Bank and Trust Company".
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<PAGE> 12
SECTION 17. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by adding a new second and third paragraph thereto at the end
thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section 1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section 1110.
In the event that Lessee has determined that it
intends to exercise a purchase option set forth in Section
9(b) or 19(d) of the Lease and in connection therewith will
assume the Secured Certificates, but Lessee determines that
the opinion required by subclause (ii) of the preceding
paragraph is unavailable, then, in lieu of assuming the
obligations of the Owner Trustee in respect of the Secured
Certificates, Lessee shall have the option, exercisable by
written notice to the Owner Participant, the Owner Trustee and
the Indenture Trustee accompanied by an opinion of counsel
addressed to the Indenture Trustee to the effect that, after
the transfer referred to below (i) the Lien of the Trust
Indenture will continue to be a valid and duly perfected first
priority security interest in and to the Aircraft and (ii) the
Indenture Trustee should be entitled to the benefits of 11
U.S.C. Section 1110 to the same extent as the Indenture
Trustee was entitled to such protection prior to such
transfer, to require the Owner Participant to transfer, at the
sole cost and expense of Lessee, its entire interest in and to
this Agreement, the Trust Estate and the Trust Agreement to a
company designated by Lessee (which may be an Affiliate of
Lessee), otherwise meeting the requirements for a Transferee
under Section 8(n) hereof (without regard to the proviso to
the second sentence thereof), upon payment to the Owner
Participant of all amounts the Owner Participant would have
been entitled to receive under the Operative Documents had
Lessee exercised and performed such purchase option as to the
Aircraft, such amounts to be mutually determined by the Owner
Participant and Lessee; provided, that, if such transfer is to
an Affiliate of Lessee, Lessee shall also furnish an opinion
of counsel addressed to the Indenture Trustee to the effect
that no part of the trust created by the Trust Agreement (but
only such Affiliate's beneficial interest in such trust) and
no right, title or interest under the Trust Indenture Estate
shall be included in, or subject to, any declaration or
adjudication of, or proceedings with respect to the
bankruptcy, insolvency or liquidation of such Affiliate. If
Lessee elects to exercise the foregoing option, such transfer
shall be fully performed no later than the date upon which the
related purchase option would have been required to be
performed. The Owner Trustee, the Owner
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<PAGE> 13
Participant and the Indenture Trustee shall cooperate with
Lessee in facilitating performance of the foregoing. In the
event that Lessee exercises the option set forth in this
paragraph, Lessee shall cause to be delivered on the effective
date of the transfer of a confirmation as of such date (after
giving effect to such transfer) of the opinion delivered with
Lessee's notice and such additional documentation concerning
the transfer as the Indenture Trustee or the Owner Trustee
shall reasonably request.
SECTION 18. AMENDMENT OF SECTION 8(y) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "citizen of the United
States as defined in Section 101(16) of the Federal Aviation Act and shall be a
United States certificated air carrier under Section 401 of the Federal Aviation
Act of 1958, as amended" in Section 8(y)(i) and replacing them with the words
"Certificated Air Carrier", (ii) deleting the words "each" the first time it
appears in Section 8(y)(ii) and replacing it with the words "the Owner", (iii)
deleting the words "such" the first time it appears in Section 8(y)(ii) and
replacing it with the words "the Indenture Trustee and the Owner", (iv)
inserting in Section 8(y)(ii) after the words "Purchase Agreement Assignment",
the words and punctuation ", the Refunding Agreement", (v) deleting the word
"each" the first time it appears in Section 8(y)(iv) and replacing it with the
words "the Owner", and (vi) deleting the word "Participants" the first time it
appears in Section 8(y)(iv) and replacing it with the words "the Indenture
Trustee and the Owner Participant".
SECTION 19. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
is hereby deleted.
SECTION 20. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement is
hereby deleted.
SECTION 21. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by deleting the first and second sentences thereof and
substituting the following:
Each of the Owner Participant and the Owner Trustee hereby
agrees with Lessee (A) to comply with all of the terms of the
Trust Agreement (as the same may hereafter be amended or
supplemented from time to time in accordance with the terms
thereof) applicable to it; (B) not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a
manner adversely affecting such party without the prior
written consent of such party; and (C) not to revoke the Trust
Agreement without the prior written consent of Lessee and the
Indenture Trustee. So long as the Lease has not been
terminated, the Indenture Trustee and the Owner Trustee hereby
agree for the benefit of Lessee that without the consent of
Lessee they will not (i) amend or modify Article III or IX of
the Trust Indenture, (ii) make any amendment which will affect
the
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<PAGE> 14
stated principal amount or interest on the Secured
Certificates or (iii) amend or modify the provisions of
Section 2.05 of the Trust Indenture.
SECTION 22. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 23. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by deleting the proviso in the first sentence and substituting
therefore the following:
"provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Indenture
Trustee may reasonably request, (B) the rights and obligations
under the Operative Documents of the Owner Participant and the
Indenture Trustee shall not be altered as a result of the
taking of such action, (C) the lien of the Trust Indenture on
the Trust Indenture Estate shall not be adversely affected by
such action, and (D) the Owner Participant and the Indenture
Trustee shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Indenture
Trustee), in scope, form and substance satisfactory to the
Owner Participant and the Indenture Trustee to the effect that
(I) the trust, as thus removed, shall remain a validly
established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized,
executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties,
enforceable in accordance with their terms, (III) such removal
will not result in the imposition of, or increase in the
amount of, any Tax for which Lessee is not required to
indemnify the Owner Participant, the Loan Participants, the
Indenture Trustee, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any
additional indemnification provided by Lessee pursuant to
clause (A) of this sentence), (IV) such removal will not
result in any Loss of Interest Deductions or MACRS Deductions
or FSC Benefits or an Inclusion Event (as defined in the Tax
Indemnity Agreement) with respect to which Lessee is not
required to indemnify the Owner Participant pursuant to
Section 4 of the Tax Indemnity Agreement (taking into account
any additional Indemnification provided by Lessee pursuant to
clause (A) of this sentence), (V) if such removal involves the
replacement of the Owner Trustee, an opinion of counsel to
such successor Owner Trustee in form and substance reasonably
satisfactory to the Indenture Trustee and to the Owner
Participant covering the matters described in Section
4(a)(xiii) hereof, and (VI) covering such other matters as the
Indenture Trustee and the Owner Participant may reasonably
request, and (E) Lessee shall indemnify and hold harmless the
Owner Participant, the Indenture Trustee and the Loan
Participants on a net after-tax basis against any and all
reasonable and actual costs and expenses including counsel
fees and disbursements, registration
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<PAGE> 15
fees, recording or filing fees and taxes incurred by the Owner
Trustee, the Owner Participant, the Indenture Trustee and the
Loan Participants in connection with such change of situs.
SECTION 24. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as
Lessor, under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor.
SECTION 25. ASSUMPTION OF OBLIGATIONS BY THE INDENTURE
TRUSTEE. The Indenture Trustee, in its individual capacity and as Indenture
Trustee, hereby accepts its appointment as Indenture Trustee under the Operative
Documents and accepts the estates, properties, rights, powers and obligations of
the Indenture Trustee in each of the Operative Documents. The Indenture Trustee
hereby makes and agrees to, and incorporates by reference herein, in its
individual capacity or as Indenture Trustee, as the case may be, the
representations, warranties and covenants made and agreed to by the Original
Indenture Trustee in each of the Operative Documents to which at any time the
Original Indenture Trustee was a party or by which at any time it was bound, in
its individual capacity or as the Indenture Trustee. Such representations,
warranties and covenants shall be deemed to be made and agreed by the Indenture
Trustee as of the date hereof and for the benefit of the other parties to the
Operative Documents as set forth therein, their successors and permitted
assigns.
SECTION 26. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
SECTION 27. MISCELLANEOUS. (a) Each of the parties hereto
agrees that the transactions contemplated hereby shall constitute one of the
four refinancing operations permitted in Section 17 of the Participation
Agreement.
(b) Each party hereto acknowledges and agrees that each of the
Pass Through Trustee is a Loan Participant under the Participation Agreement,
the Lease and the other Operative Documents, and is entitled to the benefits of
the covenants and other provisions therein running in favor of the Loan
Participants, and to the security purported to be afforded by the Trust
Indenture, but that (i) no Pass Through Trustee has any liability arising out of
any actions or inactions of the Original Loan Participant or any prior
Certificate
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<PAGE> 16
Holder or any event or condition which occurred or existed prior to the Closing,
(ii) no Pass Through Trustee is making any representations or warranties other
than those set forth in the Refunding Agreement and such other representations
and warranties in the Operative Documents to the extent such representations and
warranties relate to a date after the Closing Date, and (iii) no Pass Through
Trustee has any liability or obligation under any covenant in any of such
agreements for any period prior to the Closing.
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: ___________________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By: ___________________________________
Name:
Title:
[ ],
as Owner Participant
By: ___________________________________
Name:
Title:
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<PAGE> 18
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By: ___________________________________
Name:
Title:
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<PAGE> 19
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
4. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1D,
dated as of June 12, 1996.
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<PAGE> 1
REFUNDING AGREEMENT
[NW 1990 A]
This REFUNDING AGREEMENT [NW 1990 A], dated as of June 3,
1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the
"LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the
"GUARANTOR"), (iii) [______________] (the "OWNER PARTICIPANT"), (iv) FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (the "OWNER
TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK
AND TRUST COMPANY, not in its individual capacity except as otherwise expressly
provided herein, but solely as trustee (in such capacity, the "PASS THROUGH
TRUSTEE") under each of the four separate Pass Through Trust Agreements (as
defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Indenture Trustee (the "INDENTURE
TRUSTEE") under the Original Indenture and the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Participation Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the First National
Bank of Boston, in its individual capacity and as owner trustee (the "ORIGINAL
OWNER TRUSTEE"), [______________], as the loan participant (the ORIGINAL LOAN
PARTICIPANT") and The Connecticut Bank and Trust Company, National Association,
in its individual capacity and as indenture trustee (the "ORIGINAL INDENTURE
TRUSTEE") entered into the Participation Agreement [NW 1990 A], dated as of
August 23, 1990 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale
and lease of one Boeing 747-451 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and the Original
Indenture Trustee entered into the Trust Indenture and Security Agreement [NW
1990 A], dated as of August 23, 1990, as supplemented by Trust Agreement and
Indenture Supplement [NW 1990 A], dated August 23, 1990 (collectively, the
"ORIGINAL INDENTURE"), pursuant to which the Original Owner Trustee issued to
the Original Loan Participant secured certificates substantially in the form set
forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of
the
<PAGE> 2
loan then being made by the Original Loan Participant in participating in the
payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Original Owner Trustee and the Lessee
entered into the Lease Agreement [NW 1990 A] relating to the Aircraft, dated as
of August 23, 1990, as supplemented by Lease Supplement No. 1 [NW 1990 A] dated
August 23, 1990 (the "ORIGINAL LEASE"), whereby, subject to the terms and
conditions set forth therein, the Original Owner Trustee agreed to lease to the
Lessee, and the Lessee agreed to lease from the Original Owner Trustee, the
Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Original Owner
Trustee entered into the Trust Agreement [NW 1990 A], dated as of August 23,
1990 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Original Owner
Trustee agreed, among other things, to hold the Trust Estate defined in Section
1.01 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23,
1990 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, pursuant to an Instrument of Transfer, Removal,
Appointment, Assumption and Acceptance among the Owner Participant, the Original
Owner Trustee and the Owner Trustee dated May 28, 1996 (the "INSTRUMENT OF
TRANSFER"), the Owner Trustee succeeded to all of the estates, properties,
rights, powers, duties and trusts of the Original Owner Trustee under the
Original Trust Agreement and the other Operative Documents to which the Original
Owner Trustee was a party;
WHEREAS, pursuant to an Instrument of Assignment and
Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of
July 14, 1991, the Indenture Trustee succeeded to the Original Indenture
Trustee, as indenture trustee under the Original Indenture;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
Amended and Restated Trust Indenture and Security Agreement [NW 1990 A], dated
as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner
Trustee will issue new secured certificates
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substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES ") in four series;
WHEREAS, concurrently with the execution and delivery of this
Refunding Agreement, the Owner Trustee and the Lessee entered into the First
Amendment to Lease Agreement [NW 1990 A], dated as of the date hereof (the
"LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment
No. 1, the "LEASE"), containing amendments, modifications and additions
necessary to give effect to the transactions described herein;
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into the First Amendment to Trust Agreement [NW 1990 A],
dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the
Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the
"TRUST AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1990 A], dated as of the Refinancing
Date (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as
amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the
Pass Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1990 A], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, at the Closing, the Guarantor will enter into the
Guarantee [NW 1990 A] (the "GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date,
four separate grantor trusts (collectively, the "PASS THROUGH TRUSTS" and,
individually, a "PASS THROUGH TRUST") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank
Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will
enter into three revolving credit
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agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust (other than Northwest Airlines 1996-1D
Pass Through Trust), with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent will enter into the
Intercreditor Agreement, dated as of the Refinancing Date (the "INTERCREDITOR
AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES;
REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth
herein, on June 12, 1996 or on such other date agreed to by the parties hereto
(the "REFINANCING DATE"):
(i) immediately prior to the Closing, the Lessee shall
pay to the Owner Trustee, as a payment of Basic Rent under the
Lease, an amount equal to the unpaid interest on the Original
Secured Certificates accrued up to but not including the
Refinancing Date, and as Supplemental Rent any Funding Loss
Amount (as defined in the Original Indenture) payable in
respect of the Original Secured Certificates;
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Refinancing Secured Certificates being issued to
such Pass Through Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture
Trustee for the benefit of the holders of the Original Secured
Certificates an amount equal to the aggregate principal amount
of Original Secured Certificates outstanding on the
Refinancing Date, together with accrued and unpaid interest on
the Original Secured Certificates and Funding Loss Amount, if
any, up to but not including the Refinancing Date, and all
other amounts payable to such holders under the Original
Indenture and the Original Participation Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee
shall disburse to the holders of the Original Certificates the
amounts of principal and interest, Funding Loss Amount, and
other amounts, if any, described in clause (iii) above, owing
to them on the Refinancing Date with respect to the Original
Secured Certificates as a prepayment of the Original Secured
Certificates;
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(v) simultaneously with the disbursement by the
Indenture Trustee of amounts described in clause (iv) above to
the holders of Original Secured Certificates, the Indenture
Trustee shall receive the Original Secured Certificates for
cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall
enter into the Indenture; and
(vii) the Owner Trustee shall issue, pursuant to Article
II of the Indenture, to the Subordination Agent on behalf of
the Pass Through Trustee for each of the Pass Through Trusts,
Refinancing Secured Certificates of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) In case any Pass Through Trustee shall for any reason fail
to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above
on or prior to June 12, 1996, or such other date as shall be agreed in writing
by the parties hereto, the written notice given by the Lessee pursuant to
Section 17 of the Original Participation Agreement shall be deemed never to have
been given, none of the Owner Participant, the Owner Trustee nor the Lessee
shall have any obligation to pay to the holders of the Original Secured
Certificates any amount in respect of the prepayment of the Original Secured
Certificates, the Original Secured Certificates shall remain outstanding and in
full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7
hereof shall not take place.
(d) The closing (the "CLOSING") of the transactions described
in this Agreement shall take place at the offices of Simpson Thacher & Bartlett,
425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at
such other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated
hereby, the Lessee and the Guarantor have entered into the Underwriting
Agreement, dated June 3, 1996, among the Lessee, the Guarantor and the several
underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"),
and, subject to the terms and conditions hereof, the Lessee and the Guarantor
will enter into each of the Pass Through Trust Agreements and will undertake to
perform certain administrative and ministerial duties under such Pass Through
Trust Agreements.
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SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing
Secured Certificates shall be payable as to principal in accordance with the
terms of the Indenture, and the Refinancing Secured Certificates shall provide
for a fixed rate of interest per annum and shall contain the terms and
provisions provided for the Refinancing Secured Certificates in the Indenture.
The Owner Trustee shall execute, and the Indenture Trustee shall authenticate
and deliver to the Pass Through Trustee for each Pass Through Trust, a principal
amount of Refinancing Secured Certificates bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Refinancing Secured Certificates in the aggregate shall be in the principal
amounts set forth on Schedule II hereto. Subject to the terms hereof, of the
Pass Through Trust Agreements and of the other Operative Documents, all such
Refinancing Secured Certificates shall be dated and authenticated as of the
Refinancing Date and shall bear interest therefrom, shall be registered in such
names as shall be specified by the Subordination Agent and shall be paid in the
manner and at such places as are set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass
Through Trustee to make the payments described in Section l(a)(ii) and the
obligations of the Owner Trustee and the Owner Participant to make the payments
and participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder and paragraphs (r) and (s) shall
not be a condition precedent to the obligations of the Pass Through Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Refinancing
Secured Certificates to the Indenture Trustee for authentication, and the
Indenture Trustee shall have authenticated such Refinancing Secured Certificates
and shall have tendered the Refinancing Secured Certificates to the
Subordination Agent on behalf of the Pass Through Trustee in accordance with
Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received executed counterparts or conformed
copies of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. l;
(5) the Trust Agreement Amendment No. 1;
(6) each of the Pass Through Trust Agreements;
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(7) the Intercreditor Agreement;
(8) the Liquidity Facility for each of the Class
A, Class B and Class C Trusts; and
(9) the Guarantee.
(c) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the
Lessee and the Guarantor (as the case may be) as to
the person or persons authorized to execute and
deliver this Agreement, the Lease Amendment No. 1,
the PA Amendment No. 1, the TIA Amendment No. 1, the
Pass Through Trust Agreements, the Guarantee and any
other documents to be executed on behalf of the
Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby
and the signatures of such person or persons;
(2) a copy of the resolutions of the
board of directors of the Lessee and the Guarantor or
the executive committee thereof, certified by the
Secretary or an Assistant Secretary of the Lessee and
the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby;
and
(3) a copy of the certificate of
incorporation of the Lessee and the Guarantor,
certified by the Secretary of State of the State of
Minnesota in the case of the Lessee and certified by
the Secretary of State of the State of Delaware in
the case of the Guarantor, a copy of the by-laws of
the Lessee and the Guarantor, certified by the
Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate
or other evidence from the Secretary of State of the
State of Minnesota in the case of the Lessee and from
the Secretary of State of the State of Delaware in
the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due
incorporation and good standing of the Lessee or the
Guarantor (as the case may be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
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(1) the Aircraft has been duly
certified by the FAA as to type and airworthiness in
accordance with the terms of the Original Lease and
has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original
Lease and the Original Indenture have been duly
recorded, and the Original Trust Agreement has been
duly filed, with the FAA pursuant to the sections of
Title 49, United States Code, relating to aviation
(the "FEDERAL AVIATION ACT");
(3) the Aircraft has been registered
with the FAA in the name of the Owner Trustee and the
Lessee has authority to operate the Aircraft;
(4) the representations and warranties
contained herein of the Lessee and the Guarantor are
correct as though made on and as of the Refinancing
Date, except to the extent that such representations
and warranties (other than those contained in clause
(v) of Section 8(d)) relate solely to an earlier date
(in which case such representations and warranties
were correct on and as of such earlier date); and
(5) there has been no material adverse
change in the financial condition of the Guarantor
and its subsidiaries, taken as a whole, since
December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the
Indenture Trustee as to the person or persons
authorized to execute and deliver this Agreement, the
Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be
executed on behalf of the Indenture Trustee in
connection with the transactions contemplated hereby
and the signatures of such person or persons;
(2) a copy of the resolutions of the
board of directors of the Indenture Trustee,
certified by the Secretary or an Assistant Secretary
of the Indenture 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 Indenture
Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of
association and by-laws of the Indenture Trustee,
each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
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(4) a certificate signed by an
authorized officer of the Indenture Trustee, dated
the Refinancing Date, certifying that the
representations and warranties contained herein of
the Indenture Trustee are correct as though made on
and as of the Refinancing Date, except to the extent
that such representations and warranties relate
solely to an earlier date (in which case such
representations and warranties are correct on and as
of such earlier date).
(f) The Pass Through Trustee and the Owner Participant
each shall have received the following:
(1) an incumbency certificate of the
Owner Trustee as to the person or persons authorized
to execute and deliver this Agreement, the PA
Amendment No. 1, the Trust Agreement Amendment No. 1
and any other documents to be executed on behalf of
the Owner Trustee in connection with the transactions
contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the
board of directors of the Owner Trustee, certified by
the Secretary or an Assistant Secretary of the Owner
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 Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of
association and by-laws of the Owner Trustee, each
certified by the Secretary or an Assistant Secretary
of the Owner Trustee; and
(4) a certificate signed by an
authorized officer of the Owner Trustee, dated the
Refinancing Date, certifying that the representations
and warranties contained herein of the Owner Trustee
are correct as though made on and as of the
Refinancing Date, except to the extent that such
representations and warranties relate solely to an
earlier date (in which case such representations and
warranties are correct on and as of such earlier
date).
(g) The Pass Through Trustee and the Owner Trustee each
shall have received a certificate signed by an authorized officer of the Owner
Participant, dated the Refinancing Date, certifying that the representations and
warranties contained herein of the Owner Participant are correct as though made
on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received an independent insurance broker's
report as to the due
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<PAGE> 10
compliance with the terms of Section 11 of the Lease relating to insurance with
respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received an opinion addressed to it from
Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an
opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for
the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's
legal department, in each case in form and substance satisfactory to each of
them.
(j) The Pass Through Trustee and the Owner Participant
each shall have received an opinion addressed to it from Ray, Quinney & Nebeker,
special counsel for the Owner Trustee, in form and substance satisfactory to
each of them.
(k) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received an opinion addressed to it from
Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each
shall have received an opinion addressed to it from Sidley & Austin, special
counsel for the Owner Participant, and an opinion addressed to it from corporate
counsel to the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee shall have received an
opinion of White & Case, special counsel to the Liquidity Provider, and in-house
German counsel for the Liquidity Provider, each in form and substance
satisfactory to the Pass Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the
Owner Participant each shall have received an opinion addressed to it from Crowe
& Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and
substance satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into
the Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustees to make the payments described in Section l(a)(ii)
or for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
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(q) All approvals and consents of any trustee or holder
of any indebtedness or obligations of the Lessee or the Guarantor which are
required in connection with the Pass Through Trustee's making of the payments
described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's
participation in the transactions contemplated by this Agreement on the
Refinancing Date shall have been duly obtained.
(r) The Owner Participant shall have received such other
documents or evidence with respect to the Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent and the Indenture
Trustee, as it or its counsel may reasonable request in order to establish the
authority of such parties to consummate the transactions contemplated by this
Agreement, the taking of all necessary corporate action in connection therewith
and compliance with the conditions herein set forth.
(s) The Lessee and the Owner Trustee shall each have
executed and delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1
and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause
Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to
the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner
Participant and the Owner Trustee an opinion as to the due recording of the
Lease Amendment No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS
THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to
participate in the transactions contemplated by this Agreement and to execute
and deliver each of the Pass Through Trust Agreements, and the PA Amendment No.
1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion
referred to in subsections (j) through (n) of Section 3, addressed to the Lessee
and the Guarantor or accompanied by a letter from counsel rendering such opinion
authorizing the Lessee and the Guarantor to rely on such opinion as if it were
addressed to the Lessee and the Guarantor, (ii) each certificate referred to in
subsections (e) through (g) of Section 3, (iii) executed counterparts or
conformed copies of the Trust Agreement Amendment No. 1, and (iv) such other
documents and evidence with respect to each other party hereto as the Lessee,
the Guarantor or their counsel may reasonably request in order to establish the
due consummation of the transactions contemplated by this Agreement, the taking
of all necessary corporate action in connection therewith and compliance with
the conditions herein set forth.
(b) The respective obligations of each of the Lessee, the
Guarantor, the Pass Through Trustee (solely as to clause (iii)), the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Pass Through Trustee are correct as though made on and
as of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such
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<PAGE> 12
earlier date), (ii) an opinion addressed to each of them of Bingham, Dana &
Gould LLP, special counsel for the Pass Through Trustee, in form and substance
satisfactory to each of them, and (iii) such other documents and evidence with
respect to the Pass Through Trustee it may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL
INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the Indenture,
and the Owner Trustee and the Indenture Trustee, by execution and delivery
hereof, agree to execute and deliver the Indenture. The Lessee and the
Guarantor, by execution and delivery hereof, consent to such execution and
delivery of the Indenture. The Indenture shall be effective as of the
Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the
satisfaction or waiver of the conditions precedent set forth herein, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant, by
execution and delivery hereof, consent to the amendment to the Original Lease
effected by, and request and instruct the Owner Trustee to execute and deliver,
the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by
execution and delivery hereof, to execute and deliver the Lease Amendment No. 1.
The Lease Amendment No. 1 shall be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the PA Amendment
No. 1, and the Owner Trustee and the Indenture Trustee, by execution and
delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the
execution and delivery of the PA Amendment No. 1 by each of the parties thereto,
the Original Participation Agreement shall be amended as set forth in the PA
Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall
be a party thereto from and after the Refinancing Date to the extent set forth
in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the
Refinancing Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND
THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a
corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, has
the corporate power and authority to own or hold under lease
its properties, has, or had on the respective dates of
execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the
Lessee, this Agreement, the Lease Amendment No. 1, the PA
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Amendment No. 1, the TIA Amendment No. 1, the Pass Through
Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party and (ii) in the
case of the Guarantor, this Agreement, the Pass Through Trust
Agreements, the Guarantee, the Underwriting Agreement and the
other Operative Documents to which it is a party, and is duly
qualified to do business as a foreign corporation in each
state in which its operations or the nature of its business
requires other than failures to so qualify which would not
have a material adverse effect on the condition (financial or
otherwise), consolidated business or properties of it and its
subsidiaries considered as one enterprise;
(b) the Lessee is a Certificated Air Carrier,
and its chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code in effect in the
State of Minnesota) is located at Eagan, Minnesota;
(c) the execution and delivery by the Lessee or
the Guarantor (as the case may be) of this Agreement, the
Lease Amendment No. 1, the PA Amendment No. 1, the Pass
Through Trust Agreements, the Guarantee, the Underwriting
Agreement and each other Operative Document to which the
Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the
Guarantor (as the case may be) under this Agreement, the
Participation Agreement, the Tax Indemnity Agreement, the
Lease, the Pass Through Trust Agreements, the Guarantee, the
Underwriting Agreement and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a
party, have been duly authorized by all necessary corporate
action on the part of the Lessee or the Guarantor, do not
require any stockholder approval, or approval or consent of
any trustee or holder of any material indebtedness or material
obligations of the Lessee or the Guarantor, except such as
have been duly obtained and are in full force and effect, and
do not contravene any law, governmental rule, regulation or
order binding on the Lessee or the Guarantor (as the case may
be) or the certificate of incorporation or by-laws of the
Lessee or the Guarantor (as the case may be), or contravene
the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Permitted Liens) upon the
property of the Lessee or the Guarantor (as the case may be)
under, any indenture, mortgage, contract or other agreement to
which the Lessee or the Guarantor (as the case may be) is a
party or by which it may be bound or affected which
contravention, default or Lien, individually or in the
aggregate, would be reasonably likely to have a material
adverse effect on the condition (financial or otherwise),
business or properties of the Guarantor and its subsidiaries
considered as one enterprise;
(d) neither the execution and delivery by the
Lessee or the Guarantor (as the case may be) of this
Agreement, the Lease Amendment No. 1, the PA Amendment No. 1,
the Pass Through Trust Agreements, the Guarantee, the
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Underwriting Agreement or any other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or
the Guarantor (as the case may be) hereunder or under the
Participation Agreement, the Tax Indemnity Agreement, the
Lease, the Pass Through Trust Agreements, the Guarantee, the
Underwriting Agreement or the other Operative Documents to
which the Lessee or the Guarantor (as the case may be) is a
party, nor the consummation by the Lessee or the Guarantor (as
the case may be) of any of the transactions contemplated
hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of
any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state or
foreign governmental authority having jurisdiction, other than
(i) the registration of the Certificates under the Securities
Act of 1933, as amended, and under the securities laws of any
state in which the Certificates may be offered for sale if the
laws of such state require such action, (ii) the qualification
of the Pass Through Trust Agreements under the Trust Indenture
Act of 1939, as amended, pursuant to an order of the
Securities and Exchange Commission, (iii) the consents,
approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation
Agreement, (iv) the registrations and filings referred to in
Section 8(f), and (v) authorizations, consents, approvals,
actions, notices and filings required to be obtained, taken,
given or made either only after the date hereof or the failure
of which to obtain, take, give or make would not be reasonably
likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(e) this Agreement constitutes, and each of the
Participation Agreement, the Pass Through Trust Agreements,
the Tax Indemnity Agreement and the Lease, when the PA
Amendment No. 1, the TIA Amendment No. 1 and the Lease
Amendment No. 1 shall have been executed and delivered by each
of the parties thereto, will constitute, the legal, valid and
binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor
(as the case may be) in accordance with their respective
terms, except as the same may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the rights of creditors
or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable
laws which may affect the remedies provided in the Lease,
which laws, however, do not make the remedies provided in the
Lease inadequate for practical realization of the benefits
intended to be afforded thereby;
(f) except for the filings and registrations
referred to in Section 7(a)(vi) of the Participation
Agreement, such filings and registrations as shall have been
made or effected subsequent thereto and the filing for
recording
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<PAGE> 15
pursuant to the Federal Aviation Act of the Indenture and the
Lease Amendment No. 1, no further 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 under the laws of the
United States of America or any State thereof in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft (with respect to such
portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107)
and in the Lease in any applicable jurisdiction in the United
States other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease and
the Lease Amendment No. 1 (to the extent the Lease constitutes
chattel paper) and the filing of continuation statements at
periodic intervals with respect to the Uniform Commercial Code
financing statements in effect on the Refinancing Date
covering the security interests created by the Indenture or
describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of
their affiliates has directly or indirectly offered the
Certificates for sale to any Person other than in a manner
permitted by the Securities Act of 1933, as amended, and by
the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(i) no event has occurred and is continuing
which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given
or time lapse or both; and
(j) no event has occurred and is continuing
which constitutes an Event of Loss or would constitute an
Event of Loss with the lapse of time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of
the parties below represents, warrants and covenants to each of the other
parties to this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity
represents, warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts
trust company duly incorporated, validly existing and in good
standing under the laws of Massachusetts, is a Citizen of the
United States (without making use of any voting trust, voting
powers agreement or similar arrangement), will notify promptly
all parties to this Agreement if in its reasonable opinion its
status as a Citizen of the United States (without making use
of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as
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<PAGE> 16
Indenture Trustee as provided in Section 8.02 of the Indenture
promptly after it obtains actual knowledge that it has ceased
to be such a Citizen of the United States (without making use
of a voting trust, voting powers agreement or similar
arrangement), and has the full corporate power, authority and
legal right under the laws of the Commonwealth of
Massachusetts and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of this
Agreement, the PA Amendment No. 1, the Indenture and each
other Operative Document to which it is a party and to carry
out its obligations under this Agreement, the Participation
Agreement, the Indenture and each other Operative Document to
which it is a party;
(2) the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, the PA Amendment No.
1 and each other Operative Document to which it is a party and
the performance by the Indenture Trustee of its obligations
under this Agreement, the Participation Agreement, the
Indenture and each other Operative Document to which it is a
party have been duly authorized by the Indenture Trustee and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the
Participation Agreement, when the PA Amendment No. 1 has been
executed and delivered by the Indenture Trustee, and the
Indenture, when executed and delivered by the Indenture
Trustee, will constitute, the legal, valid and binding
obligations of the Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party; and
(5) there are no Indenture Trustee Liens on the
Aircraft or any portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except
as provided in clauses (3) and (7) below) and (but only as provided in clauses
(3) and (7) and, to the extent that it relates to the Owner Trustee, clauses
(2), (9) and (11) below) as Owner Trustee, represents and warrants that:
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<PAGE> 17
(1) the Owner Trustee, in its individual
capacity, is a national banking association duly organized and
validly existing in good standing under the laws of the United
States, has full corporate power and authority to carry on its
business as now conducted, has, or had on the respective dates
of execution thereof, the corporate power and authority to
execute and deliver the Instrument of Transfer and to carry
out the terms of the Original Trust Agreement, and has, or had
on the respective dates of execution thereof or assumption of
rights and obligations thereunder (assuming the authorization,
execution and delivery of the Trust Agreement by the Owner
Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the
corporate power and authority to execute and deliver and to
carry out the terms of this Agreement, the Indenture, the
Refinancing Secured Certificates, the Lease, the PA Amendment
No. 1, the Trust Agreement Amendment No. 1 and each other
Operative Document (other than the Trust Agreement) to which
it is a party;
(2) the Owner Trustee in its trust capacity and,
to the extent expressly provided herein, in its individual
capacity, has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant),
this Agreement and the Purchase Agreement Assignment
constitute, and each of the Participation Agreement, when the
PA Amendment No. 1 shall have been entered into, the
Indenture, when the Indenture shall have been entered into,
the Lease, when the Lease Amendment No. 1 shall have been
entered into, and the Trust Agreement, when the Trust
Agreement Amendment No. 1 shall have been entered into, will
constitute, a legal, valid and binding obligation of the Owner
Trustee, in its individual capacity, or as Owner Trustee, as
the case may be, enforceable against it in its individual
capacity or as Owner Trustee, as the case may be, in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution
and delivery of the Trust Agreement by the Owner Participant,
the Owner Trustee has duly authorized, and on the Refinancing
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Refinancing Secured
Certificates pursuant to the terms and provisions hereof and
of the Indenture, and each Refinancing Secured Certificate on
the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the
benefits and security afforded by the Indenture in accordance
with the terms of such Refinancing Secured Certificate and the
Indenture;
(4) neither the execution and delivery by the
Owner Trustee, in its individual capacity or as Owner Trustee,
as the case may be, of this Agreement,
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<PAGE> 18
the Instrument of Transfer, the PA Amendment No. 1, the
Indenture, the Lease Amendment No. 1, the Trust Agreement
Amendment No. 1, the Refinancing Secured Certificates or any
other Operative Document to which it is a party, nor the
consummation by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the
transactions contemplated hereby or thereby, nor the
compliance by the Owner Trustee, in its individual capacity or
as Owner Trustee, as the case may be, 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 it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the
United States of America or the State of Utah governing the
trust powers of the Owner Trustee, or any judgment or order
applicable to or binding on it;
(5) no consent, approval, order or authorization
of, giving of notice to, or registration with, or taking of
any other action in respect of, any Utah state or local
governmental authority or agency or any United States federal
governmental authority or agency regulating the trust powers
of the Owner Trustee in its individual capacity is required
for the execution and delivery of, or the carrying out by, the
Owner Trustee, in its individual capacity or as Owner Trustee,
as the case may be, of any of the transactions contemplated
hereby or by the Trust Agreement, the Participation Agreement,
the Indenture, the Lease, the Refinancing Secured
Certificates, or any other Operative Document to which it is a
party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken or which is
described in Section 8(d);
(6) there exists no Lessor Lien (including for
this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to the
Owner Trustee, in its individual capacity, other than any
Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor
Liens) (A) the existence of which poses no material risk of
the sale, forfeiture or loss of the Aircraft, Airframe or any
Engine or any interest therein, (B) the existence of which
does not interfere in any way with the use or operation of the
Aircraft by the Lessee (or any Sublessee), (C) the existence
of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the
Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence
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<PAGE> 19
of which does not result in actual interruption in the receipt
and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for
the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for
this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to the
Owner Trustee, as lessor under the Lease, other than any
Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor
Liens) (A) the existence of which poses no material risk of
the sale, forfeiture or loss of the Aircraft, Airframe or any
Engine or any interest therein, (B) the existence of which
does not interfere in any way with the use or operation of the
Aircraft by the Lessee (or any Sublessee), (C) the existence
of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the
Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in
actual interruption in the receipt and distribution by the
Indenture Trustee in accordance with the Indenture of Rent
assigned to the Indenture Trustee for the benefit of the
Certificate Holders;
(8) there are no Taxes payable by the Owner
Trustee, either in its individual capacity or as Owner
Trustee, imposed by the State of Utah or any political
subdivision thereof in connection with the redemption of the
Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and
delivery in its individual capacity or as Owner Trustee, as
the case may be, of any of the instruments referred to in
clauses (1), (2), (3) and (4) above, that, in each case, would
not have been imposed if the Trust Estate were not located in
the State of Utah and First Security Bank of Utah, National
Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in,
the State of Utah;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the
place where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the Trust
Estate, are located in Salt Lake City, Utah;
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<PAGE> 20
(11) the Owner Trustee has not, in its individual
capacity or as Owner Trustee, directly or indirectly offered
any Refinancing Secured Certificate or Certificate or any
interest in or to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participant and the Owner
Participant; and the Owner Trustee has not authorized anyone
to act on its behalf (it being understood that in arranging
and proposing the refinancing contemplated hereby and agreed
to herein by the Owner Trustee, the Lessee has not acted as
agent of the Owner Trustee) to offer directly or indirectly
any Refinancing Secured Certificate, any Certificate or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or to solicit any offer to
acquire any of the same from, any person; and
(12) it is a Citizen of the United States
(without making use of a voting trust agreement, voting powers
agreement or similar arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its
present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof or assumption of rights and obligations thereunder, as
the case may be, the corporate power and authority to enter
into and to perform its obligations under this Agreement, the
Original Participation Agreement, the Original Tax Indemnity
Agreement, the Original Trust Agreement, the PA Amendment No.
1, the TIA Amendment No. 1 and the Trust Agreement Amendment
No. 1; this Agreement has been duly authorized, executed and
delivered by it; and this Agreement constitutes, and the
Participation Agreement, when the PA Amendment No. 1 shall
have been entered into, the Tax Indemnity Agreement, when the
TIA Amendment No. 1 shall have been entered into, and the
Trust Agreement, when the Trust Agreement Amendment No. 1
shall have been entered into, will constitute, the legal,
valid and binding obligations of the Owner Participant
enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
(2) neither (A) the execution and delivery by
the Owner Participant of this Agreement, the PA Amendment No.
1, the TIA Amendment No. 1, the Trust Agreement Amendment No.
1 or any other Operative Document to which it is a party nor
(B) compliance by it with all of the provisions hereof or
thereof, (x) will contravene any law or order of any court or
governmental
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<PAGE> 21
authority or agency applicable to or binding on the Owner
Participant (it being understood that no representation or
warranty is made with respect to laws, rules or regulations
relating to aviation or to the nature of the equipment owned
by the Owner Trustee other than such laws, rules or
regulations relating to the citizenship requirements of the
Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected;
(3) no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body (other than as required by the
Federal Aviation Act or the regulations promulgated
thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by it of this
Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, or
the Trust Agreement Amendment No. 1;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings before any court or
administrative agency or arbitrator which would materially
adversely affect the Owner Participant's ability to perform
its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust
Agreement;
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated hereby
and agreed to herein by the Owner Participant, the Lessee has
not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or
Certificate or any interest in and to the Trust Estate, the
Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any
Person; the Owner Participant's interest in the Trust Estate
and the Trust Agreement was acquired for its own account and
was purchased for investment and not with a view to any resale
or distribution thereof;
(6) on the Refinancing Date, the Trust Estate
shall be free of Lessor Liens attributable to the Owner
Participant other than any Lessor Liens (including for this
purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) (A) the existence of which
poses no material risk of the sale, forfeiture or loss of the
Aircraft, Airframe or any Engine or any interest therein, (B)
the existence of which does not interfere in any way with the
use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the
priority or perfection of, or otherwise jeopardize, the Lien
of the Indenture, (D) which the Owner Participant is
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<PAGE> 22
diligently contesting by appropriate proceedings and (E) the
existence of which does not result in actual interruption in
the receipt and distribution by the Indenture Trustee in
accordance with the Indenture of Rent assigned to the
Indenture Trustee for the benefit of the Certificate Holders;
and
(7) it is a Citizen of the United States
(without making use of a voting trust agreement, voting powers
agreement or similar arrangement).
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly
incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, and has the full
corporate power, authority and legal right under the laws of
the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Pass Through Trust Agreements,
the Intercreditor Agreement, the PA Amendment. No. 1 and this
Agreement and to perform its obligations under this Agreement,
the Pass Through Trust Agreements, the Intercreditor Agreement
and the Participation Agreement;
(2) this Agreement has been, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements, the Intercreditor Agreement and the
PA Amendment No. 1 will have been, duly authorized, executed
and delivered by the Pass Through Trustee; this Agreement
constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement , the PA Amendment No. 1 and (upon
execution and delivery of the PA Amendment No. 1) the
Participation Agreement, will constitute, the legal, valid and
binding obligations of the Pass Through Trustee enforceable
against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(3) none of the execution, delivery and
performance by the Pass Through Trustee of any of the Pass
Through Trust Agreements, the Intercreditor Agreement, this
Agreement or the PA Amendment No. 1, the performance by the
Pass Through Trustee of the Participation Agreement, the
purchase by the Pass Through Trustee of the Refinancing
Secured Certificates pursuant to this Agreement, or the
issuance of the Certificates pursuant to the Pass Through
Trust Agreements, contravenes any law, rule or regulation of
the Commonwealth of Massachusetts or any United States
governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers or any judgment
or order applicable to or binding on the Pass Through Trustee
and does not contravene or result in any breach of, or
constitute a
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<PAGE> 23
default under, the Pass Through Trustee's articles of
association or by-laws or any agreement or instrument to which
the Pass Through Trustee is a party or by which it or any of
its properties may be bound;
(4) neither the execution and delivery by the
Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement, the PA Amendment No.
1 or this Agreement, nor the consummation by the Pass Through
Trustee of any of the transactions contemplated hereby or
thereby or by the Participation Agreement, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any Massachusetts governmental authority or agency
or any federal governmental authority or agency regulating the
Pass Through Trustee's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass
Through Trustee imposed by the Commonwealth of Massachusetts
or any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements, the Intercreditor Agreement or the
Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through
Trust Agreements), and there are no Taxes payable by the Pass
Through Trustee imposed by the Commonwealth of Massachusetts
or any political subdivision thereof in connection with the
acquisition, possession or ownership by the Pass Through
Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through
Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under
subpart E, Part I of Subchapter J of the Code, such trusts
will not be subject to any Taxes imposed by the Commonwealth
of Massachusetts or any political subdivision thereof;
(6) there are no pending or threatened actions
or proceedings against the Pass Through Trustee before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any
Pass Through Trust Agreement;
(7) except for the issue and sale of the
Certificates contemplated hereby, the Pass Through Trustee has
not directly or indirectly offered any Refinancing Secured
Certificate for sale to any Person or solicited any offer to
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<PAGE> 24
acquire any Refinancing Secured Certificates from any Person,
nor has the Pass Through Trustee authorized anyone to act on
its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any
offer to acquire any Refinancing Secured Certificate from any
Person; and the Pass Through Trustee is not in default under
any Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, any
Underwriter, the Lessee or the Guarantor.
(e) The Subordination Agent represents, warrants and
covenants that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States and has the full corporate power,
authority and legal right under the laws of the United States
pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment No. 1 and this
Agreement and to perform its obligations under this Agreement,
the Liquidity Facilities and the Intercreditor Agreement and,
when the PA Amendment No. 1 has been executed and delivered by
each of the parties thereto, the Participation Agreement;
(2) this Agreement has been, and when executed
and delivered by the Subordination Agent, each of the
Liquidity Facilities, the Intercreditor Agreement and the PA
Amendment No. 1 will have been, duly authorized, executed and
delivered by the Subordination Agent; this Agreement
constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment No. 1 and (upon
execution and delivery by the Subordination Agent of the PA
Amendment No. 1), the Participation Agreement, will
constitute, the legal, valid and binding obligations of the
Subordination Agent enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and
performance by the Subordination Agent of each of the
Liquidity Facilities, the Intercreditor Agreement, this
Agreement, the PA Amendment No. 1 or the Participation
Agreement, or the performance by the Subordination Agent of
the Participation Agreement, contravenes any law, rule or
regulation of the State of Connecticut or any United States
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers or any judgment or
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<PAGE> 25
order applicable to or binding on the Subordination Agent and
do not contravene or result in any breach of, or constitute a
default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to which
the Subordination Agent is a party or by which it or any of
its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment No. 1 or this
Agreement nor the consummation by the Subordination Agent of
any of the transactions contemplated hereby or thereby or by
the Participation Agreement requires the consent or approval
of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental
authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity
Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or
other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities),
and there are no Taxes payable by the Subordination Agent
imposed by the State of Connecticut or any political
subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of
the Refinancing Secured Certificates (other than franchise or
other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities);
(6) there are no pending or threatened actions
or proceedings against the Subordination Agent before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the PA Amendment
No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Refinancing Secured Certificate for
sale to any Person or solicited any offer to acquire any
Refinancing Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to
offer directly or indirectly any Refinancing Secured
Certificate for sale to any Person, or to
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<PAGE> 26
solicit any offer to acquire any Refinancing Secured
Certificate from any Person; and the Subordination Agent is
not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, any
Underwriter, the Lessee or the Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and any such notice shall become effective upon
being deposited in the United States mail, with proper postage for first-class
registered or certified mail prepaid, or when delivered personally or, if
promptly confirmed by mail as provided above, when dispatched by facsimile or
other written telecommunication, addressed, if to the Lessee, the Guarantor, the
Owner Participant, the Owner Trustee, the Pass Through Trustee, the
Subordination Agent, or the Indenture Trustee, at their respective addresses or
facsimile numbers set forth below the signatures of such parties at the foot of
this Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b)
below, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participant in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and
disbursements allocable to the Refinancing Secured
Certificates issued under the Indenture of (A) Bingham, Dana &
Gould LLP, special counsel for the Pass Through Trustee and
the Indenture Trustee, (B) Ray, Quinney & Nebeker, special
counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C.,
special counsel in Oklahoma City, Oklahoma, (D) Shearman &
Sterling, special counsel for the Underwriters, and (E)
special counsel, if any, to the Original Loan Participant;
(2) the reasonable fees, expenses and
disbursements of Sidley & Austin, special counsel for the
Owner Participant;
(3) the fees, expenses and disbursements of
Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft,
special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the
Indenture Trustee, the Owner Trustee, the Liquidity Provider,
the Pass Through Trustee and the Subordination Agent;
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<PAGE> 27
(6) the costs of filing and recording documents
with the FAA and filing Uniform Commercial Code financing
statements in the United States; and
(7) the reasonable fees, expenses and
disbursements of White & Case, special counsel for the
Liquidity Provider;
provided, however, the Owner Participant shall not be obligated to pay expenses
under this Section 11(a) in excess of $1,656,719. Any such expenses in excess of
such amount shall be paid by the Lessee as Supplemental Rent.
(b) In the event that the transactions contemplated by
this Section 11 and the agreements referred to herein are not consummated, the
Lessee shall bear and pay all costs, expenses and fees referred to in this
Section 11; provided that if the transactions fail to be consummated as a result
of the failure of the Owner Participant to act in good faith in consummating the
transactions, or to otherwise comply with the terms hereof, the Owner
Participant shall bear and pay its own fees, costs and expenses (including,
without limitation, the fees and expenses of its special counsel) and the Lessee
shall pay all other reasonable fees, costs and expenses as aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of
counterparts (and each of the parties hereto shall not be required to execute
the same counterpart). Each counterpart of this Agreement, including a signature
page executed by each of the parties hereto, shall be an original counterpart of
this Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
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<PAGE> 28
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of Original Secured Certificates.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
as Lessee
By: _________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 30
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: _________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 31
[_____________________]
as Owner Participant
By:
Name:
Title:
Address:
Attention:
Facsimile:
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<PAGE> 32
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as Pass
Through Trustee
By: _________________________________________
Name:
Title:
Address: Two International Place,
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 33
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent
By: _________________________________________
Name:
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place,
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Indenture Trustee
By: _________________________________________
Name:
Title:
Address: Two International Place,
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 35
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, except as
otherwise provided herein, but solely as
Owner Trustee
By: _________________________________________
Name:
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 36
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
4. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1D,
dated as of June 12, 1996.
<PAGE> 37
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate Purchase
Purchaser and Maturity Principal Amount Price
--------- ------------ ---------------- -----
<S> <C> <C> <C>
Northwest Airlines
Pass Through Trust
1996-1A 7.67% Refinancing Secured Certificates due January 2, 2015 $51,475,500 $51,475,500
1996-1B 8.07% Refinancing Secured Certificates due July 2, 2011 $17,158,500 $17,158,500
1996-1C 8.97% Refinancing Secured Certificates due January 2, 2009 $17,158,341 $17,158,341
1996-1D 10.15% Refinancing Secured Certificates due January 2, 2005 $12,657,657 $12,657,657
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1995 A]
This TRUST AGREEMENT [NW 1995 A] dated as of November 15, 1995
between [______________________________________] a [___________] corporation
(the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association (in its individual capacity,
"FSBU") and otherwise not in its individual capacity but solely as trustee
hereunder (herein in such capacity with its permitted successors and assigns
called the "OWNER TRUSTEE");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust
Agreement the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1995 A], to be
dated as of the date hereof, and to be entered into by the Owner Trustee and
Lessee concurrently with the execution and delivery of this Trust Agreement, as
said Lease Agreement may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Trust Agreement. The term "Lease" shall also include
each Lease Supplement from time to time entered into pursuant to the terms of
the Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
<PAGE> 2
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant,
the percentage of its undivided beneficial interest in the Trust Estate created
by this Trust Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such term in
the Lease.
"Replacement Airframe" has the meaning ascribed to such term in
the Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
"Subsequent Owner Participant" means any corporation to which the
Original Owner Participant or any transferee from the Original Owner
Participant or any Subsequent Owner Participant shall have transferred at any
time after the Delivery Date all of the undivided right, title and interest
originally held by the Original Owner Participant in this Trust Agreement, the
Trust Estate and the Participation Agreement, to the extent permitted by
Section 8.01 of this Trust Agreement and Section 8 of the Participation
Agreement, provided that any such transfer: (i) shall be effected by a written
agreement, in form and substance reasonably satisfactory to the Owner Trustee
in its individual capacity, among such transferee, its transferor and the Owner
Trustee, which shall provide that such transferee thereby becomes a party to,
and beneficiary of, this Trust Agreement and an Owner Participant for all
purposes hereof and that such transferee assumes all of the obligations of its
transferor under this Trust Agreement; and (ii) so long as the Lease shall be
in effect or any Secured Certificates remain unpaid, such transferee and its
transferor shall have complied with all of the terms of Section 8(n) of the
Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in
its individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in
the Trust Indenture.
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<PAGE> 3
"Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and
to this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner
Participant hereby authorizes and directs the Owner Trustee to execute and
deliver the Operative Documents and any other agreements, instruments or
documents to which the Owner Trustee is a party in the respective forms thereof
in which delivered from time to time by the Owner Participant to the Owner
Trustee for execution and delivery and, subject to the terms hereof, to perform
its duties and, upon instructions from the Owner Participant, exercise its
rights under said Operative Documents in accordance with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participant, subject, however, to
the provisions of and the Lien created by the Trust Indenture and to the
provisions of the Lease.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the benefit of the Owner Participant that it will, on the
Delivery Date, subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and
the FAA Bill of Sale;
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<PAGE> 4
(c) cause the Aircraft to be leased to Lessee under the Lease,
and in furtherance thereof execute and deliver a Lease Supplement covering
the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the Participation
Agreement;
(f) execute and deliver the financing statements referred to
in Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of the
Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA
Bill of Sale; (ii) an application for registration of the Aircraft in the
name of the Owner Trustee (including without limitation an affidavit from
the Owner Trustee in compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement.
SECTION 3.02.CONDITIONS PRECEDENT. The right and obligation of
the Owner Trustee to take the action required by Section 3.01 hereof with
respect to the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full
amount of its Commitment set forth in Schedule I of the Participation
Agreement available to the Owner Trustee, in immediately available funds,
in accordance with Section 1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been complied
with in a manner satisfactory to the Original Owner Participant and the
Owner Trustee.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE
LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified
to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease
and upon Lessee's assuming the indebtedness evidenced by the Secured
Certificates in accordance with the provisions of such Section 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT
AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and
directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of
the Owner Participant that it will, in the event of a Replacement Airframe and
Replacement Engines, if any, being substituted pursuant to Section 10(a) of the
Lease, or a Replacement Engine being substituted pursuant to
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<PAGE> 5
Section 10(b) of the Lease, subject to due compliance with the terms of Section
10(a) or 10(b) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees of Lessee) to accept
delivery of the Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement
Airframe and Replacement Engines, if any, or the Replacement Engine a bill
of sale or bills of sale (if tendered), and the invoice, if any, with
respect to the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 10(a) or (b) of the
Lease;
(c) in the case of a Replacement Airframe, make application to
the Federal Aviation Administration for the registration in the name of the
Owner Trustee of the Aircraft of which such Replacement Airframe is a part;
(d) execute and deliver a Lease Supplement and a Trust
Supplement covering (i) the Aircraft of which such Replacement Airframe is
part or (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe and
Engines or engines (if any) or the Engine or engine being replaced from the
lien created under the Trust Indenture and release the Purchase Agreement
and the Purchase Agreement Assignment (solely with respect to such replaced
Airframe and Engines, if any, or Engine) from the assignment and pledge
under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take such
further action as may be contemplated by clauses (A) and (B) of the third
paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of
Section 10(b) of the Lease, as the case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND
EFFECT. In the event of the substitution of a Replacement Airframe for the
Airframe or the substitution of a Replacement Engine for any Engine or engine,
all provisions of this Trust Agreement relating to such replaced Airframe or
Engine or engine shall be applicable to such Replacement Airframe or
Replacement Engine with the same force and effect as if such Replacement
Airframe or Replacement Engine were the same airframe or engine as the Airframe
or Engine being replaced but for the Event of Loss with respect to such
Airframe or Engine.
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<PAGE> 6
SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN
ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee
to, and the Owner Trustee agrees for the benefit of the Owner Participant that
it will, in the event of an engine being transferred to the Owner Trustee
pursuant to Section 5(b) of the Lease, subject to due compliance with the terms
of such Section 5(b):
(a) accept from Lessee the bill of sale with respect to such
engine contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement and the Purchase
Agreement Assignment (solely with respect to such Engine) from the
assignment and pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to
Indenture Trustee. Until the Trust Indenture shall have been discharged
pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance
proceeds and requisition or other payments of any kind included in the Trust
Estate (other than Excluded Payments) payable to the Owner Trustee shall be
payable directly to the Indenture Trustee (and if any of the same are received
by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee
without deduction, set-off or adjustment of any kind) for distribution in
accordance with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof, any
payment of the type referred to in Section 4.01(a) hereof (other than Excluded
Payments) received by the Owner Trustee, any payments received from the
Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents
-6-
<PAGE> 7
shall be applied and distributed in accordance with the terms of the Lease or
such other Operative Document; and third, the balance, if any, shall be paid to
the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts
from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the Trust Indenture shall, if paid to the Owner
Trustee, be distributed by the Owner Trustee to the Owner Participant in
accordance with the provisions of Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the
Owner Trustee shall be paid by the Owner Trustee to the Person to whom such
Excluded Payments are payable under the provisions of the Participation
Agreement, the Tax Indemnity Agreement or the Lease.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of the Owner Participant as the Owner
Participant may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will, if so requested by the
Owner Participant in writing, pay any or all amounts payable to the Owner
Participant pursuant to this Article IV either (i) by crediting such amount or
amounts to an account or accounts maintained by the Owner Participant with the
Owner Trustee in its individual capacity in immediately available funds, (ii)
by payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to the Owner Participant at such address as the Owner
Participant shall have designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee
shall have knowledge of a Lease Event of Default or Indenture Event of Default
(or an event which with the passage of time or the giving of notice or both
would constitute a Lease Event of Default or an Indenture Event of Default) the
Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy
notice thereof followed by prompt confirmation thereof by certified mail,
postage prepaid, provided that (i) in the case of an event which with the
passage of time would constitute an Indenture Event of Default referred to in
paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no
event be furnished later than ten (10) days after the Owner Trustee shall first
have knowledge of such event and (ii) in the case of a misrepresentation by the
Owner Trustee which with the passage of time would constitute an Indenture
Event of Default referred to in paragraph (d) of Section 4.02 of the Trust
Indenture, such notice shall in no event be furnished later than ten (10) days
after the Owner Trustee shall first have knowledge of such event. Subject to
the terms of Section 5.03 hereof, the Owner Trustee shall take such action or
shall refrain from taking such action, not
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inconsistent with the provisions of the Trust Indenture, with respect to such
Lease Event of Default, Indenture Event of Default or other event as the Owner
Trustee shall be directed in writing by the Owner Participant. If the Owner
Trustee shall not have received instructions as above provided within twenty
(20) days after the mailing of such notice to the Owner Participant, the Owner
Trustee until instructed otherwise in accordance with the preceding sentence
may, but shall be under no duty to, take or refrain from taking such action
with respect to such Lease Event of Default, Indenture Event of Default or
other event, not inconsistent with the provisions of the Trust Indenture, as it
shall deem advisable in the best interests of the Owner Participant. For all
purposes of this Trust Agreement, the Lease and the other Operative Documents,
in the absence of actual knowledge by an officer of FSBU in the Corporate Trust
Department, the Owner Trustee shall not be deemed to have knowledge of a Lease
Event of Default, Indenture Event of Default or other event referred to in this
Section 5.01 unless notified in writing by the Indenture Trustee, the Owner
Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms
of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of the Owner Participant, the Owner Trustee will take such of
the following actions, not inconsistent with the provisions of the Trust
Indenture, as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder or under any of the
Operative Documents to which the Owner Trustee is a party or in respect of all
or any part of the Trust Estate as shall be specified in such instructions
(including entering into agreements referred to in clause (i) of the definition
of "Subsequent Owner Participant"); (ii) take such action to preserve or
protect the Trust Estate (including the discharge of Liens) as may be specified
in such instructions; (iii) approve as satisfactory to it all matters required
by the terms of the Lease or the other Operative Documents to be satisfactory
to the Owner Trustee, it being understood that without written instructions of
the Owner Participant, the Owner Trustee shall not approve any such matter as
satisfactory to it (it being understood that the provisions of Sections 3.03,
3.04 and 3.06 hereof do not constitute instructions by the Owner Participant
for the Owner Trustee to approve of or consent to the matters to be approved of
or consented to by the Owner Trustee in the sections of the Lease referred to
in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of
Lessee under the Operative Documents, after the expiration or earlier
termination of the Lease, deliver the Aircraft to the Owner Participant in
accordance with such instructions, convey all of the Owner Trustee's right,
title and interest in and to the Aircraft for such amount, on such terms and to
such purchaser or purchasers as shall be designated in such instructions, or
net lease the Aircraft on such terms and to such lessee or lessees as shall be
designated in such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be
required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participant, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish
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such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
fees and disbursements of counsel or agents employed by the Owner Trustee in
connection therewith. The Owner Trustee shall not be required to take any
action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is contrary
to the terms of any of the Operative Documents to which the Owner Trustee is a
party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT
OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in written instructions from the
Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and
no implied duties or obligations shall be read into this Trust Agreement
against the Owner Trustee. FSBU agrees that it will, in its individual
capacity and at its own cost or expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01 hereof) promptly take
such action as may be necessary to duly discharge and satisfy in full all
Lessor Liens which it is required to discharge pursuant to Section 8(h) of the
Participation Agreement and otherwise comply with the terms of said Section
binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything
herein to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the
Participation Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority
to, and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
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ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts
the trusts hereby created and agrees to perform the same but only upon the
terms hereof applicable to it. The Owner Trustee also agrees to receive and
disburse all monies received by it constituting part of the Trust Estate upon
the terms hereof. FSBU shall not be answerable or accountable under any
circumstances, except (a) for its own willful misconduct or gross negligence,
(b) for performance of the terms of the last sentence of Section 5.04 hereof,
(c) for its or the Owner Trustee's failure to use ordinary care to disburse
funds and (d) for liabilities that may result from the inaccuracy of any
representation or warranty of it (or from the failure by it to perform any
covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in
Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation
Agreement.
SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance
with written instructions furnished pursuant to Section 5.02 hereof and except
as provided in, and without limiting the generality of, Section 5.04 hereof and
the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU
shall have any duty (i) to see to any recording or filing of any Operative
Document or of any supplement to any thereof or to see to the maintenance of
any such recording or filing or any other filing of reports with the Federal
Aviation Administration or other governmental agencies, except that FSBU, in
its individual capacity, shall comply with the reporting requirements set forth
in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee
shall, to the extent that information for that purpose is supplied by Lessee
pursuant to any of the Operative Documents, complete and timely submit (and
furnish the Owner Participant with a copy of) any and all reports relating to
the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto,
other than to forward to the Owner Participant copies of all reports and other
written information which the Owner Trustee receives from Lessee pursuant to
Section 11(c) of the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee under the Lease
or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN
MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE
MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, CONDITION, DESIGN, OPERATION,
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MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER,
except that FSBU in its individual capacity warrants that on the Delivery Date
the Owner Trustee shall have received whatever title was conveyed to it by
Lessee and that the Aircraft shall during the Term be free of Lessor Liens
attributable to it, or (b) any representation or warranty as to the validity,
legality or enforceability of this Trust Agreement or any Operative Document to
which the Owner Trustee is a party, or any other document or instrument, or as
to the correctness of any statement contained in any thereof except to the
extent that any such statement is expressly made herein or therein as a
representation by FSBU in its individual capacity or by the Owner Trustee and
except that FSBU in its individual capacity hereby represents and warrants that
this Trust Agreement has been, and (assuming due authorization, execution and
delivery by the Original Owner Participant of this Trust Agreement) the
Operative Documents to which it or the Owner Trustee is a party have been (or
at the time of execution and delivery of any such instrument by it or the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of itself or the Owner Trustee, as the case may be.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST.
Except as provided in Section 22 of the Lease, monies received by the Owner
Trustee hereunder need not be segregated in any manner except to the extent
required by law, and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS.
The Owner Trustee shall incur no liability to anyone in acting in reliance upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of the
Owner Participant or Lessee mentioned herein or in any of the Operative
Documents to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be the chairman of the
board, the president, any executive vice president, any senior vice president
or any vice president or a managing director and in the name of the Owner
Participant or Lessee, as the case may be. The Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the secretary or any assistant secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board or Committee and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is
not specifically described herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by a person purporting to be the chairman
of the board, the president, any executive vice president, any senior vice
president or any vice president or a managing director of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it
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in good faith in reliance thereon. In the administration of trusts hereunder,
the Owner Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and
may, at the expense of the Trust Estate, consult with counsel, accountants and
other skilled persons to be selected and employed by it. The Owner Trustee
shall not be liable for anything done, suffered or omitted in good faith by it
in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons and the Owner Trustee shall not be liable for the
negligence of any such agent, attorney, counsel, accountant or other skilled
person appointed by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons,
other than the Owner Participant, as provided herein, having any claim against
the Owner Trustee by reason of the transactions contemplated hereby shall look
only to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in
Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no
right against the Owner Participant or (subject to the provisions of the Trust
Indenture) the Trust Estate for any fee as compensation for its services
hereunder; provided, however, that the Owner Trustee shall have a lien upon the
Trust Estate (subject, however, to the lien of the Trust Indenture) for any
such fee not paid by Lessee as contemplated by the last paragraph of Section
7(c) of the Participation Agreement.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement of all monies under this Trust Agreement or any
agreement contemplated hereby. The Owner Participant shall be responsible for
causing to be prepared and filed all income tax returns required to be filed by
the Owner Participant. The Owner Trustee shall be responsible for causing to
be prepared, at the request and expense of the Owner Participant, all income
tax returns required to be filed with respect to the trust created hereby and
shall execute and file such returns. The Owner Participant or the Owner
Trustee, as the case may be, upon request, will furnish the Owner Trustee or
the Owner Participant, as the case may be, with all such information as may be
reasonably required from the Owner Participant or the Owner Trustee, as the
case may be, in connection with the preparation of such income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnify, protect, save and keep harmless FSBU in its individual capacity and
its successors, assigns, legal representatives,
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agents and servants, from and against any and all liabilities, obligations,
losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its
individual capacity on or measured by any compensation received by FSBU in its
individual capacity for its services hereunder or in connection with the
transactions contemplated by the Operative Documents), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and
including without limitation any liability of an owner, any strict liability
and any liability without fault) of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against FSBU in its individual capacity
(whether or not also indemnified against by Lessee under the Lease or under the
Participation Agreement or also indemnified against by any other person but
only to the extent not otherwise paid or reimbursed by Lessee or such other
person) in any way relating to or arising out of this Trust Agreement or any of
the Operative Documents or the enforcement of any of the terms of any thereof,
or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement),
or in any way relating to or arising out of the administration of the Trust
Estate or the action or inaction of the Owner Trustee or FSBU in its individual
capacity hereunder, except (a) in the case of willful misconduct or gross
negligence on the part of the Owner Trustee or FSBU in its individual capacity
in the performance or non-performance of its duties hereunder or (b) those
resulting from the inaccuracy of any representation or warranty of FSBU in its
individual capacity (or from the failure of FSBU in its individual capacity to
perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its
individual capacity of its covenants in the last sentence of Section 5.04
hereof or (d) in the case of the failure to use ordinary care on the part of
the Owner Trustee or FSBU in its individual capacity in the disbursement of
funds. The indemnities contained in this Section 7.01 extend to FSBU only in
its individual capacity and shall not be construed as indemnities of the Trust
Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU
in its individual capacity has been reimbursed by the Trust Indenture Estate or
the Trust Estate for amounts covered by the indemnities contained in this
Section 7.01). The indemnities contained in this Section 7.01 shall survive
the termination of this Trust Agreement. In addition, if necessary, FSBU in
its individual capacity shall be entitled to indemnification from the Trust
Estate, subject to the Lien of the Trust Indenture, for any liability,
obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee, the Owner Participant or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same FSBU in its individual capacity shall have a Lien on the Trust
Estate, subject to the Lien of the Trust Indenture, which shall be prior to any
interest therein of the Owner Participant. The payor of any indemnity under
this Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
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ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section
8(n) of the Participation Agreement shall (with the same force and effect as if
set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor
Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of
the Participation Agreement and (ii) may resign at any time without cause by
giving at least sixty (60) days' prior written notice to the Owner Participant,
the Indenture Trustee (so long as the Lien of the Trust Indenture has not been
fully discharged) and Lessee (so long as the Lease is in effect), such
resignation to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant
may at any time remove the Owner Trustee without cause by a notice in writing
delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of
the Trust Indenture has not been fully discharged) and Lessee (so long as the
Lease is in effect), such removal to be effective upon the acceptance of
appointment by the successor Owner Trustee under Section 9.01(b) hereof. In
the case of the resignation or removal of the Owner Trustee, the Owner
Participant may appoint a successor Owner Trustee by an instrument signed by
the Owner Participant. If a successor Owner Trustee shall not have been
appointed within thirty (30) days after such notice of resignation or removal,
the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may
apply to any court of competent jurisdiction to appoint a successor Owner
Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. Any successor Owner Trustee so appointed by such
court shall immediately and without further act be superseded by any successor
Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor
Owner Trustee, however appointed, shall execute and deliver to the predecessor
Owner Trustee and the Owner Participant an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further act,
shall become vested with all the estates, properties, rights, powers, duties
and trusts of the predecessor Owner Trustee in the trusts hereunder with like
effect as if originally named the Owner Trustee herein; but nevertheless, upon
the written request of such successor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to such successor
Owner Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of such
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predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed. Upon the appointment of any successor Owner Trustee
hereunder, the predecessor Owner Trustee will execute such documents as are
provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are
reasonably required to cause registration of the Aircraft included in the Trust
Estate to be transferred upon the records of the Federal Aviation
Administration, or other governmental authority having jurisdiction, into the
name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement and shall also be
a bank or trust company organized under the laws of the United States or any
state thereof having a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally qualified to perform
the duties of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any
time it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which all or any part of the Trust Estate is located, or the
Owner Trustee being advised by counsel shall determine that it is so necessary
or prudent in the interest of the Owner Participant or the Owner Trustee, or
the Owner Trustee shall have been directed to do so by the Owner Participant,
the Owner Trustee and the Owner Participant shall execute and deliver an
agreement supplemental hereto and all other instruments and agreements
necessary or proper to constitute another bank or trust company or one or more
persons (any and all of which shall be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement)
approved by the Owner Trustee and the Owner Participant, either to act as
co-trustee, jointly with the Owner Trustee, or to act as separate trustee
hereunder (any such co-trustee or separate trustee being herein sometimes
referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of
Default not arising from a Lease Event of Default shall occur and be
continuing, the Owner Trustee may act under the foregoing provisions of this
Section 9.02 without the concurrence of the Owner Participant; and the Owner
Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to
act for it under the foregoing provisions of this Section 9.02 in such
contingency.
Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and the Owner Trustee and its successors shall
act, subject to the following provisions and conditions:
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(A) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and management of
monies, the Aircraft or documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Trust Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in
writing may remove any such additional trustee unless such additional
trustee was appointed by the Owner Trustee without the concurrence of the
Owner Participant during the occurrence of an Indenture Event of Default
not arising from a Lease Event of Default, in which case the Owner Trustee
shall have the power to remove any such additional trustee without the
concurrence of the Owner Participant, and the Owner Participant hereby
appoints the Owner Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee
will relieve the Owner Trustee of any of its obligations under, or
otherwise affect any of the terms of, the Trust Indenture or affect the
interests of the Indenture Trustee or the holders of the Secured
Certificates in the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Owner Participant. Subject to Section 10.02 hereof and the first sentence of
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other
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modification of this Trust Agreement or of any other Operative Document to
which the Owner Trustee is a party which it is requested to execute by the
Owner Participant, except that the Owner Trustee shall not execute any such
amendment, supplement or other modification which, by the express provisions of
any of the above documents, requires the consent of any other party unless such
consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties.
A signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by the Owner Trustee to the Indenture Trustee and
each holder of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior
to executing any document required to be executed by it pursuant to the terms
of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an
opinion of its counsel to the effect that the execution of such document is
authorized hereunder. If in the opinion of the Owner Trustee any such document
adversely affects any right, duty, immunity or indemnity in favor of the Owner
Trustee hereunder or under any other Operative Document to which the Owner
Trustee is a party, the Owner Trustee may in its discretion decline to execute
such document.
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not
be necessary for any written request furnished pursuant to Section 10.01 hereof
to specify the particular form of the proposed documents to be executed
pursuant to such Section, but it shall be sufficient if such request shall
indicate the substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid,
a conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND
TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust
Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust
Agreement and the trusts created hereby shall be of no further force or effect
upon the earlier of (a) both the final discharge of the Trust Indenture
pursuant to Section 10.01 thereof and the sale or other final disposition by
the Owner Trustee of all property constituting part of the Trust Estate and the
final distribution by the Owner Trustee of all monies or other property or
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proceeds constituting part of the Trust Estate in accordance with Article IV
hereof, provided that at such time Lessee shall have fully complied with all of
the terms of the Lease and the Participation Agreement or (b) twenty-one years
less one day after the death of the last survivor of all of the descendants of
the grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto; otherwise this Trust
Agreement and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST
ESTATE. The Owner Participant shall not have legal title to any part of the
Trust Estate. No transfer, by operation of law or otherwise, of any right,
title and interest of the Owner Participant in and to the Trust Estate
hereunder shall operate to terminate this Trust Agreement or the trusts
hereunder or entitle any successors or transferees of the Owner Participant to
an accounting or to the transfer of legal title to any part of the Trust
Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any
assignment, sale, transfer or other conveyance of its interest in the Aircraft
by the Owner Trustee made pursuant to the terms hereof or of the Lease or the
Participation Agreement shall bind the Owner Participant and shall be effective
to transfer or convey all right, title and interest of the Owner Trustee and
the Owner Participant in and to the Aircraft. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES
ONLY. Except for the terms of Section 8(n) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in
Articles IX and X hereof, nothing herein, whether expressed or implied, shall
be construed to give any Person other than the Owner Trustee and the Owner
Participant any legal or equitable right, remedy or claim under or in respect
of this Trust Agreement; but this Trust Agreement shall be held to be for the
sole and exclusive benefit of the Owner Trustee and the Owner Participant.
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) 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 telecopier, or by prepaid courier service, and shall be deemed to be
given for purposes of this Agreement on the day that such writing is delivered
or sent to the intended recipient thereof in accordance with the provisions of
this Section 11.05(a). Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 11.05(a),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures
of such parties on the signature page of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such
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Subsequent Owner Participant at such address as such Subsequent Owner
Participant shall have furnished by notice to the parties hereto or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the secured certificate register maintained pursuant to
Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and to the non-exclusive jurisdiction of
the Supreme Court of the State of New York, New York County, for the purposes
of any suit, action or other proceeding arising out of this Trust Agreement,
the Participation Agreement, the Lease, the Tax Indemnity Agreement or any
other Operative Document, the subject matter of any thereof or any of the
transactions contemplated hereby or thereby brought by any party or parties
thereto, or their successors or assigns, and (B) hereby waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that the Participation Agreement,
the Lease, the Tax Indemnity Agreement or any other Operative Document or the
subject matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given. SECTION 11.08.COUNTERPARTS. This Trust
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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Owner Trustee and its successors and assigns, and the Owner Participant,
its successors and, to the extent permitted by Article VIII hereof, its
assigns. Any request, notice, direction, consent, waiver or other instrument
or action by the Owner Participant shall bind its successors and assigns. Any
Owner Participant which shall cease to have any Ownership Interest shall
thereupon cease to be a party hereto or an Owner Participant for any reason and
shall have no further obligations hereunder.
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SECTION 11.10. HEADINGS; REFERENCES. The headings of the
various Articles and Sections herein are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
BY
--------------------------------
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By
--------------------------------
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1995 A]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995
A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have entered into
the Trust Agreement whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner Participant
subject, however, to the Trust Indenture Estate created pursuant hereto for the
use and benefit of, and with the priority of payment to, the holders of Secured
Certificates issued hereunder, and (ii) the Owner Trustee has been authorized
and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into
the Trust Indenture and Security Agreement [NW 1995 A] dated as of November 15,
1995 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust
Agreement and Indenture Supplement [NW 1995 A] (the "SUPPLEMENT") dated November
21, 1995 to the Original Indenture, (iii) the Original Indenture and the
Supplement were recorded by the Federal Aviation Administration on November 22,
1995 and were assigned Conveyance No. P04680 and (iv) the Lease Agreement [NW
1995 A] dated as of even date with the Original Indenture between the Owner
Trustee and Lessee and the Lease Supplement No. 1 [NW 1995 A] were recorded by
the Federal Aviation Administration on November 22, 1995 and were assigned
Conveyance No. P04679 and (v) pursuant to the Original Indenture, the Owner
Trustee issued and sold to the Loan Participants Secured Certificates (as
defined in the Original Indenture);
WHEREAS, the parties have agreed that subject to certain conditions,
Lessee shall have the right to cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Secured Certificates
issued to the Loan Participant pursuant to the Original Indenture shall be
redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES")
shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner Trustee for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount
of, interest on, Make-Whole Amount, if any, and all other amounts due with
respect to, all Secured Certificates from time to time outstanding hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions herein and in the Participation Agreement and the
Secured Certificates contained, for the benefit of the Certificate Holders and
the prompt payment of all amounts from time to time owing under the
Participation Agreement to the Certificate Holders by the Owner Trustee and for
the uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the Secured Certificates by the holders thereof, and for other
good and valuable consideration the receipt and adequacy whereof are hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors in trust and assigns, for the security and
benefit of the Certificate Holders, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, other than
Excluded Payments (which collectively, excluding Excluded Payments but including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Agreement and Indenture Supplement or any mortgage
supplemental hereto, are included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor to which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited or required
to be deposited with the Indenture Trustee pursuant to any terms of this
Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery of the Original Indenture, the Owner
Trustee delivered to the Indenture Trustee the original executed counterpart of
the Lease and the Lease Supplement No. 1 (to each of which a chattel paper
receipt is attached), and executed copies of the Participation Agreement, and
the Purchase Agreement Assignment with the Consent and Agreement attached
thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (8) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under each of the
Indenture Agreements to which it is a party to perform all of the obligations
assumed by it thereunder, except to the extent prohibited or excluded from doing
so pursuant to the terms and provisions thereof, and the Indenture Trustee and
the Certificate Holders shall have no obligation or liability under the
Indenture Agreements, by reason of or arising out of the assignment hereunder,
nor shall the Indenture Trustee or the Certificate Holders be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to any of the Indenture Agreements to which it is a
party, or, except as herein expressly provided, to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the true
and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines
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<PAGE> 5
and upon such purchase to execute and deliver in the name of and on behalf of
the Owner Trustee an appropriate bill of sale and other instruments of transfer
relating to the Airframe and Engines, when purchased by such purchaser, and to
perform all other necessary or appropriate acts with respect to any such
purchase, and in its discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of the Owner Trustee or
otherwise, which the Indenture Trustee may deem necessary or appropriate to
protect and preserve the right, title and interest of the Indenture Trustee in
and to such Rents and other sums and the security intended to be afforded
hereby; provided, however, that no action of the Indenture Trustee pursuant to
this paragraph shall increase the obligations or liabilities of the Owner
Trustee to any Person beyond those obligations and liabilities specifically set
forth in this Trust Indenture and in the other Operative Documents. Under the
Lease, Lessee is directed, so long as this Trust Indenture shall not have been
fully discharged, to make all payments of Rent (other than Excluded Payments)
and all other amounts which are required to be paid to or deposited with the
Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to,
or as directed by, the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application as provided in this Trust
Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will
transfer to the Indenture Trustee any and all monies from time to time received
by it constituting part of the Trust Indenture Estate, for distribution by the
Indenture Trustee pursuant to this Trust Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Indenture Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee and its predecessor(s) in this transaction, and that it will not, except
as otherwise provided in this Trust Indenture and except with respect to
Excluded Payments to which it is entitled, (i) accept any payment from Lessee
under any Indenture Agreement, (ii) enter into any agreement amending or
supplementing any Indenture Agreement, (iii) execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers or privileges
under, any Indenture Agreement, (iv) settle or compromise any claim (other than
those relating to an Excluded Payment) arising under any Indenture Agreement or
(v) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any Indenture Agreement to arbitration
thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment of
Rent (other than Excluded Payments), including Interim Rent, Basic
Rent, Stipulated Loss Value, Termination Value or any other
payment to be made pursuant to Section 9 or 10 of the Lease prior
to the date for the payment thereof provided for by the Lease or
assign, transfer or hypothecate (other than to the Indenture
Trustee hereunder) any payment of Rent, including Interim Rent,
Basic Rent, Stipulated Loss Value, Termination Value or any other
payment to be made pursuant to Section 9 or 10 of the Lease, then
due or to accrue in the future under the Lease in respect of the
Airframe and Engines; or
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<PAGE> 6
(b) except as contemplated by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage,
transfer, assign or hypothecate (other than to the Indenture
Trustee hereunder) its interest in the Airframe and Engines or any
part thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing paragraphs,
there is hereby excluded from the foregoing sale, transfer, assignment, grant,
pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee
or Indenture Trustee, as the case may be, actual knowledge of a Responsible
Officer in the Trust Office of the Owner Trustee or in the Corporate Trust
Office of the Indenture Trustee, as the case may be, and (ii) as it applies to
the Owner Participant, actual knowledge of a vice president or other higher
officer of the Owner Participant having responsibility for the transactions
contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Date on the Amortization
Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed shall
be the date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Secured Certificate.
"REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at the redemption
date of such Secured Certificate, shall be the number of days equal to the
quotient obtained by dividing (a) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
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<PAGE> 7
"Certificate Holder" shall mean any holder from time to time of one or
more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture.
"Default" means any event or condition that with the giving of notice
or the lapse of time or both would become an Event of Default or Lease Event of
Default (excluding Lease Events of Default related to Excluded Payments).
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Enforcement Date" shall have meaning specified in Section 4.03 hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or payable
by Lessee to or in respect of the Owner Participant or the Owner Trustee in its
individual capacity, their respective Affiliates, successors and permitted
assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease plus
all reasonable expenses incurred by the Owner Trustee and the Owner Participant
in connection with such assumption, as applicable, (vii) any payment of the
foregoing under the Guarantee, (viii) interest accrued on any of the above, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
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"Government Entity" means (a) 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 (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor " shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1995 A], dated as
of November 15, 1995, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery of the Original Trust Indenture, as said Lease
Agreement has been, or may from time to time be, supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Indenture. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Default" shall mean a "Default" as defined in the Lease.
"Lease Event of Default" shall mean an "Event of Default" as defined in
the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a particular date
of determination shall mean the holders of more than a majority in aggregate
unpaid Principal Amount of all Secured Certificates outstanding as of such date
(excluding any Secured Certificates held by the Owner Trustee or the Owner
Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate, the
amount (as determined by an independent investment banker selected by Lessee and
reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "TREASURY YIELD" at the time of
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<PAGE> 9
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Secured
Certificate and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Secured Certificate and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Secured Certificate,
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in Section 3.03
hereof.
"Owner Indemnitee" shall have the meaning specified in the definition
of Excluded Payments herein.
"Owner Participant" shall mean [
], so long as such party shall have any interest in the Trust Estate,
and transferees thereof as permitted by Section 8 of the Participation
Agreement.
"PA Amendment No. 1" shall mean the First Amendment to Participation
Agreement [NW 1995 A], dated as of the Closing Date, among Lessee, the Owner
Trustee, the Pass Through Trustee, the Owner Participant, the Subordination
Agent and State Street Bank and Trust Company, in its individual capacity and as
Indenture Trustee.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1995 A], dated as of November 15, 1995, among the Owner Trustee,
the Indenture Trustee, Lessee and the Participants, as amended by the PA
Amendment No. 1, as the same may from time to time be supplemented or further
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured Certificates,
the rate per annum equal to 2% over the Debt Rate as in effect from time to
time.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with the
Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
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<PAGE> 10
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured Certificates
issued hereunder, and issued in exchange therefor or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section 2.06
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the Participation
Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement to
the Trust Agreement and to this Indenture, in substantially the form of Exhibit
A hereto, which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture", and "the Indenture" shall mean this Amended and
Restated Trust Indenture and Security Agreement [NW 1995 A] as it may from time
to time be supplemented or amended as herein provided, including supplementing
by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
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<PAGE> 11
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES
The Secured Certificates shall be substantially in the form set forth
below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1995 A] DATED AS OF NOVEMBER 15, 1995.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N535US.
No.____ Date:[______,__]
$________________
INTEREST RATE MATURITY DATE
------------- -------------
[________]
[________,________]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 A], dated as of
November 15, 1995, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of June
12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the
"INDENTURE TRUSTEE"), as the same may be amended or supplemented from
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<PAGE> 12
time to time. All other capitalized terms used in this Secured Certificate and
not defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if any,
and other amounts, if any, to be made by the Owner Trustee hereunder and under
the Trust Indenture or the Participation Agreement shall be payable only from
the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder shall
be payable in Dollars in immediately available funds at the Corporate Trust
Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred to
in the Trust Indenture which have been or are to be issued by the Owner Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Indenture Trustee as security, in part, for the Secured Certificates. The
provisions of this Secured Certificate are subject to the Trust Indenture.
Reference is hereby made to the Trust Indenture and the Participation Agreement
for a complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Secured Certificate and the rights
and obligations of the holders of, and
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<PAGE> 13
the nature and extent of the security for, any other Secured Certificates
executed and delivered under the Trust Indenture, as well as for a statement of
the terms and conditions of the Trust created by the Trust Indenture, to all of
which terms and conditions in the Trust Indenture and the Participation
Agreement each holder hereof agrees by its acceptance of this Secured
Certificate.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Secured Certificate is exchangeable for a like aggregate
Principal Amount of Secured Certificates of different authorized denominations,
as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Secured
Certificate, the Owner Trustee and the Indenture Trustee shall treat the person
in whose name this Secured Certificate is registered as the owner hereof for all
purposes whether or not this Secured Certificate be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of Series A Secured
Certificates, and this Secured Certificate is issued subject to such provisions.
The Certificate Holder of this Secured Certificate, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Indenture Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Indenture Trustee his attorney-in-fact for such
purpose.](1)
Unless the certificate of authentication hereon has been executed by or
on behalf of the Indenture Trustee by manual signature, this Secured Certificate
shall not be entitled to any benefit under the Trust Indenture or be valid or
obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ---------------
(1) To be inserted in the case of a Series B Secured Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By______________________________________
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance thereof,
shall be issued in two separate series consisting of Series A and Series B and
in the maturities and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the Refinancing
Transaction, (i) each Refinancing Secured Certificate shall be issued to the
Pass Through Trustees (or their designee) under the Pass Through Agreements as
set forth in Schedule II hereto in connection therewith and (ii) the Secured
Certificates issued under the Original Indenture shall be concurrently redeemed.
The Secured Certificates shall be issued in registered form only. The Secured
Certificates shall be issued in denominations of $1,000 and integral multiples
thereof, except that one Secured Certificate of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if there
exists a Payment Default under any Secured Certificate a fraction, the
numerator of which is the aggregate principal balance then outstanding of
the Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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<PAGE> 17
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Certificate Holders under this
Trust Indenture, each Certificate Holder, by its acceptance of a Secured
Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to sue the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property of,
or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee,
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directly or indirectly (other than the recourse liability of the Owner Trustee
(in its individual capacity), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture and (iii) any Certificate Holder or
the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount
by which such payment exceeds the amount that would have been received by a
Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a registered Certificate
Holder, all payments to it shall be made to the account of such Certificate
Holder specified in Schedule I thereto and otherwise in the manner provided in
or pursuant to the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) unless it shall have specified
some other account or manner of payment by notice to the Indenture Trustee
consistent with this Section 2.04.
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(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured Certificate
(as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
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Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid (provided
that such Secured Certificate shall not be subject to redemption except as
provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.
A Certificate Holder shall not, as such, have any further interest in,
or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE
REGISTER") in which the Indenture Trustee shall provide for the registration of
Secured Certificates and the registration of transfers of Secured Certificates.
No such transfer shall be given effect unless and until registration hereunder
shall have occurred. The Secured Certificate Register shall be kept at the
Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby
appointed "Secured Certificate Registrar" for the purpose of registering Secured
Certificates and transfers of Secured Certificates as herein provided. A holder
of any Secured Certificate intending to exchange such Secured Certificate shall
surrender such Secured Certificate to the Indenture Trustee at the Corporate
Trust Office, together with a written request from the registered holder thereof
for the issuance of a new Secured Certificate, specifying, in the case of a
surrender for transfer, the name and address of the new holder or holders. Upon
surrender for registration of transfer of any Secured Certificate, the Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Secured
Certificates of a like aggregate Principal Amount and of the same series. At the
option of the Certificate Holder, Secured Certificates may be exchanged for
other Secured Certificates of any authorized denominations of a like aggregate
Principal Amount, upon surrender of the Secured Certificates to be exchanged to
the Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
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made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff),
10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and
warranted (except as provided above), and covenanted, to the parties to the
Participation Agreement as to the matters represented, warranted and covenanted
by the original Loan Participant in the Participation Agreement. Subject to
compliance by the Certificate Holder and its transferee (if any) of the
requirements set forth in this Section 2.07, the Indenture Trustee and the Owner
Trustee shall use all reasonable efforts to issue new Secured Certificates upon
transfer or exchange within 10 Business Days of the date a Secured Certificate
is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the holder of such
Secured Certificate, execute and the Indenture Trustee shall authenticate and
deliver in replacement thereof a new Secured Certificate, payable in the same
Principal Amount dated the same date and captioned as issued in connection with
the Aircraft. If the Secured Certificate being replaced has become mutilated,
such Secured Certificate shall be surrendered to the Indenture Trustee and a
photocopy thereof shall be furnished to the Owner Trustee. If the Secured
Certificate being replaced has been destroyed, lost or stolen, the holder of
such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
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SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by Lessee
pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed
all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13
and to Section 8(x) of the Participation Agreement, on the date the Lease is so
terminated all the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with accrued interest thereon to the date of redemption and all other amounts
payable hereunder or under the Participation Agreement to the Certificate
Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any purchase
by the Owner Trustee of any Secured Certificate may be made except to the extent
and in the manner expressly permitted by this Trust Indenture. No purchase of
any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Secured Certificates to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption
date in immediately available funds the redemption price of the Secured
Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at
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any office or agency maintained for such purposes pursuant to Section 2.07, and
from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation Agreement, and
subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon the events
and subject to the terms and conditions and for the price set forth in this
Section 2.14, purchase all but not less than all of the Secured Certificates
outstanding hereunder, and each Certificate Holder agrees that it will, upon
such events and subject to such terms and conditions and upon receipt of such
price, sell, assign, transfer and convey to such purchaser or its nominee
(without recourse or warranty of any kind except as to its title to the Secured
Certificates and except against Liens on such Secured Certificates arising by,
through or under such holder), all of the right, title and interest of such
Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture
and the Secured Certificates held by it, and such purchaser or its nominee shall
assume all of such holder's obligations under the Participation Agreement and
hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default, the purchase price
thereof shall equal the price provided in the preceding sentence plus the
Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Secured Certificates shall
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become irrevocable upon the sixteenth day preceding the date specified in the
written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date of
such purchase shall so request, the Certificate Holders will comply with all the
provisions of Section 2.07 to enable new Secured Certificates to be issued to
the Owner Trustee or the Owner Participant or its nominee in such denominations
as the Owner Trustee or the Owner Participant shall request. All taxes, charges
and expenses required pursuant to Section 2.09 in connection with the issuance
of such new Secured Certificate shall be borne by the Owner Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured Certificates of
any Series, each Certificate Holder of such Series, hereby agree that no payment
or distribution shall be made on or in respect of the Secured Obligations owed
to such Certificate Holder of such Series, including any payment or distribution
of cash, property or securities after the commencement of a proceeding of the
type referred to in Section 4.02(g) hereof, except as expressly provided in
Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series (other
than Series A), each Certificate Holder of such Series agrees that in the event
that such Certificate Holder, in its capacity as a Certificate Holder, shall
receive any payment or distribution on any Secured Obligations in respect of
such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean,
(i) the Certificate Holders of Series A until the Secured Obligations in respect
of Series A Secured Certificates have been paid in full and (ii) after the
Secured Obligations in respect of Series A Secured Certificates have been paid
in full, the Certificate Holders of Series B until the Secured Obligations in
respect of Series B Secured Certificates have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each installment
of Basic Rent or Interim Rent, any payment of interest on overdue installments
of Basic Rent and any payment received by the Indenture Trustee pursuant to
Section 4.03 hereof shall be promptly distributed in the following order of
priority:
FIRST, (i) so much of such installment or payment as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series A Secured Certificates
shall be distributed to the Certificate Holders of Series A
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each
Series A Secured Certificate bears to the aggregate amount of the
payments then due under all Series A Secured Certificates; and
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(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series B Secured Certificates shall be
distributed to the Certificate Holders of Series B ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series B
Secured Certificate bears to the aggregate amount of the payments
then due under all Series B Secured Certificates; and
SECOND, the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner Trustee; provided, however, that
if an Event of Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section
5.09 hereof until whichever of the following shall first occur:
(i) all Events of Default shall have been cured or waived, in
which event such balance shall be distributed as provided in this
clause "Second" without reference to this proviso, (ii) Section
3.03 hereof shall be applicable, in which event such balance shall
be distributed in accordance with the provisions of such Section
3.03, or (iii) the 120th day after the receipt of such payment in
which case such payment shall be distributed as provided in this
clause "Second" without reference to this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for
any reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents and then (b) to
pay any other amounts then due to the Indenture Trustee and the
Certificate Holders under this Trust Indenture, the Participation
Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due and
payable in respect of the Series A Secured Certificates; and
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such
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moneys shall be invested as provided in Section 5.09 hereof) as additional
security for the obligations of Lessee under the Lessee Operative Documents and,
unless otherwise applied pursuant to the Lease, such proceeds (and such
investment earnings) shall be released to Lessee at Lessee's written request
upon the release of such damaged Airframe or Engine and the replacement thereof
as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of
Default shall have occurred and be continuing and the Secured Certificates shall
have become due and payable pursuant to Section 4.04(b) hereof, as well as all
payments or amounts then held by the Indenture Trustee as part of the Trust
Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the
"MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred
by the Indenture Trustee (to the extent not previously
reimbursed), the expenses of any sale, taking or other proceeding,
reasonable attorneys' fees and expenses, court costs, and any
other expenditures incurred or expenditures or advances made by
the Indenture Trustee or the Certificate Holders in the
protection, exercise or enforcement of any right, power or remedy
or any damages sustained by the Indenture Trustee or any
Certificate Holder, liquidated or otherwise, upon such Event of
Default shall be applied by the Indenture Trustee as between
itself and the Certificate Holders in reimbursement of such
expenses and any other expenses for which the Indenture Trustee or
the Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid, then ratably,
without priority of one over the other, in proportion to the
amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing
or prior Certificate Holders ratably, without priority of one over
the other, in accordance with the amount of the payment or
payments made by each such then existing or prior Certificate
Holder pursuant to said Section 5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series A Secured Certificates, and the accrued
but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series A, and in
case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series A
Secured Certificates held by each holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series A Secured
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of
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all Series B Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series B Secured
Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series B, and in
case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series B
Secured Certificates held by each holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series B Secured
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this Article
III, any amounts received by the Indenture Trustee which constitute Excluded
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no provision
as to the application thereof is made in the Lease, the Participation Agreement,
elsewhere in this Trust Indenture or in any other Operative Document shall be
distributed by the Indenture Trustee to the extent received or realized at any
time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified
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in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in
full of all Secured Obligations due the Certificate Holders, in the following
order of priority:
FIRST, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of Section
3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the
Indenture Trustee under the Lease or otherwise with respect to the
Aircraft (including, without limitation, all amounts realized upon the
sale or release of the Aircraft after the termination of the Lease with
respect thereto), to the extent received or realized at any time after
payment in full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of priority
specified in clause (ii) of the immediately preceding sentence of this
Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to the Owner
Trustee shall be paid to the Owner Trustee (within the time limits contemplated
by Section 2.04(a)) by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal Amount
of, Make-Whole Amount, if any, and interest on and other amounts due under
the Secured Certificates and hereunder in accordance with the terms of the
Secured Certificates and this Trust Indenture and all amounts, if any,
payable by it to the Certificate Holders under the Participation Agreement;
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(b) the Owner Trustee in its individual capacity covenants and agrees
that it shall not, directly or indirectly, cause or permit to exist a Lessor
Lien attributable to it in its individual capacity with respect to the
Aircraft or any other portion of the Trust Estate; that it will promptly, at
its own expense, take such action as may be necessary to duly discharge such
Lessor Lien attributable to it in its individual capacity; and that it will
make restitution to the Trust Estate for any actual diminution of the assets
of the Trust Estate resulting from such Lessor Liens attributable to it in
its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Event of Default, Default or Event of Loss to
the Indenture Trustee, each Certificate Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to the Owner
Trustee under the Lease, including, without limitation, a copy of any
Termination Notice and a copy of each report or notice received pursuant to
Section 9(a) and 11(c) of the Lease to the extent that the same shall not
have been furnished to the Indenture Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent of
the Indenture Trustee (acting pursuant to instructions given in accordance
with Section 9.01 hereof), the Owner Trustee will not contract for, create,
incur, assume or suffer to exist any Debt, and will not guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing, or
otherwise), endorse or otherwise be or become contingently liable, directly
or indirectly, in connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing thereof
to Lessee and the carrying out of the transactions contemplated hereby and
by the Lease, the Participation Agreement, the Trust Agreement and the other
Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or
the Owner Participant when due any amount that is included in the definition
of Excluded Payments shall not constitute an Event of Default unless notice
is given by the Owner Trustee to the Indenture Trustee that such failure
shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other amount
due and payable under any Secured Certificate or hereunder (other than any
such failure arising by virtue of a tax withheld pursuant to Section 2.04(b)
hereof or as a result of a Lease Event of Default or a Lease Default) and
such failure shall have continued unremedied for ten Business Days in the
case of any payment of Principal Amount or interest or Make-Whole Amount, if
any, thereon and, in the case of any other amount, for ten Business Days
after the Owner Trustee or the Owner Participant receives written demand
from the Indenture Trustee or any Certificate Holder; or
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(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual
or trust capacity pursuant to Section 8(h) of the Participation Agreement,
or by the Owner Participant pursuant to Section 8(h) of the Participation
Agreement shall remain undischarged for a period of 30 days after the Owner
Trustee and the Owner Participant shall have received written notice from
the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or the
Owner Trustee herein, in the Participation Agreement (or, upon consummation
of the Refinancing Transaction, the Refunding Agreement) or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents shall prove to have
been false or incorrect when made in any material respect and continues to
be material; and if such misrepresentation is capable of being corrected and
if such correction is being sought diligently, such misrepresentation shall
not have been corrected within 60 days (or, without affecting Section
4.02(f) hereof, in the case of the representations made in Section 8(c) of
the Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as soon
as is reasonably practicable but in any event within 60 days) following
notice thereof from the Indenture Trustee or any Certificate Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform any other
covenant or obligation of the Owner Trustee or Owner Participant, as the
case may be, for the benefit of the Indenture Trustee or the Certificate
Holders contained in the Participation Agreement, Section 4.01(a) of the
Trust Agreement, the Secured Certificates or this Trust Indenture which is
not remedied within a period of 60 days after notice thereof has been given
to the Owner Trustee and the Owner Participant; or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the Aircraft
under the Federal Aviation Act, and regulations then applicable thereunder,
shall cease to be effective; provided that no Event of Default shall be
deemed to have occurred under this paragraph (f) unless such circumstances
continue unremedied for more than 60 days after the Owner Participant has
Actual Knowledge of the state of facts that resulted in such ineffectiveness
and of such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or
other proceeding in respect of the Owner Participant, the Owner Trustee or
the Trust Estate under the federal bankruptcy Laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or seeking the winding-up or liquidation of its affairs and the continuation
of any such case or other proceeding undismissed and unstayed for a period
of 90 consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or other
similar Law in the United States, or the consent by the Owner Participant,
the Owner Trustee or the Trust Estate to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or the making by the Owner Participant, the Owner Trustee or the Trust
Estate of any assignment for the benefit of creditors or the Owner
Participant or the Owner Trustee shall take any action to authorize any of
the foregoing; provided, however, that an event referred to in this Section
4.02(g) with respect to the Owner Participant shall not constitute an Event
of Default if within 30 days of the commencement of the case or proceeding a
final non-appealable order, judgment or decree shall be entered in such case
or proceeding by a court or a trustee, custodian,
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receiver or liquidator, to the effect that, no part of the Trust Estate
(except for the Owner Participant's beneficial interest therein) and no
right, title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or proceedings
with respect to, the bankruptcy, insolvency or liquidation of the Owner
Participant referred to in this Section 4.02(g).
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the Owner
Trustee and the Owner Participant prompt written notice of any Event of Default
of which the Indenture Trustee has Actual Knowledge and, if any such Event of
Default results from a Lease Event of Default, shall give the Certificate
Holders, the Owner Trustee and the Owner Participant not less than ten Business
Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after
which the Indenture Trustee may commence and consummate the exercise of any
remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of
the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the
Indenture Trustee shall have insufficient funds to make any payment of Principal
Amount and interest on any Secured Certificate on the day it becomes due and
payable, the Owner Trustee or the Owner Participant may, but shall not be
obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the
manner provided in Section 2.04 hereof, for application in accordance with
Section 3.01 hereof, an amount equal to the portion of the Principal Amount and
interest (including interest, if any, on any overdue payments of such portion of
Principal Amount and interest) then due and payable on the Secured Certificates,
and, unless the Owner Trustee has cured Events of Default in respect of payments
of Basic Rent on each of the three immediately preceding Basic Rent payment
dates, or on the Commencement Date and each of the two immediately succeeding
Basic Rent payment dates in respect of payment of Interim Rent, or the Owner
Trustee has cured six previous Events of Default in respect of payments of
Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely
for purposes of this Trust Indenture be deemed to cure any Event of Default
which would otherwise have arisen on account of the nonpayment by Lessee of such
installment of Interim Rent or Basic Rent (but not any other Default or Event of
Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Interim Rent or Basic Rent by Lessee) which can be cured has occurred, the Owner
Trustee or the Owner Participant may, but shall not be obligated to, cure such
Event of Default prior to the Enforcement Date as is necessary to accomplish the
observance or performance of the defaulted covenant, condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Interim Rent or Basic Rent which was overdue at the time of such
payment and interest payable by Lessee on account of its being overdue and any
Supplemental Rent in respect of the reimbursement of amounts paid by Owner
Trustee pursuant to the immediately preceding paragraph (but in either case
shall have no rights as a secured party hereunder), and thereafter, the Owner
Trustee or the Owner Participant, as the case may be, shall be entitled to
receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the
case may be, and interest thereon upon receipt thereof by the Indenture Trustee
(and shall be entitled to bring an action against Lessee to enforce such
payment); provided, however, that (i) if the Principal Amount and interest on
the Secured Certificates shall have become due and payable pursuant to Section
4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest
on, Make-Whole Amount, if any, and all other amounts due with respect to all
Secured Certificates shall have been paid in full, be subordinate to the
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rights of the Indenture Trustee and the Certificate Holders in respect of such
payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest
and (ii) the Owner Trustee shall not be entitled to seek to recover any such
payment (or any payment in lieu thereof) except pursuant to the foregoing right
of subrogation by demand or suit for damages.
SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an Event of
Default shall have occurred and be continuing and so long as the same shall
continue unremedied, then and in every such case the Indenture Trustee may,
subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder as a
result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee's own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Indenture Trustee may (and shall, upon receipt of a
written demand therefor from a Majority in Interest of Certificate Holders),
subject to Section 4.03 hereof, at any time, by delivery of written notice or
notices to the
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Owner Trustee and the Owner Participant, declare all the Secured Certificates to
be due and payable, whereupon the unpaid Principal Amount of all Secured
Certificates then outstanding, together with accrued but unpaid interest thereon
(without Make-Whole Amount) and other amounts due thereunder, shall immediately
become due and payable without presentment, demand, protest or notice, all of
which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if at
any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale pursuant to
Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
(d) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing,
subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture
Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture
Trustee such instruments of title and other documents as the Indenture Trustee
may deem necessary or advisable to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any part of the Mortgaged Property included in the Trust Indenture Estate
to which the Indenture Trustee shall at the time be entitled hereunder. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent
permitted by applicable law, and (ii) pursue all or part of such Mortgaged
Property wherever it may be found and, in the event that a Lease Event of
Default has occurred and is continuing, may enter any of the premises of Lessee
wherever such Mortgaged Property may be or be supposed to be and search for such
Mortgaged Property and take possession of and remove such Mortgaged Property.
All expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Trust Indenture.
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(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture Trustee
specifically or otherwise in this Trust Indenture shall be cumulative and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Indenture Trustee, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Indenture
Trustee and Lessee shall, subject to any determination in such proceedings, be
restored to their former positions and rights hereunder with respect to the
Mortgaged Property, and all rights, remedies and powers of the Owner Trustee,
the Indenture Trustee or Lessee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Certificate Holders,
the Indenture Trustee shall not waive any Default (i) in the payment of the
Principal Amount, Make-Whole Amount, if any, and interest and other amounts due
under any Secured Certificate then outstanding, or (ii) in respect of a covenant
or provision
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hereof which, under Article IX hereof, cannot be modified or amended without the
consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE,
ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee the true
and lawful attorney-in-fact of the Owner Trustee in its name and stead and on
its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture, the right
of any Certificate Holder to receive payment of principal of, and premium, if
any, and interest on a Secured Certificate on or after the respective due dates
expressed in such Secured Certificate, or to bring suit for the enforcement of
any such payment on or after such respective dates in accordance with the terms
hereof, shall not be impaired or affected without the consent of such
Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay Rent, the Indenture
Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner
Participant, Lessee, and each Certificate Holder. Subject to the terms of
Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust
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Indenture, in the absence of Actual Knowledge on the part of the Indenture
Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the
Owner Trustee or the Owner Participant, as the case may be, shall not be deemed
to have knowledge of a Default or an Event of Default (except, in the case of
the Indenture Trustee, the failure of Lessee to pay any installment of Interim
Rent or Basic Rent within one Business Day after the same shall become due, if
any portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of a Default) unless notified
in writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01
and 5.03 hereof, upon the written instructions at any time and from time to time
of a Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
or any other part of the Trust Indenture Estate as shall be specified in such
instructions; and (iii) after the occurrence and during the continuance of an
Event of Default, approve as satisfactory to the Indenture Trustee all matters
required by the terms of the Lease to be satisfactory to the Owner Trustee, it
being understood that without the written instructions of a Majority in Interest
of Certificate Holders, the Indenture Trustee shall not approve any such matter
as satisfactory to the Indenture Trustee; provided, that anything contained in
this Trust Indenture, the Lease or the other Operative Documents to the contrary
notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the consent
of the Indenture Trustee, demand, collect, sue for or otherwise obtain all
amounts included in Excluded Payments from Lessee or the Guarantor, exercise
any election or option or make any decision or determination or to give or
receive any notice, consent, waiver or approval in respect of any Excluded
Payment and seek legal or equitable remedies to require Lessee or the
Guarantor to maintain the insurance coverage referred to in Section 11 of
the Lease; provided, that the rights referred to in this clause (1) shall
not be deemed to include the exercise of any remedies provided for in
Section 15 of the Lease other than the right to proceed by appropriate court
action, either at law or in equity, to enforce payment by Lessee or the
Guarantor of such amounts included in Excluded Payments or performance by
Lessee or the Guarantor of such insurance covenant, or to recover damages
for the breach thereof or for specific performance of any covenant of Lessee
or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing and except as provided in clause (4) below,
the Indenture Trustee shall not, without the consent of the Owner Trustee,
which consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be diminished or impaired thereby,
(i) enter into, execute and deliver amendments, modifications, waivers or
consents in respect of any of the provisions of the Lease, or (ii) approve
any accountants, engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to the Owner Trustee pursuant to the
Operative Documents; provided that, whether or not an Event of Default shall
have occurred and be continuing, no amendment, modification, waiver or
consent in respect of the Lease shall affect the amount or timing of, or the
right to enforce payment of, any Excluded Payment;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee, (i)
to receive from Lessee all notices, certificates, reports, filings, opinions
of counsel and other documents and all information which any thereof is
permitted or required to give or furnish to the Owner Trustee or Lessor
pursuant to any Operative Document (including pursuant to Section 7(b) of
the Participation Agreement), (ii) to exercise inspection rights pursuant to
Section 12 of the Lease, (iii) to retain all rights with respect to
insurance maintained for its own account which Section 11(e) of the Lease
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specifically confers on Lessor or the Owner Participant, (iv) to exercise,
to the extent necessary to enable it to exercise its rights under Section
4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to
give notices of default under Section 14 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the
right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated
Loss Values and Termination Values as provided in Section 3(d) of the Lease
and to select counsel with respect to any opinion relating to tax matters to
be delivered solely to the Owner Participant;
(5) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee may, without the
consent of the Indenture Trustee, (i) solicit and make bids with respect to
the Aircraft under Section 9 of the Lease in respect of a termination of the
Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market
sales value" and "fair market rental value" under Section 19 of the Lease
for all purposes except following an Event of Default pursuant to Section 15
of the Lease, and (iii) make an election pursuant to and in accordance with
the provisions of Section 9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights of
the "Lessor" under the Lease shall be exercised by the Owner Trustee to the
exclusion of the Indenture Trustee including, without limitation, the right
to (i) exercise all rights with respect to Lessee's use and operation,
modification or maintenance of the Aircraft and any Engine which the Lease
specifically confers on Lessor, and (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease; provided that the foregoing
shall not limit (A) any rights separately granted to the Indenture Trustee
under the Operative Documents or (B) the right of the Indenture Trustee to
receive any funds to be delivered to the "Lessor" under the Lease (except
with respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be continuing
and the Owner Trustee shall not have cured fully such Lease Event of Default
under and in accordance with Section 4.03 hereof, on request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall declare the Lease
to be in default pursuant to Section 15 thereof and exercise those remedies
specified by such Certificate Holders. The Indenture Trustee agrees to provide
to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee
concurrently with such declaration by the Indenture Trustee, notice of such
declaration by the Indenture Trustee.
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SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or pursuant
to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if
no Lease Event of Default is continuing, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of
this Trust Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid, but only upon compliance by Lessee with the applicable
provisions of Section 10 of the Lease and upon receipt by or deposit with the
Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such release
specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee stating
the following:
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A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial
number;
(ii) a description of the Replacement Airframe to be received
(including the manufacturer, model, FAA registration number
(or other applicable registration information) and
manufacturer's serial number) as consideration for the
Airframe to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Airframe the Owner
Trustee will be the legal owner of such Replacement Airframe
free and clear of all Liens except as are permitted by Section
6 of the Lease, that such Replacement Airframe will on such
date be in good working order and condition, and that such
Replacement Airframe has been or, substantially concurrently
with such withdrawal, will be duly registered in the name of
the Owner Trustee under the Federal Aviation Act or under the
law then applicable to the registration of the Airframe and
that an airworthiness certificate has been duly issued under
the Federal Aviation Act (or such other applicable law) with
respect to such Replacement Airframe, and that such
registration and certificate is in full force and effect, and
that Lessee will have the full right and authority to use such
Replacement Airframe;
(iv) the existence of the insurance required by Section 11 of the
Lease with respect to such Replacement Airframe and the
payment of all premiums then due thereon;
(v) that the Replacement Airframe is of the same or an improved
model as the Airframe requested to be released from this
Indenture;
(vi) the fair market value of the Replacement Airframe as of the
date of such certificate (which in the judgment of Lessee
shall be not less than the then fair market value of the
Airframe requested to be released (assuming such Airframe was
in the condition and repair required to be maintained under
the Lease));
(vii) the fair market value of the Airframe immediately prior to the
date the Airframe suffered an Event of Loss (assuming such
Airframe was in the condition and repair required to be
maintained under the Lease);
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(viii) that no Lease Event of Default and no event which, with lapse
of time or notice, or both, would become a Lease Event of
Default, has occurred which has not been remedied or waived,
and that Lessee will not be in default, by the making and
granting of the request for release and the addition of a
Replacement Airframe, in the performance of any of the terms
and covenants of the Lease; and
(ix) that the release of the Airframe so to be released will not
be in contravention of any of the provisions of this
Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's serial number;
(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) as consideration for
the Engine to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Engine the Owner
Trustee will be the legal owner of such Replacement Engine
free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Engine will on
such date be in good working order and condition and that
such Replacement Engine is substantially the same as the
Engine to be released (or as improved model);
(iv) the fair market value of the Replacement Engine as of the
date of such certificate (which value shall not be less than
the then fair market value of the Engine to be released
(assuming such Engine was in the condition and repair
required to be maintained under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered by such
Engine and assuming that such Engine was in the condition and
repair required to be maintained under the Lease);
(vi) that each of the conditions specified in Section 10(b) of the
Lease with respect to such Replacement Engine have been
satisfied and that Lessee will not be in default, by the
making and granting of the request for release and the
addition of the Replacement Engine, in the performance of any
of the terms and covenants of the Lease;
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(vii) that, with respect to the replacement of an Engine pursuant
to Section 9(d) of the Lease, no Lease Event of Default and
no Lease Default has occurred which has not been remedied or
waived; and
(viii) that the release of the Engine so to be released will not be
in contravention of any of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this Indenture
as deemed necessary or desirable by counsel for the Indenture Trustee to protect
the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and
deposited with the Indenture Trustee conform to the
requirements of this Trust Indenture and the Lease and, upon
the basis of such application, the property so sold or
disposed of may be lawfully released from the lien of this
Trust Indenture and all conditions precedent herein provided
for relating to such release have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the lien of this Indenture and covered
by the Lease, the instruments subjecting such Replacement
Airframe or Replacement Engine to the Lease and to the Lien
of this Trust Indenture, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or
any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any
document is necessary or advisable in order to establish and
perfect the right, title, estate
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and interest of the Owner Trustee to and the lien of this
Trust Indenture on such Replacement Aircraft or Replacement
Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being substituted as
contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Certificate Holders and Lessee, subject to
fulfillment of the conditions precedent and compliance by Lessee with its
obligations set forth in Section 10 of the Lease and the requirements of Section
5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to
execute and deliver a Lease Supplement and a Trust Agreement and Indenture
Supplement, as applicable, as contemplated by Section 10 of the Lease.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced, and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and applicable
to it and agrees to perform the same but only upon the terms of this Trust
Indenture and agrees to receive and disburse all monies constituting part of the
Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee,
in its individual
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capacity, and the Indenture Trustee, in its individual capacity, shall not be
answerable or accountable under any circumstances, except (i) for their own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Indenture Trustee, as provided in the
fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04
hereof, and (iii) for liabilities that may result, in the case of the Owner
Trustee, from the inaccuracy of any representation or warranty of the Owner
Trustee expressly made in its individual capacity in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the Refunding Agreement)
or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the
Indenture Trustee or any Certificate Holder in connection with the transactions
contemplated by the Operative Documents) or, in the case of the Indenture
Trustee (in its individual capacity), from the inaccuracy of any representation
or warranty of the Indenture Trustee (in its individual capacity) in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee
nor the Indenture Trustee shall be liable for any action or inaction of the
other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03 and 5.04
hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR
THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND
EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Owner Trustee made
in its individual capacity and the representations and warranties of the
Indenture Trustee, in
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each case expressly made in this Trust Indenture or in the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement). The Loan Participants, the Certificate Holders and the Owner
Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest all monies held as directed by Lessee so long as no Lease Event of
Default or Lease Default has occurred and is continuing (or in the absence of
such direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or, in the case of the
Owner Participant which originally executed the Participation Agreement,
evidence of the approval by the Executive Committee thereof) of any party to the
Participation Agreement, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to the aggregate unpaid Principal Amount of Secured Certificates
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Indenture Trustee. As to any fact or matter relating to
Lessee the manner of ascertainment of which is not specifically described
herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof
rely on a certificate, signed by a duly authorized officer of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee and the Indenture Trustee for any action taken or omitted to be
taken by them in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trustee is
authorized by the Trust Agreement to enter into this Trust Indenture and to take
all action to be taken by it pursuant to the provisions hereof, and shall not
inquire into the authorization of the Owner Trustee with respect thereto. In the
administration of the trusts hereunder, the Owner Trustee and the Indenture
Trustee each may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may at
the expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for
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the payment of such compensation, to the extent that such compensation shall not
be paid by Lessee, and shall have the right, on and subsequent to an Event of
Default hereunder, to use or apply any monies held by it hereunder in the Trust
Indenture Estate toward such payments. The Indenture Trustee agrees that it
shall have no right against the Loan Participants, the Certificate Holders, the
Owner Trustee or the Owner Participant for any fee as compensation for its
services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to
assume liability for, and does hereby indemnify, protect, save and keep harmless
the Indenture Trustee (in its individual and trust capacities), and its
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, to the extent not reimbursed by Lessee. Without limiting the
foregoing, the Indenture Trustee agrees that, prior to seeking indemnification
from the Trust Indenture Estate, it will demand, and take such action as it may
in its discretion determine to be reasonable to pursue, indemnification
available to the Indenture Trustee under the Lease or the Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Expenses to the extent relating to or
arising from the willful misconduct or gross negligence (or negligence in the
case of handling funds) of the Indenture Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any representation or
warranty of the Indenture Trustee (in its individual capacity) referred to in
Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last
sentence of Section 5.04 hereof, or as otherwise excluded by the terms of
Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities
under such Sections. In addition, if necessary, the Indenture Trustee shall be
entitled to indemnification from the Trust Indenture Estate for any liability,
obligation, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
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ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee
an instrument accepting such appointment and assuming the obligations of the
Indenture Trustee under the Participation Agreement arising from and after the
time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a bank
or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of
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the Indenture Trustee may be transferred, shall, subject to the terms of
paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the
Indenture Trustee under this Trust Indenture without further act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise any
of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
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(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with respect
to Excluded Payments, the Owner Trustee agrees it shall not enter into any
amendment of or supplement to the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and
deliver any written waiver or modification of, or consent under, the terms of
the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified, amended, changed or
waived in such manner as shall be agreed to by the Owner Participant and Lessee
and (ii) the Owner Trustee and Lessee may enter into amendments of or additions
to the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments, modifications
and changes do not and would not affect the time of, or reduce the amount of,
Rent payments until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06
hereof, Section 14 (except to add an Event of Default) of the Lease, the
definitions of "Event of Default", "Default", "Lease Event of Default", "Lease
Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or
"Certificate Holder", or the percentage of Certificate Holders required to take
or approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Principal Amount, Make-Whole
Amount, if any, or interest with respect to any Secured Certificate, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the
Certificate Holders, the Owner Trustee and Lessee, (iii)
-48-
<PAGE> 49
reduce, modify or amend any indemnities in favor of the Certificate Holders,
(iv) consent to any change in the Trust Indenture or the Lease which would
permit redemption of Secured Certificates earlier than permitted under Section
2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as
permitted by Section 2.14 hereof, (v) modify any of the provisions of Section
3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any
assignment of the Lease, in either case releasing Lessee from its obligations in
respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and unconditional
character of the obligations of Lessee to pay Rent as set forth in Sections 3
and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date of the consummation of the Refinancing
Transaction, the Owner Trustee and the Indenture Trustee may enter into one or
more agreements supplemental hereto without the consent of any Certificate
Holder for any of the following purposes: (i) (a) to cure any defect or
inconsistency herein or in the Secured Certificates, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee under the
Trust Agreement or the institution acting as Indenture Trustee hereunder, any
document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the Certificate
Holders or the Owner Participant pursuant to Section 9.01 hereof shall be
required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
-49-
<PAGE> 50
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE
HOLDERS.
No holder of a Secured Certificate shall have legal title to any part
of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of
any Secured Certificate or other right, title and interest of any Certificate
Holder in and to the Trust Indenture Estate or hereunder shall operate to
terminate this Trust Indenture or entitle such holder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or any part
thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE
TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
-50-
<PAGE> 51
addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-51-
<PAGE> 52
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a vote of a
Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-52-
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture
to be duly executed by their respective officers thereof duly authorized as of
the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee, as Owner Trustee
By:__________________________
Name:________________________
Title:
STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee
By:__________________________
Name:________________________
Title:
-53-
<PAGE> 54
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1995 A]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 A], dated ______
_______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain
Trust Agreement [NW 1995 A] dated as of November 15, 1995 (the "TRUST
AGREEMENT"), between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1995 A], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
<PAGE> 55
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in and
to all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts).
As further security for the obligations referred to above and secured
by the Trust Indenture and hereby, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Loan Participants and of the Certificate Holders, in
the trust created by the Trust Indenture, all of the right, title and interest
of the Owner Trustee in, to and under the Lease Supplement [of even date
herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity
EXHIBIT A-2
<PAGE> 56
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and subject to the terms and provisions set forth in the Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental to
the Trust Indenture and shall form a part thereof. The Trust Indenture is each
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
This Trust Indenture Supplement is being delivered in the State of New
York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 57
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as
By:_____________________________________
Name:
Title:
<PAGE> 58
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A . . . . . . $22,859,853 7.67%
Series B . . . . . . $ 7,140,147 8.07%
</TABLE>
<PAGE> 59
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N535US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 1.93840704%
Jan 2, 2001 0.00000000%
Jul 2, 2001 2.17914350%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.17914350%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.17914350%
Jan 2, 2004 0.00000000%
Jul 2, 2004 2.17914787%
Jan 2, 2005 0.00000000%
Jul 2, 2005 2.17914350%
Jan 2, 2006 0.00000000%
Jul 2, 2006 1.95700734%
Jan 2, 2007 0.22213616%
Jul 2, 2007 1.42103276%
Jan 2, 2008 0.75811074%
Jul 2, 2008 8.12804002%
Jan 2, 2009 1.32368305%
Jul 2, 2009 14.28626859%
Jan 2, 2010 1.92232645%
Jul 2, 2010 14.90786927%
Jan 2, 2011 2.56776367%
Jul 2, 2011 4.99680379%
Jan 2, 2012 2.85786615%
Jul 2, 2012 15.87926659%
Jan 2, 2013 3.57643595%
Jul 2, 2013 12.36126059%
</TABLE>
<PAGE> 60
SERIES B
AIRCRAFT: N535US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 0.00000000%
Jan 2, 2001 0.00000000%
Jul 2, 2001 0.00000000%
Jan 2, 2002 0.00000000%
Jul 2, 2002 0.00000000%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.32558237%
Jan 2, 2004 0.00000000%
Jul 2, 2004 2.32556837%
Jan 2, 2005 0.00000000%
Jul 2, 2005 2.32558237%
Jan 2, 2006 0.00000000%
Jul 2, 2006 22.83569232%
Jan 2, 2007 0.00000000%
Jul 2, 2007 37.52730861%
Jan 2, 2008 0.00000000%
Jul 2, 2008 17.83596332%
Jan 2, 2009 0.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 13.40714694%
Jul 2, 2014 1.41715570%
</TABLE>
<PAGE> 61
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as of
June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as of
June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1995 A]
This LEASE AGREEMENT [NW 1995 A], dated as of November 15, 1995,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (as defined in Section 1 hereof) (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. Unless the context otherwise
requires, the following terms shall have the following meanings for all
purposes of this Lease Agreement [NW 1995 A] and shall be equally applicable to
both the singular and the plural forms of the terms herein defined:
"Administrative Agent" means [____________], [___________]
banking corporation, as administrative agent pursuant to the
Participation Agreement, and any successor acting as
administrative agent.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this
definition, "control" (including "controlled by" and "under common
control with") shall mean 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 or
by contract or otherwise.
"Aircraft" means the Airframe to be delivered and leased
hereunder (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) hereof) together with the two
Engines initially leased hereunder (or any engine substituted for
either of such Engines pursuant to the terms hereof), whether or
not any of such initial or substituted Engines may from time to
time be installed on such initial or substituted Airframe or may
be installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft (except
Engines or engines from time to time installed thereon) specified
in the initial Lease Supplement, which aircraft shall be leased by
Lessor to Lessee hereunder and under such Lease Supplement, and
any aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for
<PAGE> 2
such aircraft (except Engines or engines from time to time
installed thereon) pursuant to clause (ii) of the first paragraph
of Section 10(a); and (ii) any and all Parts (A) so long as the
same shall be incorporated or installed in or attached to such
aircraft (except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 8 after removal
from such aircraft (except Engines or engines from time to time
installed thereon); provided, however, that at such time as an
aircraft (except Engines or engines from time to time installed
thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe pursuant to the applicable
provisions hereof, the replaced Airframe shall cease to be an
Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured Certificates
then outstanding and, if no Secured Certificates shall be
outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Base Rate" means the rate of interest announced publicly
by Citibank, N.A. in New York, New York from time to time as its
base rate.
"Basic Rent" means, for the Basic Term, the rent payable
for the Aircraft pursuant to Section 3(c) as adjusted as provided
in Section 3(d) but subject always to the provisions of Section
3(d)(v) hereof and, for any Renewal Term, Basic Rent determined
pursuant to Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on the
Commencement Date and ending on July 2, 2016, or such earlier date
as this Lease may be terminated in accordance with the provisions
hereof.
"Bill of Sale" means a full warranty bill of sale covering
the Aircraft, executed by Lessee in favor of the Owner Trustee,
dated the Delivery Date, specifically referring to the Airframe
and each Engine, which Bill of Sale shall contain, among other
things, a statement that such Bill of Sale thereby conveys to the
Owner Trustee good title to the Airframe and each Engine described
in such Bill of Sale, free and clear of all liens, encumbrances
and rights of others except Liens permitted by clause (v) of
Section 6 of the Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston, Massachusetts;
Salt Lake City, Utah; Phoenix, Arizona or Minneapolis, Minnesota
and, in connection with any payment of Rent and so long as any
Secured Certificate is a Eurodollar Loan (as defined in the Trust
Indenture), such day is also a day for trading by and between
banks in the interbank Eurodollar market.
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<PAGE> 3
"Certificate Holder" means Certificate Holder as defined
in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49,
United States Code, for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo.
"Citizen of the United States" has the meaning specified
in Section 40102(a)(15) of Title 49 of the United States Code or
any similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve
Air Fleet Program currently administered by the United States Air
Force Air Mobility Command pursuant to Executive Order No. 11490,
as amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commencement Date" means July 2, 1996.
"Commitment" means the commitment of a Loan Participant or
of the Owner Participant, as the case may be, to finance the Owner
Trustee's payment of Lessor's Cost for the Aircraft.
"Consent and Agreement" means the Consent and Agreement
[NW 1995 A], dated as of the date hereof, executed by the
Manufacturer, as the same may be amended, modified or supplemented
from time to time in accordance with the applicable provisions
thereof.
"Credit Agreement" means the Credit Agreement, dated as of
November 2, 1995, among Lessee, the banks, financial institutions
and other institutional lenders listed on the signature pages
thereof, [____________], as documentation agent, [______________],
as administrative agent, and [_____________], as
syndication agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of notice
or the lapse of time or both would become an Event of Default.
"Delivery Date" means the date of the Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased
by Lessor to Lessee and accepted by Lessee hereunder.
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<PAGE> 4
"Depreciation Period" means the period commencing on the
Delivery Date and ending on December 31, 2002, or such earlier
date as this Lease may be terminated in accordance with the
provisions hereof.
"Documentation Agent" means [____________], a bank
organized under the laws of [_______________], as documentation
agent pursuant to the Participation Agreement, and any successor
acting as documentation agent.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of the two Pratt & Whitney Model
PW2037 engines listed by manufacturer's serial number in the
initial Lease Supplement, whether or not from time to time
thereafter installed on the Airframe or installed on any other
airframe or on any other aircraft; and (ii) any engine which may
from time to time be substituted, pursuant to the terms hereof,
for either of such two engines, together in each case with any and
all Parts incorporated or installed in or attached thereto or any
and all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of Section 8
after removal from such Engine; provided, however, that at such
time as an engine shall be deemed part of the property leased
hereunder in substitution for an Engine pursuant to the applicable
provisions hereof, the replaced Engine shall cease to be an Engine
hereunder. The term "Engines" means, as of any date of
determination, all Engines then leased hereunder.
"Event of Default" has the meaning specified in Section 14
hereof.
"Event of Loss" with respect to the Aircraft, 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 uneconomic or which renders such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement
with respect to such property on the basis of a total loss, or a
constructive or compromised total loss; (iii) the theft or
disappearance of such property, or the confiscation, condemnation,
or seizure of, or requisition of title to, or use of, such
property (other than a requisition for use by the United States
Government or any other government of registry of the Aircraft, or
any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) (other than a
requisition of title) shall have resulted in the loss of
possession of such property by Lessee for a period in excess of
180 consecutive days or, in the case of a requisition of title,
the requisition of title shall not have been reversed within 90
days from the date of such requisition of title; (iv) as a result
of any
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<PAGE> 5
law, rule, regulation, order or other action by the Federal
Aviation Administration or other governmental body of the
government of registry of the Aircraft having jurisdiction, the
use of such property in the normal course of the business of air
transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of such
180 day period, shall have undertaken and shall be diligently
carrying forward all steps which are necessary or desirable to
permit the normal use of such property by Lessee, but in any event
if such use shall have been prohibited for a period of two
consecutive years, provided that no Event of Loss shall be deemed
to have occurred if such prohibition has been applicable to
Lessee's entire U.S. registered fleet of Boeing Model 757-200
aircraft and Lessee, prior to the expiration of such two-year
period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order
or other action and commenced regular commercial use of the same
in such jurisdiction and shall be diligently carrying forward, in
a manner which does not discriminate against the Aircraft in so
conforming the Aircraft, all steps which are necessary or
desirable to permit the normal use of the Aircraft by Lessee, but
in any event if such use shall have been prohibited for a period
of three years or such use shall be prohibited at the expiration
of the Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft or
any instrumentality or agency of any thereof, which shall have
occurred during the Basic Term (or the Interim Term or any Renewal
Term) and shall have continued for thirty (30) days beyond the
Term, provided, however, that no Event of Loss pursuant to this
clause (v) shall exist if Lessor shall have furnished to Lessee
the written notice specified in Section 10(d) hereof; and (vi) any
divestiture of title to or interest in an Engine treated as an
Event of Loss pursuant to Section 7(b) hereof. 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 Airframe.
"Excess Amount" for the Transition Date means an amount
equal to the amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit B hereto opposite the Transition
Date; provided, however, that, to the extent that the aggregate
amount of interest due and payable on the Transition Date on the
Secured Certificates relating to the period from and including the
Delivery Date to but excluding the Transition Date is less than
the aggregate amount of interest on the Secured Certificates that
would have been due and payable on the Transition Date if such
Secured Certificates had borne interest at the Assumed Interest
Rate for such period, the corresponding percentage set forth in
Exhibit B shall be decreased by the amount which when multiplied
by Lessor's Cost will equal such differential.
"Expenses" has the meaning specified in Section 7(c) of
the Participation Agreement.
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<PAGE> 6
"FAA Bill of Sale" means a bill of sale for the Aircraft
on AC Form 8050-2 or such other form as may be approved by the
Federal Aviation Administration on the Delivery Date for the
Aircraft, executed by Lessee in favor of the Owner Trustee and
dated the Delivery Date.
"Federal Aviation Act" means that portion of the United
States Code comprising those provisions formerly referred to as
the Federal Aviation Act of 1958, as amended, or any subsequent
legislation that amends, supplements or supersedes such
provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to
their functions.
"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, Airframe and/or any
Engine or engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal
Aviation Administration, 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 Rijflauchtraatdienst of the Kingdom of the
Netherlands, the Ministry of Transportation of Japan or the
Federal Ministry of Transport of Canada (and any agency or
instrumentality of the applicable government succeeding to the
functions of any of the foregoing entities).
"Funding Loss Amount" has the meaning assigned to that
term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1995 A], dated as of
the date hereof, made by the Guarantor in favor of the Parties, as
such Guarantee may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of their
respective Affiliates, successors, permitted assigns, directors,
officers, employees, servants and agents.
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<PAGE> 7
"Indenture Trustee" means the Indenture Trustee under the
Trust Indenture, and any entity which may from time to time be
acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as
a result of (A) claims against the Indenture Trustee not related
to its interest in the Aircraft or the administration of the Trust
Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to
take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitute gross
negligence or willful misconduct, (C) claims against the Indenture
Trustee relating to Taxes or Expenses (as such terms are defined
in Section 7 of the Participation Agreement) which are excluded
from the indemnification provided by said Section 7 pursuant to
said Section 7, or (D) claims against the Indenture Trustee
arising out of the transfer by the Indenture Trustee of all or any
portion of its interest in the Aircraft, the Trust Estate, the
Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the
Lease or Article IV or V of the Trust Indenture, or a transfer of
the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"Interest Period" means Interest Period as defined in the
Trust Indenture.
"Interim Rent" means the rent payable for the Aircraft for
the Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the Delivery
Date and ending on and including the day immediately preceding the
Commencement Date unless earlier terminated in accordance with the
provisions hereof.
"Lease Agreement", "this Lease Agreement", "this Lease",
"this Agreement", "herein", "hereof", "hereunder", "hereby" or
other like words mean this Lease Agreement [NW 1995 A] as
originally executed or as modified, amended or supplemented
pursuant to the applicable provisions hereof and in accordance
with the Trust Agreement and the Trust Indenture, including,
without limitation, supplementation hereof by one or more Lease
Supplements entered into pursuant to the applicable provisions
hereof.
"Lease Period" means each of the consecutive semi-annual
periods throughout the Basic Term and any Renewal Term ending on a
Lease Period
- 7 -
<PAGE> 8
Date, the first such period commencing on and including the
Commencement Date.
"Lease Period Date" means January 2, 1997 and each
succeeding July 2 and January 2, to and including the last such
date in the Term.
"Lease Supplement" means a Lease Supplement, substantially
in the form of Exhibit A hereto, to be entered into between Lessor
and Lessee on the Delivery Date for the purpose of leasing the
Aircraft under and pursuant to the terms of this Lease Agreement,
and any subsequent Lease Supplement entered into in accordance
with the terms hereof.
"Lessee Documents" means the Participation Agreement, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement (insofar as it relates to the Aircraft), the FAA Bill of
Sale, the Bill of Sale, the Purchase Agreement Assignment and the
Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title or
interest arising as a result of (i) claims against Lessor, First
Security Bank of Utah, National Association, in its individual
capacity, or the Owner Participant not related to the transactions
contemplated by the Operative Documents, (ii) any act or omission
of the Owner Participant, Lessor, or First Security Bank of Utah,
National Association, in its individual capacity, which is not
related to the transactions contemplated by the Operative
Documents or is in violation of any of the terms of the Operative
Documents, (iii) claims against the Owner Participant, Lessor, or
First Security Bank of Utah, National Association, in its
individual capacity, with respect to Taxes or Expenses against
which Lessee is not required to indemnify the Owner Participant,
Lessor or First Security Bank of Utah, National Association, in
its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner
Participant arising out of any transfer by Lessor or the Owner
Participant of all or any portion of the respective interests of
Lessor or the Owner Participant in the Aircraft, the Trust Estate
or the Operative Documents other than the transfer of possession
of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft
pursuant to Section 9, 10 or 19 hereof or pursuant to the exercise
of the remedies set forth in Section 15 hereof, provided, however,
that any Lien which is attributable solely to First Security Bank
of Utah, National Association or the Owner Participant and would
otherwise constitute a Lessor Lien hereunder shall not constitute
a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the
Aircraft, (2) the existence of such Lien does not interfere in any
way with the use, possession, operation, or quiet enjoyment of the
Aircraft by Lessee (or any Sublessee), (3) the existence of such
Lien does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First Security
Bank of Utah,
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<PAGE> 9
National Association or the Owner Participant, as appropriate, is
diligently contesting such Lien and (5) the existence of such Lien
does not pose a material threat of interference with the payment
of Rent (other than Excluded Payments in favor of First Security
Bank of Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease, sub-sublease or security interest.
"Loan Participant" means each institution executing the
Participation Agreement as a Loan Participant, and its respective
successors and assigns, and any Certificate Holder; at any time
when there is only one Certificate Holder, "each Loan Participant"
shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises from
acts or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section
10(a) hereof.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement and
the Consent and Agreement.
"Net Economic Return" shall have the meaning ascribed to
such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net present value,
as of the Delivery Date, of Basic Rent set forth in Exhibit B
hereto, discounted at an annual interest rate of 7.70 percent on a
semi-annual basis.
"Operative Documents" and "Operative Document" means each
of the Participation Agreement, the Lease, the Trust Indenture,
the Trust Agreement, an acceptance certificate covering the
Aircraft in the form agreed to by the Participants and Lessee, the
Tax Indemnity Agreement, the Lease Supplement covering the
Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Guarantee,
the Purchase Agreement Assignment and the Consent and Agreement.
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
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<PAGE> 10
"Owner Participant" means the corporation executing the
Participation Agreement as the Owner Participant and any person to
which such corporation transfers all or any portion of its right,
title and interest in and to the Trust Agreement, the Trust Estate
and the Participation Agreement, to the extent permitted by
Section 8.01 of the Trust Agreement and Section 8 of the
Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity appointed
as successor Owner Trustee pursuant to Section 9.01 of the Trust
Agreement, and references to a predecessor Owner Trustee in its
individual capacity by name in the Operative Documents shall
include such successor Owner Trustee in its individual capacity
from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering the
Aircraft, the Lease, the Lease Supplement covering the Aircraft,
the Purchase Agreement Assignment, the Trust Indenture and the
Secured Certificates.
"Participants" means and includes the Loan Participants
and the Owner Participant.
"Participation Agreement" means that certain Participation
Agreement [NW 1995 A], dated as of the date hereof, among Lessee,
the Loan Participants, the Indenture Trustee, the Owner
Participant and Owner Trustee, as such Participation Agreement may
be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee
and the Participants.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines, (b)
any items leased by Lessee from a third party (other than Lessor)
and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any
Engine or so long as title thereto shall remain vested in Lessor
in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion of
any payment of Rent that may be required by the Trust Indenture to
be paid by the Indenture Trustee to the Loan Participants, or the
holders of any outstanding Secured Certificates, the "Past Due
Rate" as defined in the Trust Indenture and (ii) with
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<PAGE> 11
respect to the remaining portion of any payment of Rent (and the
entire amount of any payment of Rent after the satisfaction and
discharge of the Trust Indenture), a rate per annum equal to 1%
over the Base Rate.
"Permitted Lien" means any Lien referred to in clauses (i)
through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a
country listed in Exhibit F hereto.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section 3(g)
hereof.
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and Lessee
relating to the purchase by Lessee of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance
with the terms thereof, but only insofar as the foregoing relates
to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1995 A], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of Consent
and Agreement to be executed by the Manufacturer attached thereto.
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 hereof.
"Rent" means Interim Rent, Basic Rent and Supplemental
Rent, collectively.
"Rent Differential Amount" has the meaning set forth in
Section 3(c) hereof.
"Secured Certificates" has the meaning assigned to that
term in the Trust Indenture.
"Special Purchase Price" shall mean the amount denominated
as such in Exhibit B to the Lease.
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<PAGE> 12
"Stipulated Loss Value" with respect to the Aircraft as of
any date through and including July 2, 2016, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit C hereto opposite the Stipulated
Loss Value Date with respect to which the amount is determined (as
such Exhibit C may be adjusted from time to time as provided in
Section 3(d) hereof and in Section 8 of the Tax Indemnity
Agreement). To the extent that the actual amount of interest paid
and to be paid on the Secured Certificates during the Interim Term
or the Lease Period in which such Stipulated Loss Value Date
occurs up to and including such Stipulated Loss Value Date is
greater or less than the amount included in calculating the
percentage set forth in Exhibit C with respect to such Stipulated
Loss Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted appropriately
to compensate for such differential. "Stipulated Loss Value" as
of any date after July 2, 2016 shall be the amount determined as
provided in Section 19(a) hereof.
"Stipulated Loss Value Date" means the 2nd calendar day of
each calendar month during the Interim Term, Basic Term and any
Renewal Term.
"Sublease" means any sublease permitted by the terms of
Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or any
Engine pursuant to the terms of a Sublease which is then in effect
pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Interim Rent and Basic Rent) which Lessee
assumes or agrees to pay to Lessor or others hereunder, under the
Participation Agreement, under the Tax Indemnity Agreement or
under any of the other Operative Documents. The parties
acknowledge that Supplemental Rent is a general category and,
accordingly, agree that any provision of any Operative Document
which calls for the payment of Supplemental Rent and also calls
for the payment of specific items which are includable in
Supplemental Rent is not to be interpreted as requiring any double
payment.
"Tax Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, the Loan
Participants and each other Certificate Holder, and each of their
respective Affiliates, successors and permitted assigns.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1995 A], dated as of the date hereof, between the
Owner
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<PAGE> 13
Participant and Lessee, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, gross
receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of
any nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a
"Tax").
"Term" means the Interim Term, Basic Term and, if actually
entered into, any Renewal Term.
"Termination Date" has the meaning set forth in Section
9(a) hereof.
"Termination Value" with respect to the Aircraft as of any
date through and including July 2, 2016, means, but subject always
to the provisions of Section 3(d)(v) hereof, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage
specified in Exhibit D hereto opposite the Termination Date with
respect to which the amount is determined (as such Exhibit D may
be adjusted from time to time as provided in Section 3(d) hereof
and in Section 8 of the Tax Indemnity Agreement). In the event
that the Termination Date with respect to which Termination Value
is determined is a date on which Basic Rent is payable in advance
as indicated on Exhibit B, to the extent that the actual amount of
interest paid and to be paid on the Secured Certificates during
the Lease Period ending on such Termination Date is greater or
less than the amount included in calculating the corresponding
percentage set forth in Exhibit D with respect to such Termination
Date on account of such interest, the corresponding percentage set
forth in Exhibit D shall be adjusted appropriately to compensate
for such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould, special counsel for the Indenture Trustee, such information
to be furnished by the Indenture Trustee, (2) Ray, Quinney &
Nebeker, special counsel for the Owner Trustee under the Trust
Agreement, such information to be furnished by the Owner Trustee,
(3) Shearman & Sterling, special counsel to the Loan Participants,
such information to be furnished by the Documentation Agent, (4)
Cadwalader, Wickersham & Taft, special counsel to Lessee and
Guarantor, such information to be furnished by Lessee, and (5)
Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees, taxes
and other charges payable in connection with the recording or
filing of instruments and financing statements, such information
to be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of the
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<PAGE> 14
Owner Trustee under the Trust Agreement, such information to be
furnished by the Owner Trustee, (iv) the initial fee and
reasonable and actual disbursements of the Indenture Trustee under
the Trust Indenture, such information to be furnished by the
Indenture Trustee, (v) the fee of BK Associates, Inc. with respect
to the appraisal of the Aircraft pursuant to Section 4(a)(xix) of
the Participation Agreement, such information to be furnished by
Lessee, (vi) the reasonable and actual fees, expenses and
disbursements of Feltman, Karesh, Major & Farbman, special counsel
to the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee, and the
reasonable and actual fees, expenses and disbursements of David,
Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner
Participant, such fees not to exceed the amount previously agreed
to by the Owner Participant and Lessee, such information to be
furnished by the Owner Participant, (vii) the equity placement fee
and reasonable disbursements of Babcock and Brown Financial
Corporation, such information to be furnished by Lessee, and
(viii) the fee payable to the Loan Participants on the Delivery
Date.
"Transition Date" means the date designated as such in
Exhibit B to the Lease.
"Trust Agreement" means that certain Trust Agreement [NW
1995 A], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National Association,
in its individual capacity, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
thereof, including, without limitation, supplementation thereof by
one or more Trust Supplements entered into pursuant to the
applicable provisions thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1995 A], dated as of the date hereof,
between Lessor and the Indenture Trustee, as originally executed
or as modified, amended or supplemented in accordance with the
provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form of
Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier as
to which there is in force an air carrier operating certificate
issued pursuant to Part 121 of the regulations under the Federal
Aviation Act, or which may operate as an air carrier by
certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
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<PAGE> 15
"Wet Lease" means any arrangement whereby the Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or
engines installed thereon to a third party pursuant to which such
Airframe and Engines or engines (i) shall be operated solely by
regular employees of Lessee (or any Sublessee) possessing all
current certificates and licenses that would be required under the
Federal Aviation Act or, if the Aircraft is not registered in the
United States, all certificates and licenses required by the laws
of the jurisdiction of registry, for the performance by such
employees of similar functions within the United States of America
or such other jurisdiction of registry (it is understood that
cabin attendants need not be regular employees of Lessee (or any
Sublessee)) and (ii) shall be maintained by Lessee (or any
Sublessee) in accordance with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees
(subject to satisfaction of the conditions set forth in Section 4(a) of the
Participation Agreement) to accept the transfer of title to and simultaneously
to lease to Lessee hereunder, and Lessee hereby agrees (subject to satisfaction
of the conditions set forth in Section 4(b) of the Participation Agreement) to
lease from Lessor hereunder, the Aircraft as evidenced by the execution by
Lessor and Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee
hereby agrees that such acceptance of the Aircraft by Lessor shall, without
further act, irrevocably constitute acceptance by Lessee of such Aircraft for
all purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term.
The Interim Term shall commence on the Delivery Date and end on and include the
day immediately preceding the Commencement Date unless earlier terminated
pursuant to the provisions hereof. The Basic Term shall commence on the
Commencement Date and end on July 2, 2016, or such earlier date as this Lease
may be terminated in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the
Commencement Date in an amount equal to Lessor's Cost multiplied by the
percentage specified in Exhibit B hereto for Interim Rent on the Commencement
Date.
Although the Interim Rent percentage set forth in Exhibit B hereto
has been computed on the assumption that the rate of interest on the Secured
Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize
that the actual rate of interest on the Secured Certificates may be a rate from
time to time which may be greater or less than the Assumed Interest Rate and
that the related basis upon which interest on the Secured Certificates will be
computed will be as provided in the Trust Indenture. Accordingly, the Interim
Rent payable on the Commencement Date shall be increased or decreased (but not
below zero) by the difference between (i) the aggregate amount of interest due
and payable on the Secured Certificates on the Commencement Date relating to
the period from the Transition Date to but excluding the Commencement Date and
(ii) the aggregate amount of interest on the Secured Certificates that would
have been due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to the Commencement
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<PAGE> 16
Date if such Secured Certificates had borne interest at the Assumed Interest
Rate. If the amount determined in accordance with clause (i) of the preceding
sentence shall be greater than the amount determined in accordance with clause
(ii) of such sentence, the amount of Interim Rent payable on the Commencement
Date shall be increased by such difference. If the amount determined in
accordance with clause (i) of the preceding sentence shall be less than the
amount determined in accordance with clause (ii) of such sentence, the amount
of Interim Rent payable on the Commencement Date shall be decreased (but not
below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect to
each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in 40 consecutive installments in the amounts as provided in the
next sentence, each such installment to cover the Lease Period specified in
Exhibit B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B hereto
have been computed on the assumption that the rate of interest on the Secured
Certificates throughout the Term will be 7.70% per annum, computed on the basis
of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor
and Lessee recognize that the actual rate of interest on the Secured
Certificates may be a rate from time to time which may be greater or less than
the Assumed Interest Rate and that the related basis upon which interest on the
Secured Certificates will be computed will be as provided in the Trust
Indenture. Accordingly, each installment of Basic Rent shall be increased or
decreased (but not below zero), as the case may be, by the Rent Differential
Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT"
shall mean, as of any Lease Period Date with respect to the Basic Term, the
difference between (i) the aggregate amount of interest due and payable on such
Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of
interest on the Secured Certificates that would have been due and payable on
such Lease Period Date if such Secured Certificates had borne interest at the
Assumed Interest Rate, in each case for the period from and including the Lease
Period Date (or the Commencement Date in the case of the first Lease Period)
next preceding such Lease Period Date to but excluding such Lease Period Date.
If, as of any Lease Period Date, the amount determined in accordance with
clause (i) of the immediately preceding sentence shall be greater than the
amount determined in accordance with clause (ii) of such sentence, the amount
of Basic Rent payable on such Lease Period Date shall be increased by the Rent
Differential Amount. If, as of any Lease Period Date, the amount determined in
accordance with such clause (ii) shall exceed the amount determined in
accordance with such clause (i), the amount of Basic Rent due on such Lease
Period Date shall be decreased (but not below zero) by the Rent Differential
Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs
other than on November 21, 1995, or (B) Transaction Expenses paid
by Lessor pursuant to Section 16(a) of the Participation Agreement
are determined to be other than
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<PAGE> 17
1.5% of Lessor's Cost, then in each case the Basic Rent
percentages set forth in Exhibit B and Stipulated Loss Value
percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated by the
Owner Participant, on or prior to March 15, 1996 using the same
methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages, in order
to: (1) maintain the Owner Participant's Net Economic Return and
(2) minimize the Net Present Value of Rents to Lessee to the
extent possible consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing or a refunding
as contemplated by Section 17 of the Participation Agreement, then
the Basic Rent percentages set forth in Exhibit B and Stipulated
Loss Value percentages set forth in Exhibit C and the Termination
Value percentages set forth in Exhibit D shall be recalculated
(upwards or downwards) by the Owner Participant as contemplated by
such Section to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee and (B)
in the event that Lessee elects to satisfy any indemnity
obligation under the Tax Indemnity Agreement pursuant to Section
4(d)(ii) of the Tax Indemnity Agreement, then the Basic Rent
percentages set forth in Exhibit B and the Stipulated Loss Value
percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated (upwards
or downwards) by Owner Participant, using the same methods and
assumptions (except to the extent such assumptions shall be varied
to take into account the Loss (as defined in the Tax Indemnity
Agreement) that is the subject of such indemnification and any
prior or contemporaneous Loss) used to calculate the Basic Rent
percentages, the Stipulated Loss Value percentages and the
Termination Value percentages on the Delivery Date, in order to
(1) maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof, minimize
the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant to
this Section 3(d), the Owner Participant shall redetermine the
Excess Amount set forth in column 3 of Exhibit B in a manner
consistent with such recalculation. In addition, (X) any
recalculation of Basic Rent, Stipulated Loss Value or Termination
Value percentages made pursuant to this Section 3(d) shall take
into account any decrease in the Excess Amount with respect to the
Transition Date required by the proviso to the definition of
"Excess Amount", (Y) after September 30, 1996 but prior to January
2, 1997, the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C and the
Termination Value percentages set forth in Exhibit D shall be
recalculated to take into account any decrease in Excess Amount
with respect to the Transition Date that has not therefore been
taken into account in accordance with clause (X) of this sentence,
and (Z) at the time of any payment of Stipulated Loss Value or
Termination Value, the Stipulated Loss Value
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<PAGE> 18
percentage set forth in Exhibit C or the Termination Value
percentage set forth in Exhibit D, by reference to which the
amount of such payment is determined shall be recalculated to take
into account any decrease in the Excess Amount with respect to the
Transition Date that has not theretofore been taken into account
in accordance with clause (X) or clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess Amount
and Stipulated Loss Value and Termination Value percentages
pursuant to this Section 3(d) shall be determined by the Owner
Participant and shall be subject to the verification procedures
set forth in Exhibit E hereto. Such recalculated Basic Rent,
Excess Amount and Stipulated Loss Value and Termination Value
percentages shall be set forth in a Lease Supplement or an
amendment to this Lease.
(v) Anything contained in the Participation Agreement
or this Lease to the contrary notwithstanding, each installment of
Basic Rent payable hereunder, whether or not adjusted in
accordance with this Section 3(d), shall, together with the amount
of the Excess Amount in respect of the date on which such
installment is payable, and each payment of Termination Value and
Stipulated Loss Value, whether or not adjusted in accordance with
this Section 3(d), shall, together with all other amounts
(including an amount equal to the premium, if any, payable by
Lessor on the Secured Certificates) payable simultaneously by
Lessee pursuant to this Lease, in each case be, under any
circumstances and in any event, in an amount at least sufficient
to pay in full, on the date on which such amount of Rent is due,
any payments then required to be made on account of the principal
of, premium, if any, and interest on the Secured Certificates. It
is agreed that no installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased or
adjusted by reason of (i) any attachment or diversion of Rent on
account of (A) Lessor Liens or (B) any Loan Participant Lien or
other Lien on or against the Trust Estate, any part thereof or the
Operative Documents arising as a result of claims against the
Indenture Trustee not related to the transactions contemplated by
the Operative Documents, (ii) any modification of the payment
terms of the Secured Certificates made without the prior written
consent of Lessee or (iii) the acceleration of any Secured
Certificate or Secured Certificates due to the occurrence of an
"Event of Default" (as defined in the Trust Indenture) which does
not constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section
3(d) shall be (A) in compliance with the tests of Sections
4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467
of the Internal Revenue Code of 1986, as amended, as each is in
effect on the Delivery Date (provided that the test of Rev. Proc.
75-28 Section 4.08(1) and Section 467 shall be applied on a
prospective basis from the date of such adjustment if and to the
extent permitted by applicable law, as then in effect) and (B)
subject to verification pursuant to Exhibit E.
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<PAGE> 19
(e) Supplemental Rent. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting Stipulated Loss Value or Termination Value as
the same shall become due and owing and all other amounts of Supplemental Rent
within five days after demand or within such other relevant period as may be
provided in any Operative Document, and in the event of any failure on the part
of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or in any other Operative Document or
by law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee
shall pay as Supplemental Rent when due any amount of premium payable when due
under the Trust Indenture and shall pay amounts equal to the amounts payable
pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when
the same shall become due and payable. Lessee also will pay to Lessor, or to
whomsoever shall be entitled thereto, on demand, as Supplemental Rent, to the
extent permitted by applicable law, interest at the Past Due Rate on any part
of any installment of Basic Rent not paid when due for any period for which the
same shall be overdue and on any payment of Supplemental Rent not paid when due
for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by wire
transfer of immediately available funds prior to 10:30 A.M. New York time, on
the date of payment, to Lessor at its account at First Security Bank of Utah,
National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1995 A (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby directs
and Lessee agrees, that, unless the Indenture Trustee shall otherwise direct,
all Rent payable to Lessor and assigned to the Indenture Trustee pursuant to
the Trust Indenture shall be paid prior to 10:30 A.M. New York time on the due
date thereof in funds of the type specified in this Section 3(f) directly to
the Indenture Trustee at its account at State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account
No. 9903-943-0, Attention: Corporate Trust Department, Reference:
Northwest/NW 1995 A (or such other account of the Indenture Trustee in the
continental United States as the Indenture Trustee shall direct in a notice to
Lessee at least 10 Business Days prior to the date such payment of Rent is
due). All payments of Supplemental Rent owing to the Indenture Trustee or to a
Loan Participant or any other Certificate Holder pursuant to the Participation
Agreement shall be made in Dollars in immediately available funds prior to
10:30 A.M. New York time, on the due date thereof at the office of the
Indenture Trustee or at such other office of such other financial institution
located in the continental United States as the party entitled thereto may so
direct at least 10 Business Days prior to the due date thereof. All payments
of Supplemental Rent payable to the Owner Participant, to the extent that such
amounts constitute Excluded Payments (as defined in the Trust Indenture), shall
be made in Dollars in immediately available funds prior to 10:30 A.M. New York
time, on the due date thereof, to the account of the Owner Participant
specified in Schedule I to the Participation Agreement (or to such other
account as may be specified in writing by the Owner Participant from time to
time).
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<PAGE> 20
Notwithstanding anything to the contrary contained herein, if any
date on which a payment of Rent becomes due and payable is not a Business Day,
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day with the same force and effect as if made on
such scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if
any, that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by 10:30 A.M.
New York time on the Transition Date from Lessor an amount equal to the Excess
Amount for such date, Lessee shall on the Transition Date, prepay on the
Transition Date a portion of Basic Rent equal to the Excess Amount not so paid
(the amount of such Basic Rent to be prepaid by Lessee being herein called
"PREPAID RENT"); provided that Lessee shall, under all circumstances and
whether or not an Event of Default shall be continuing on the Transition Date,
pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount
equal to the excess, if any, of the interest on the Secured Certificates
relating to the period from and including the Delivery Date to but excluding
the Transition Date over the Excess Amount payable on the Transition Date;
provided, further, that Lessee will also pay to the Indenture Trustee, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Applicable Rate in effect from time to time on any part of any
Prepaid Rent and on the amount, if any, payable pursuant to the immediately
preceding proviso not paid when due for any period for which the same shall be
overdue. Lessor agrees to reimburse Lessee in the manner provided in the
following sentence for (x) the Prepaid Rent so paid by Lessee, plus (y) any
Supplemental Rent paid with respect to Prepaid Rent by Lessee pursuant to this
Section 3(g), plus (z) accrued interest on the unreimbursed portion thereof at
a rate per annum equal to 5% over the Base Rate from the date such amount is
paid by Lessee to but not including the date of each such reimbursement (such
amounts to be reimbursed being herein called the "REIMBURSEMENT AMOUNT").
Lessor shall pay to Lessee, in funds of the type specified in Section 3(f)
hereof, within five days after Lessor, the Owner Participant and the Indenture
Trustee shall have received written notice from Lessee demanding payment, the
Reimbursement Amount. In addition, if, for any reason, Lessor shall fail to
pay to Lessee the Reimbursement Amount as above provided, Lessee shall be
entitled to offsets (without duplication) against each succeeding payment
(other than as limited by the proviso to this sentence) due from Lessee to
Persons other than the Loan Participants, the Indenture Trustee and the Owner
Trustee in its individual capacity (including, without limitation, Basic Rent,
payments due under Section 9, 10, 15 and 19 hereof, payments due under the Tax
Indemnity Agreement and payments due to Persons other than the Loan
Participants, the Indenture Trustee and Lessor in its individual capacity under
Section 7 of the Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however, that in the case of
any payment due from Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right of offset shall be limited to amounts distributable
to Lessor thereunder. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any installment of Basic Rent to an amount
insufficient, together with the Excess Amount and all other amounts payable
simultaneously by Lessee, to pay in full the payments then required to
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<PAGE> 21
be made on account of the principal of and interest on (and premium, if any,
due with respect to) the Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR
LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS."
NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that First Security Bank of Utah, National Association, in its individual
capacity, (i) represents and warrants that on the Delivery Date, Lessor shall
have received whatever title to the Aircraft was conveyed to it by Lessee, (ii)
represents and warrants that on the Delivery Date the Aircraft shall be free of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to it, (iii)
covenants that it will not, through its own actions or inactions, interfere in
Lessee's quiet enjoyment of the Aircraft during the Term so long as this Lease
shall not have been declared in default pursuant to Section 15 hereof, (iv)
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine or any portion of the Trust Estate and (v) represents and
warrants that it is a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement, and agrees that
if at any time it shall cease to be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement it
will promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Loan Participants, the Owner Participant or
Lessee), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. None of the provisions of
this Lease shall be deemed to amend, modify or otherwise affect the
representations, warranties or other obligations (express or implied) of the
Manufacturer, any subcontractor or supplier of the Manufacturer with respect to
the Airframe, the Engines or any Parts, or to release the Manufacturer, or any
such subcontractor or supplier, from any such representation, warranty or
obligation. Lessor covenants that during the Term (so long as this Lease shall
not have been declared in default pursuant to Section 15 hereof) it will not,
through its own actions or inactions interfere in the quiet enjoyment of the
Aircraft by Lessee or any Sublessee and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor Lien
attributable to it on or with respect to the Airframe or any Engine.
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<PAGE> 22
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon
Return. Unless purchased by Lessee pursuant to Section 19 hereof, upon the
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c) or 15, Lessee, at its own expense, will return the
Airframe to Lessor at a major airport in one of the forty-eight contiguous
states of the United States chosen by Lessee, and Lessee will give Lessor at
least ten (10) days' prior written notice of the place of such return;
provided, however, that if Lessor shall have made the request for storage
pursuant to Section 5(d) hereof, Lessee shall return the Airframe to Lessor at
the site of the storage at the end of the storage period. At the time of such
return, Lessee will, unless otherwise requested by Lessor at least ninety (90)
days prior to the return hereunder, cause the Aircraft, if it is not then so
registered, to be registered under the laws of the United States with the
Federal Aviation Administration in the name of the Lessor or its designee,
provided that Lessee shall be relieved of its obligations under this sentence
if (i) such registration is prohibited by reason of the failure of Lessor or
its designee to be eligible on such date to own an aircraft registered with the
Federal Aviation Administration or (ii) such registration is otherwise
prohibited by applicable law; the Airframe will be fully equipped with the
Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the
same or another manufacturer of not less than equivalent utility, value and
remaining useful life, and suitable for installation and use on the Airframe
without impairing the value, utility or remaining useful life of the Aircraft;
provided that both engines shall be of the same make and model) duly installed
thereon. Also, at the time of such return, such Airframe and Engines or
engines (i) shall be certified (or, if not then registered under the Federal
Aviation Act, shall be eligible for certification) as an airworthy aircraft by
the Federal Aviation Administration, (ii) shall be free and clear of all Liens
(other than Lessor Liens, Indenture Trustee's Liens and Loan Participant Liens)
and rights of third parties under pooling, interchange, overhaul, repair or
other similar agreements or arrangements, (iii) shall be in as good an
operating condition as when delivered to Lessee hereunder, ordinary wear and
tear excepted, or, in the case of any such engines owned by Lessee, shall have
a value, utility and remaining useful life at least equal to, and shall be in
as good an operating condition as required by the terms hereof with respect to,
Engines constituting part of the Aircraft but not then installed on the
Airframe, and (iv) shall be in compliance with the return conditions, if any,
set forth in Exhibit G.
During the last six (6) months of the Term (unless Lessee shall
have elected to purchase the Aircraft or renew this Lease in accordance with
the terms of this Lease), with reasonable notice, Lessee will cooperate, and
cause any Sublessee to cooperate, in all reasonable respects with the efforts
of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not
interfere with the operation or maintenance of the Aircraft by Lessee or any
Sublessee.
(b) Return of the Engines. In the event that any engine not
owned by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to
the effect that
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<PAGE> 23
such full warranty bill of sale has been duly authorized and delivered and is
enforceable in accordance with its terms and that such engines are free and
clear of Liens other than Lessor Liens, Loan Participant Liens and Indenture
Trustee Liens), against receipt from Lessor of a bill of sale or other
instrument evidencing the transfer, without recourse or warranty (except as to
the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), by Lessor
to Lessee or its designee of all of Lessor's right, title and interest in and
to any Engine constituting part of the Aircraft but not installed on the
Airframe at the time of the return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessor shall pay Lessee, as compensation for any fuel or oil contained in
the fuel or oil tanks of such Airframe, the value of such fuel or oil at the
price paid by Lessee for such fuel or oil, as the case may be, and (ii) Lessee
shall deliver or cause to be delivered to Lessor all logs, manuals and data and
inspection, modification and overhaul records required to be maintained with
respect thereto under applicable rules and regulations of each country under
the laws of which the Aircraft has been registered during the period of
operation thereof, which logs, manuals, data and records, if not maintained in
English, shall be translated into English at Lessee's expense.
(d) Storage Upon Return. If, at least sixty (60) days prior
to termination of this Lease at the end of the Basic Term or any Renewal Term
or pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with free parking facilities for the Aircraft
(maintenance costs and other out-of-pocket costs other than parking fees to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such
period not exceeding thirty (30) days and be reimbursed by Lessor for the
premiums thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, title thereto or any interest therein or in this Lease, except (i)
the respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any Sublessee) either not yet due or being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein, or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture, (v)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary
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<PAGE> 24
course of business) securing obligations that are not overdue for a period of
more than forty-five (45) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any
judgment or award against Lessee (or any Sublessee), unless the judgment
secured shall not, within sixty (60) days after the entry thereof, have been
discharged, vacated, reversed or execution thereof stayed pending appeal or
shall not have been discharged, vacated or reversed within sixty (60) days
after the expiration of such stay, (vii) any other Lien with respect to which
Lessee (or any Sublessee) shall have provided a bond, cash collateral or other
security adequate in the reasonable opinion of Lessor, and (viii) Liens
approved in writing by Lessor. Lessee will promptly, at its own expense, take
(or cause to be taken) such actions as may be necessary duly to discharge any
such Lien not excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION;
POSSESSION AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance.
Lessee, at its own cost and expense, shall (or shall cause any Sublessee to):
(i) forthwith upon the delivery thereof hereunder, cause the Aircraft to be
duly registered in the name of Lessor, and, subject to the second paragraph of
this Section 7(a) and Section 8(f) of the Participation Agreement, to remain
duly registered in the name of Lessor under the Federal Aviation Act, provided
that Lessor shall execute and deliver all such documents as Lessee (or any
Sublessee) may reasonably request for the purpose of effecting and continuing
such registration, and shall not register the Aircraft or permit the Aircraft
to be registered under any laws other than the Federal Aviation Act at any time
except as provided in Section 8(f) of the Participation Agreement and shall
cause the Trust Indenture to be duly recorded and maintained of record as a
first mortgage on the Aircraft; (ii) maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) the Aircraft so as
to keep the Aircraft in as good an operating condition as delivered to Lessee
hereunder, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained in
good standing at all times (other than temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Boeing
757-200 aircraft powered by engines of the same type as those with which the
Airframe shall be equipped at the time of such grounding and registered in the
United States have been grounded by the FAA (although such certification need
actually be maintained only during such periods as the Aircraft is registered
in the United States), or the applicable laws of any other jurisdiction in
which the Aircraft may then be registered from time to time in accordance with
Section 8(f) of the Participation Agreement, utilizing, except during any
period that a Sublease is in effect, the same manner and standard of
maintenance, service, repair or overhaul used by Lessee with respect to similar
aircraft operated by Lessee in similar circumstances and utilizing, during any
period that a Sublease is in effect, the same manner and standard of
maintenance, service, repair or overhaul used by the Sublessee with respect to
similar aircraft operated by the Sublessee in similar circumstances; provided,
however, that in all circumstances the Aircraft shall be maintained by Lessee
(or any Sublessee) in accordance with maintenance standards required by, or
substantially equivalent to those required by, the FAA or the central civil
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<PAGE> 25
aviation authority of Canada, France, Germany, Japan, the Netherlands or the
United Kingdom; (iii) maintain or cause to be maintained all records, logs and
other materials required to be maintained in respect of the Aircraft by the FAA
or the applicable regulatory agency or body of any other jurisdiction in which
the Aircraft may then be registered; and (iv) promptly furnish or cause to be
furnished to Lessor and the Owner Participant such information as may be
required to enable Lessor to file any reports required to be filed by Lessor or
the Owner Participant with any governmental authority because of Lessor's
ownership of the Aircraft. (II) Operation. Lessee will not maintain, use,
service, repair, overhaul or operate the Aircraft (or permit any Sublessee to
maintain, use, service, repair, overhaul or operate the Aircraft) in violation
of any law or any rule, regulation, order or certificate of any government or
governmental authority (domestic or foreign) having jurisdiction, or in
violation of any airworthiness certificate, license or registration relating to
the Aircraft issued by any such authority, except to the extent Lessee (or, if
a Sublease is then in effect, any Sublessee) is contesting in good faith the
validity or application of any such law, rule, regulation or order in any
reasonable manner which does not materially adversely affect Lessor or, so long
as any Secured Certificates shall be outstanding, the first priority Lien of
the Trust Indenture and does not involve any material risk of sale, forfeiture
or loss of the Aircraft. Lessee will not operate the Aircraft, or permit any
Sublessee to operate the Aircraft, in any area excluded from coverage by any
insurance required by the terms of Section 11; provided, however, that the
failure of Lessee to comply with the provisions of this sentence shall not give
rise to an Event of Default hereunder where such failure is attributable to
causes beyond the reasonable control of Lessee (or any Sublessee) or to
extraordinary circumstances involving an isolated occurrence or series of
incidents not in the ordinary course of the regular operations of Lessee (or
any Sublessee) and in each such case Lessee (or such Sublessee, as the case may
be) is taking all reasonable steps to remedy such failure as soon as is
reasonably practicable.
At any time after the Depreciation Period, Lessor, upon compliance
with all of the terms of Section 8(f) of the Participation Agreement, shall, at
the request and sole expense of Lessee, cooperate with Lessee to take all
actions required to change the registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the
prior written consent of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of the Airframe or any Engine or install or
permit any Engine to be installed on any airframe other than the Airframe or
enter into any Wet Lease; provided that, so long as no Default of the type
referred to in Section 14(a), 14(e) or 14(f) or Event of Default shall have
occurred and be continuing at the time of such sublease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority Lien of the Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7(b)) any Engine, and so long
as Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a)
and 11 hereof, Lessee may, without the prior written consent of Lessor:
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<PAGE> 26
(i) subject the Airframe and the Engines or engines
then installed thereon to normal interchange agreements or any
Engine to normal pooling or similar arrangements, in each case
customary in the airline industry and entered into by Lessee (or
any Sublessee) in the ordinary course of its business; provided
that (A) no such agreement or arrangement contemplates or requires
the transfer of title to the Airframe, (B) if Lessor's title to
any Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of
Loss with respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect thereof,
and (C) any interchange agreement to which the Airframe may be
subject shall be with a U.S. Air Carrier or a Foreign Air Carrier;
(ii) deliver possession of the Airframe or any Engine
to the manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service,
repair, maintenance or overhaul work on the Airframe or Engine or
any part of any thereof or for alterations or modifications in or
additions to such Airframe or Engine to the extent required or
permitted by the terms of Section 8(c) hereof;
(iii) install an Engine on an airframe owned by Lessee
(or any Sublessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines (other
than Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety), (B) the rights of third parties under interchange
agreements which would be permitted under clause (i) above,
provided that Lessor's title to such Engine and, if any Secured
Certificates shall be outstanding, the first priority Lien of the
Trust Indenture, shall not be divested or impaired as a result
thereof and (C) mortgage liens or other security interests,
provided that (as regards this clause (C)) such mortgage liens or
other security interests effectively provide that such Engine
shall not become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to Lessee
(or any Sublessee) or purchased by Lessee (or any Sublessee)
subject to a conditional sale or other security agreement,
provided that (x) such airframe is free and clear of all Liens,
except: (A) the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe, or their
assignees, and (B) Liens of the type permitted by subparagraph
(iii) of this paragraph (b) and (y) such lease, conditional sale
or other security agreement effectively provides that such Engine
shall not become subject to the lien of such lease, conditional
sale or other security agreement, notwithstanding the installation
thereof on such airframe;
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<PAGE> 27
(v) install an Engine on an airframe owned by Lessee
(or any Sublessee), leased to Lessee (or any Sublessee) or
purchased by Lessee (or any Sublessee) subject to a conditional
sale or other security agreement under circumstances where neither
subparagraph (iii) nor subparagraph (iv) of this paragraph (b) is
applicable, provided that such installation shall be deemed an
Event of Loss with respect to such Engine and Lessee shall (or
shall cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any right or
interest it may have to or in such Engine under applicable law
until compliance by Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof,
subject any appliances, Parts or other equipment owned by Lessor
and removed from the Airframe or any Engine to any pooling
arrangement referred to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve
Air Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine
to the Civil Reserve Air Fleet Program in any contract year and
provide Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States
Air Force to whom notice must be given pursuant to Section 15
hereof, and (B) promptly notify Lessor upon transferring
possession of the Airframe or any Engine to the United States of
America or any agency or instrumentality thereof pursuant to such
program;
(viii) for a period not to extend beyond the end of the
Term, enter into a Wet Lease for the Airframe and Engines or
engines then installed thereon with any third party; provided that
if Lessee (or any Sublessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options) Lessee
shall provide Lessor written notice of such Wet Lease (such notice
to be given prior to entering into such Wet Lease, if practicable,
but in any event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the
Term, transfer possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency thereof
pursuant to a contract, a copy of which shall be provided to
Lessor; or
(x) Lessee may, at any time, enter into any sublease
with (1) a U.S. Air Carrier, (2) any Person approved in writing by
the Owner Participant and the Indenture Trustee, which approval
shall not be unreasonably withheld or (3) after the Depreciation
Period, any Permitted Sublessee if (A) in any such case,
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<PAGE> 28
the Sublessee under such sublease is not subject to a proceeding
or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B)
in the event that the Sublessee under such sublease is a foreign
air carrier (other than a foreign air carrier principally based in
Taiwan), the United States maintains diplomatic relations with the
country in which such proposed Sublessee is principally based at
the time such sublease is entered into (or, in the case of a
sublease to a proposed Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in effect
on the Delivery Date) and (C) in the event that the Sublessee
under such sublease is a foreign air carrier, Lessor and the
Indenture Trustee shall have received an opinion of counsel to
Lessee to the effect that (I) the terms of the proposed sublease
will be legal, valid, binding and (subject to customary exceptions
in foreign opinions generally) enforceable against the proposed
Sublessee in the country in which the proposed Sublessee is
principally based, (II) there exist no possessory rights in favor
of the Sublessee under such Sublease under the laws of such
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee and assuming at such time
such Sublessee is not insolvent or bankrupt, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) the laws of such Sublessee's country of domicile
require fair compensation by the government of such jurisdiction
payable in currency freely convertible into Dollars for the loss
of use of the Aircraft in the event of the requisition by such
government of such use, and (IV) the laws of such Sublessee's
country of domicile would give recognition to Lessor's title to
the Aircraft, to the registry of the Aircraft in the mane of the
Lessor (or Lessee, as "lessee", or the proposed Sublessee, as
"sublessee", as appropriate) and to the Lien of the Trustee
Indenture, provided, however, that no sublease entered into
pursuant to this clause (x) shall extend beyond the expiration of
the Basic Term or any Renewal Term then in effect unless Lessee
shall have irrevocably committed to purchase the Aircraft.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any Sublease permitted by this
paragraph (b) shall be expressly subject and subordinate to, all the terms of
this Lease and to the Lien of the Trust Indenture, including, without
limitation, the covenants contained in Section 7(a) hereof and Lessor's rights
to repossession pursuant to Section 15 hereof and to avoid such Sublease upon
such repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided
herein, the terms of any such Sublease shall not permit any Sublessee to take
any action not permitted to be taken by Lessee in this Lease with respect to
the Aircraft. No pooling agreement, sublease or other relinquishment of
possession of the Airframe or any Engine or Wet Lease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or
constitute a waiver of Lessor's rights or remedies hereunder. Any sublease
permitted under this Section
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<PAGE> 29
7(b) shall expressly prevent any further sub-sublease by the Sublessee. Lessor
agrees, for the benefit of Lessee (and any Sublessee) and for the benefit of
any mortgagee or other holder of a security interest in any engine (other than
an Engine) owned by Lessee (or any Sublessee), any lessor of any engine (other
than an Engine) leased to Lessee (or any Sublessee) and any conditional vendor
of any engine (other than an Engine) purchased by Lessee (or any Sublessee)
subject to a conditional sale agreement or any other security agreement, that
no interest shall be created hereunder in any engine so owned, leased or
purchased and that none of Lessor, its successors or assigns will acquire or
claim, as against Lessee (or any Sublessee) or any such mortgagee, lessor or
conditional vendor or other holder of a security interest or any successor or
assignee of any thereof, any right, title or interest in such engine as the
result of such engine being installed on the Airframe; provided, however, that
such agreement of Lessor shall not be for the benefit of any lessor or secured
party of any airframe (other than the Airframe) leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a conditional
sale or other security agreement or for the benefit of any mortgagee of or any
other holder of a security interest in an airframe owned by Lessee (or any
Sublessee), unless such lessor, conditional vendor, other secured party or
mortgagee has expressly agreed (which agreement may be contained in such lease,
conditional sale or other security agreement or mortgage) that neither it nor
its successors or assigns will acquire, as against Lessor, any right, title or
interest in an Engine as a result of such Engine being installed on such
airframe. Lessee shall provide to the Owner Participant and the Indenture
Trustee (i) written notice of any Sublease hereunder (such notice to be given
not later than five days prior to entering into such Sublease, if practicable,
but in any event promptly after entering into any such Sublease) and (ii) a
copy of each Sublease which has a term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe
adjacent to the airworthiness certificate therein and on each Engine a
nameplate bearing the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be
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<PAGE> 30
placed on the Airframe or on any Engine as a designation that might be
interpreted as a claim of ownership; provided that nothing herein contained
shall prohibit Lessee (or any Sublessee) from placing its customary colors and
insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee, at its own
cost and expense, will promptly replace or cause to be replaced all Parts which
may from time to time be incorporated or installed in or attached to the
Airframe or any Engine and which may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided
in paragraph (c) of this Section 8 or if the Airframe or an Engine to which a
Part relates has suffered an Event of Loss. In addition, Lessee (or any
Sublessee) may, at its own cost and expense, remove in the ordinary course of
maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use, provided that Lessee (or any Sublessee),
except as otherwise provided in paragraph (c) of this Section 8, will, at its
own cost and expense, replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and pooling arrangements to the extent permitted by paragraph (b) of this
Section 8 and except in the case of replacement property temporarily installed
on an emergency basis) and shall be in as good operating condition as, and
shall have a value and utility at least equal to, the Parts replaced assuming
such replaced Parts were in the condition and repair required to be maintained
by the terms hereof. Except as otherwise provided in paragraph (c) of this
Section 8, all Parts at any time removed from the Airframe or any Engine shall
remain the property of Lessor, no matter where located, until such time as such
Parts shall be replaced by Parts which have been incorporated or installed in
or attached to the Airframe or such Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement part
becoming incorporated or installed in or attached to the Airframe or any Engine
as above provided, without further act (subject only to Permitted Liens and any
pooling arrangement to the extent permitted by paragraph (b) of this Section 8
and except in the case of replacement property temporarily installed on an
emergency basis), (i) title to such replacement Part shall thereupon vest in
Lessor, (ii) such replacement Part shall become subject to this Lease and be
deemed part of the Airframe or such Engine for all purposes hereof to the same
extent as the Parts originally incorporated or installed in or attached to the
Airframe or such Engine, and (iii) title to the replaced Part shall thereupon
vest in Lessee (or, if a Sublease is then in effect, any Sublessee), free and
clear of all rights of Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in paragraph (a) of this Section 8 may be subjected by
Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part shall
be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or
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<PAGE> 31
any Engine in accordance with such paragraph (a) may be owned by any third
party subject to such a normal pooling arrangement, provided that Lessee (or
any Sublessee), at its expense, as promptly thereafter as practicable, either
(i) causes title to such replacement Part to vest in Lessor in accordance with
such paragraph (a) by Lessee (or any Sublessee) acquiring title thereto for the
benefit of, and transferring such title to, Lessor free and clear of all Liens
except Permitted Liens (other than pooling arrangements) or (ii) replaces such
replacement Part by incorporating or installing in or attaching to the Airframe
or Engine a further replacement Part owned by Lessee (or any Sublessee) free
and clear of all Liens except Permitted Liens (other than pooling arrangements)
and by causing title to such further replacement Part to vest in Lessor in
accordance with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its
own expense, will make (or cause to be made) such alterations and modifications
in and additions to the Airframe and Engines as may be required from time to
time to meet the applicable standards of the FAA or any applicable regulatory
agency or body of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
adversely affect Lessor or, so long as any Secured Certificates are
outstanding, the Indenture Trustee. In addition, Lessee (or any Sublessee), at
its own expense, may from time to time add further parts or accessories and
make such alterations and modifications in and additions to the Airframe or any
Engine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee (or
any Sublessee) has determined in its reasonable judgment to be obsolete or no
longer suitable or appropriate for use on the Airframe or such Engine (such
parts, "OBSOLETE PARTS"); provided that no such alteration, modification or
addition shall materially diminish the value, utility or remaining useful life
of the Airframe or such Engine below the value, utility or remaining useful
life thereof immediately prior to such alteration, modification or addition,
assuming the Airframe or such Engine was then in the condition required to be
maintained by the terms of this Lease, except that the value (but not the
utility or remaining useful life) of the Airframe or any Engine may be reduced
by the value of Obsolete Parts which shall have been removed so long as the
aggregate value of all Obsolete Parts which shall have been removed and not
replaced shall not exceed $400,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (the "ADDITIONAL PARTS") shall,
without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such Additional Part (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or substitution for, any such
Part, (ii) is not required to be incorporated or installed in or attached or
added to the Airframe or any Engine pursuant to the terms of Section 7 hereof
or the first sentence of this paragraph (c) and (iii) can be removed from the
Airframe or such Engine without diminishing or impairing the value, utility or
remaining useful life which the Airframe or such Engine would have had at the
time of removal had such alteration, modification or addition not occurred,
assuming
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<PAGE> 32
that such Airframe or Engine was in the condition and repair required to be
maintained by the terms hereof. Upon the removal by Lessee (or Sublessee) of
any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed. Any Part not
removed by Lessee (or any Sublessee) as above provided prior to the return of
the Airframe or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event.
(1) [Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this
Lease on any Lease Period Date occurring on or after the fifth anniversary of
the Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(3) Lessee shall give to Lessor at least one hundred twenty
(120) days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) whether or not Lessee has determined that the Aircraft is obsolete or
surplus to its needs. Any Termination Notice shall become irrevocable fifteen
(15) days prior to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee
shall have exercised its right to terminate this Lease under Section 9(a)(2),
then during the period from the giving of the notice referred to in Section
9(a)(3) until the proposed Termination Date (unless Lessee shall have revoked
the Termination Notice specifying such proposed Termination Date), Lessee, as
agent for Lessor and at no expense to Lessor, shall use its best efforts to
obtain bids in the worldwide market for the purchase of the Aircraft and, in
the event it receives any bid, Lessee shall, within five Business Days after
receipt thereof and at least ten Business Days prior to the proposed
Termination Date, certify to Lessor in writing the amount and terms of such
bid, and the name and address of the party or parties (who shall not be Lessee
or any Affiliate of Lessee or any Person with whom Lessee or any such Affiliate
has an arrangement or understanding regarding the future use of the Aircraft by
Lessee or any such Affiliate but who may be the Owner Participant, any
Affiliate thereof or any Person contacted by the Owner Participant) submitting
such bid. After Lessee shall have certified to Lessor all bids received, the
Owner Participant, any Affiliate thereof or any Person contacted by the Owner
Participant may submit a further bid or bids to Lessee not later than five
Business Days prior to the Termination Date proposed by Lessee (unless Lessee
shall have revoked the Termination Notice specifying such proposed Termination
Date). Subject to the next succeeding sentence, on or before the Termination
Date, subject to the release of all mortgage and security interests with
respect to the Aircraft under the Trust Indenture: (1)
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<PAGE> 33
Lessee shall deliver the Aircraft, or cause the Aircraft to be delivered, to
the bidder(s), if any, which shall have submitted the highest bid therefor at
least ten (or, in the case of the Owner Participant, any Affiliate thereof, or
Person contacted by the Owner Participant, five) Business Days prior to such
Termination Date, in the same manner and in the same condition and otherwise in
accordance with all the terms of this Lease as if delivery were made to Lessor
pursuant to Section 5, and shall duly transfer to Lessor title to any engines
not owned by Lessor all in accordance with the terms of Section 5, (2) Lessor
shall comply with the terms of the Trust Indenture and shall, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), subject to prior or concurrent payment by Lessee of all
amounts due under clause (3) of this sentence, sell all of Lessor's right,
title and interest in and to the Aircraft for cash in Dollars to such
bidder(s), the total selling price realized at such sale to be retained by
Lessor, and (3) Lessee shall simultaneously pay or cause to be paid to Lessor
in funds of the type specified in Section 3(f) hereof, an amount equal to the
sum of (A) the excess, if any, of (i) the Termination Value for the Aircraft,
computed as of the Termination Date, over (ii) the sale price of the Aircraft
sold by Lessor after deducting the reasonable expenses incurred by Lessor in
connection with such sale, (B) all unpaid Basic Rent with respect to the
Aircraft due prior to such Termination Date and, if such Basic Rent is payable
in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all unpaid Supplemental Rent due on or prior to the
Termination Date with respect to the Aircraft, and (C) the premium and Funding
Loss Amount, if any, due on the Secured Certificates, and upon such payment
Lessor simultaneously will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens), all of Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft which were not sold with the Aircraft.
Notwithstanding the preceding sentence, Lessor may, if Lessee has not revoked
the Termination Notice, elect to retain title to the Aircraft. If Lessor so
elects, Lessor shall give to Lessee written notice of such election at least
five Business Days prior to the Termination Date accompanied by an irrevocable
undertaking by the Owner Participant to make available to the Lessor for
payment to the Indenture Trustee on the Termination Date the amount required to
pay in full the unpaid principal amount of the Secured Certificates outstanding
on the Termination Date plus interest accrued thereon through the Termination
Date together with the premium and Funding Loss Amount, if any, due on the
Secured Certificates, if the same is not otherwise paid. Upon receipt of
notice of such an election by Lessor and the accompanying undertaking by the
Owner Participant, Lessee shall cease its efforts to obtain bids as provided
above and shall reject all bids theretofore or thereafter received. On the
Termination Date, Lessor shall (subject to the payment by Lessee of all Rent
due on or prior to such date as set forth below) pay in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination
Date plus interest accrued thereon through the Termination Date together with
all premium and Funding Loss Amount, if any, due on the Secured Certificates
and, so long as the Secured Certificates are paid as aforesaid, Lessee shall
deliver the Airframe and Engines or engines to Lessor in accordance with
Section 5 and shall pay all Basic Rent due prior to the Termination Date and,
if such Basic Rent is payable in arrears on such Termination Date as indicated
on Exhibit B, on such Termination Date, and all Supplemental Rent (other than
premium, Funding Loss Amount or Termination Value) due on
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or prior to the Termination Date. If no sale shall have occurred on the
Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, this Lease shall
continue in full force and effect as to the Aircraft, Lessee shall pay the
reasonable costs and expenses incurred by the Owner Participant and Lessor
(unless such failure to terminate the Lease is a consequence of the failure of
Lessor or the Owner Participant without due cause to make, or cause to be made,
the payment referred to in the immediately preceding sentence), if any, in
connection with preparation for such sale and Lessee may give one or more
additional Termination Notices in accordance with Section 9(a)(2), subject to
the last sentence of this Section 9(c). In the event of any such sale or such
retention of the Aircraft by Lessor and upon compliance by Lessee with the
provisions of this paragraph, the obligation of Lessee to pay Basic Rent or any
other amounts hereunder shall cease to accrue and this Lease shall terminate.
Lessor may, but shall be under no duty to, solicit bids, inquire into the
efforts of Lessee to obtain bids or otherwise take any action in connection
with any such sale other than to transfer (in accordance with the foregoing
provisions) to the purchaser named in the highest bid certified by Lessee to
Lessor all of Lessor's right, title and interest in the Aircraft, against
receipt of the payments provided herein. Lessee may revoke a Termination
Notice given pursuant to Section 9(a)(2) no more than two times during the
Term.
(d) Termination as to Engines. So long as no Event of Default
shall have occurred and be continuing, Lessee shall have the right at its
option at any time during the Term, on at least thirty (30) days' prior written
notice, to terminate this Lease with respect to any Engine. In such event, and
prior to the date of such termination, Lessee shall replace such Engine
hereunder by complying with the terms of Section 10(b) to the same extent as if
an Event of Loss had occurred with respect to such Engine, and Lessor shall
transfer such right, title and interest as it may have to the replaced Engine
as provided in Section 5(b). No termination of this Lease with respect to any
Engine as contemplated by this Section 9(d) shall result in any reduction of
Interim Rent or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event
of Loss with Respect to the Aircraft. Upon the occurrence of an Event of Loss
with respect to the Airframe or the Airframe and the Engines and/or engines
then installed thereon, Lessee shall forthwith (and in any event, within
fifteen (15) days after such occurrence) give Lessor written notice of such
Event of Loss, and within forty-five (45) days after such Event of Loss Lessee
shall give Lessor written notice of its election to perform one of the
following options (it being agreed that if Lessee shall not have given such
notice of election within such period, Lessee shall be deemed to have elected
the option set forth in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i),
in which event not later than the earlier of (x) the Business Day
next succeeding the 120th day following the occurrence of such
Event of Loss or (y) the third Business Day following the receipt
of insurance proceeds in respect of such occurrence (but not
earlier than thirty (30) days after such occurrence) (the "LOSS
PAYMENT DATE"), Lessee shall pay or cause to be paid to Lessor in
funds of the type specified in Section 3(f) hereof, an amount
equal to the Stipulated Loss Value of
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<PAGE> 35
the Aircraft corresponding to the Stipulated Loss Value Date
occurring on or immediately following the Loss Payment Date;
provided, however, that if the Commencement Date or a Lease Period
Date shall occur prior to the Loss Payment Date with respect to
which Stipulated Loss Value is determined, Lessee shall pay on the
Commencement Date or such Lease Period Date an amount equal to the
Interim Rent or Basic Rent that would have been due on the
Commencement Date or such Lease Period Date if such Event of Loss
had not occurred, or
(ii) substitute an aircraft or an airframe or an
airframe and one or more engines, as the case may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor on the
Business Day next succeeding the 120th day following the occurrence of such
Event of Loss the amount specified in clause (i) above.
At such time as Lessor shall have received the sum of the amounts
specified in clauses (A) and (B) of subparagraph (i) above, together with all
other amounts that then may be due hereunder (including, without limitation,
all Basic Rent due before the date of such payment and all Supplemental Rent),
under the Participation Agreement and under the Tax Indemnity Agreement, (1)
the obligation of Lessee to pay the installments of Basic Rent, Supplemental
Rent, Stipulated Loss Value, Termination Value or any other amount shall cease
to accrue, (2) this Lease shall terminate, (3) Lessor will comply with the
terms of the Trust Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest
in and to the Airframe and any Engines subject to such Event of Loss, as well
as any Engines not subject to such Event of Loss, and furnish to or at the
direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, and (4)
Lessee will be subrogated to all claims of Lessor, if any, against third
parties, for damage to or loss of the Airframe and any Engines which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft.
In the event Lessee shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause
to be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or
an airframe or an airframe and one or more engines which, together with the
Engines constituting a part of the Aircraft but not installed thereon at the
time of such Event of Loss constitute the Aircraft) free and clear of all Liens
(other than Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Aircraft subject to such Event of Loss assuming that
the Aircraft had been maintained in accordance with this Lease; provided that
any aircraft, airframe or engine so substituted hereunder shall be of the same
or improved model as those initially leased hereunder and (B) prior to or at
the time of
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<PAGE> 36
any such substitution, Lessee (or any Sublessee), at its own expense, will (1)
furnish Lessor with a full warranty bill of sale and a Federal Aviation
Administration bill of sale, in form and substance reasonably satisfactory to
Lessor, evidencing such transfer of title, (2) cause a Lease Supplement and a
Trust Supplement to be duly executed by Lessee and filed for recording pursuant
to the Federal Aviation Act, or the applicable laws, rules and regulations of
any other jurisdiction in which the Airframe may then be registered as
permitted by Section 8(f) of the Participation Agreement, (3) cause a financing
statement or statements with respect to such substituted property to be filed
in such place or places as are deemed necessary or desirable by Lessor to
perfect its and the Indenture Trustee's interest therein and herein, (4)
furnish Lessor with such evidence of compliance with the insurance provisions
of Section 11 with respect to such substituted property as Lessor may
reasonably request, (5) furnish Lessor with copies of the documentation
required to be provided by Lessee pursuant to Section 5.06 of the Trust
Indenture, and Lessor simultaneously will comply with the terms of the Trust
Indenture and transfer to or at the direction of Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest, if any, in and to the
Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an
opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not,
other counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor should be entitled to the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to the substitute aircraft, provided that
such opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, and (7) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe
or the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60)
days after the occurrence of such Event of Loss, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to which such Event of
Loss occurred, title to another Pratt & Whitney Model PW2037 engine (or engine
of the same or another manufacturer of the same, an equivalent or an improved
model and suitable for installation and
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<PAGE> 37
use on the Airframe without impairing the value, utility or remaining useful
life of the Aircraft; provided that both Engines shall be of the same make and
model) free and clear of all Liens (other than Permitted Liens, which engine
may upon its transfer to Lessor become subject to any and all Permitted Liens)
and having a value, utility and remaining useful life at least equal to the
Engine subject to such Event of Loss assuming that such Engine had been
maintained in accordance with this Lease. Prior to or at the time of any such
conveyance, Lessee, at its own expense, will (i) furnish Lessor with a warranty
(as to title) bill of sale, in form and substance reasonably satisfactory to
Lessor, with respect to such replacement engine, (ii) cause a Lease Supplement
and Trust Supplement to be duly executed by Lessee and to be filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (iii)
furnish Lessor with such evidence of compliance with the insurance provisions
of Section 11 hereof with respect to such replacement engine as Lessor may
reasonably request and furnish Lessor with copies of the documentation required
to be provided by Lessee pursuant to Section 5.06 of the Trust Indenture, and
Lessor will comply with the terms of the Trust Indenture and transfer to or at
the direction of Lessee without recourse or warranty (except as to absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) all of Lessor's right, title
and interest, if any, in and to (A) the Engine with respect to which such Event
of Loss occurred and furnish to or at the direction of Lessee a bill of sale in
form and substance reasonably satisfactory to Lessee, evidencing such transfer
and (B) all claims, if any, against third parties, for damage to or loss of the
Engine subject to such Event of Loss, and such Engine shall thereupon cease to
be the Engine leased hereunder. For all purposes hereof, each such replacement
engine shall, after such conveyance, be deemed part of the property leased
hereunder, and shall be deemed an "ENGINE". No Event of Loss with respect to
an Engine under the circumstances contemplated by the terms of this paragraph
(b) shall result in any reduction in Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with
respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then installed
thereon), (A) unless the same are replaced pursuant to the last
paragraph of Section 10(a), after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, so much of such payments remaining as shall
not exceed the Stipulated Loss Value required to be paid by Lessee
pursuant to Section 10(a), shall be applied in reduction of
Lessee's obligation to pay Stipulated Loss Value, if not already
paid by Lessee, or, if already paid by Lessee, shall be applied to
reimburse Lessee for its payment of Stipulated Loss Value, and
following the foregoing application, the balance, if any, of such
payments will be paid over to, or retained by Lessee, provided
that Lessor shall
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<PAGE> 38
be entitled to so much of the excess, if any, of such payment over
the greater of (x) the Stipulated Loss Value and (y) the fair
market value of the Aircraft as Lessor shall demonstrate to
Lessee's reasonable satisfaction is attributable to compensation
for loss of Lessor's interest in the Aircraft as distinguished
from the loss of use of the Aircraft; or (B) if such property is
replaced pursuant to the last paragraph of Section 10(a), such
payments shall be paid over to, or retained by, Lessee; provided
that Lessee shall have fully performed or, concurrently therewith,
will fully perform the terms of the last paragraph of Section
10(a) with respect to the Event of Loss for which such payments
are made; and
(ii) if such payments are received with respect to an
Engine under circumstances contemplated by Section 10(b) hereof,
so much of such payments remaining after reimbursement of Lessor
(as provided for in Section 7.01 of the Trust Agreement) for
reasonable costs and expenses shall be paid over to, or retained
by, Lessee, provided that Lessee shall have fully performed, or
concurrently therewith will perform, the terms of Section 10(b)
with respect to the Event of Loss for which such payments are
made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, Lessee shall promptly notify Lessor of such requisition, and all of
Lessee's obligations under this Lease Agreement with respect to the Aircraft
shall continue to the same extent as if such requisition had not occurred,
provided that if such Airframe and Engines or engines installed thereon are
not returned by such government prior to the end of the Term, Lessee shall be
obligated to return the Airframe and such Engines or engines to Lessor pursuant
to, and in all other respects in compliance with the provisions of, Section 5
promptly on the date of such return by such government. If, in the event of
any such requisition, Lessee shall fail to return the Aircraft on or before the
thirtieth day beyond the end of the Term, such failure shall constitute an
Event of Loss which shall be deemed to have occurred on the last day of the
Term and in such event Lessee shall make the payment contemplated by Section
10(a)(i) in respect of such Event of Loss; provided, however, that Lessor may
notify Lessee in writing on or before the twentieth day prior to the last day
of the Term that, in the event Lessee shall fail by reason of such requisition
to return the Airframe and such Engines or engines on or before the thirtieth
day beyond the end of the Term, such failure shall not be deemed an Event of
Loss. Upon the giving of such notice and such failure to return by the
thirtieth day beyond the end of the Term, Lessee shall be relieved of all of
its obligations pursuant to the provisions of Section 5 (but not under any
other Section), except that if any engine not owned by Lessor shall then be
installed on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause
to be furnished, to Lessor a full warranty (as to title) bill of sale with
respect to each such engine, in form and substance reasonably satisfactory to
Lessor (together with an opinion of counsel to the effect that such full
warranty bill of sale has been duly authorized and delivered and is enforceable
in accordance with its terms and that such engines are free and clear of Liens
other than Lessor Liens (including for this purpose
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<PAGE> 39
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale evidencing the transfer, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), by Lessor to Lessee or its designee of all of Lessor's right,
title and interest in and to any Engine constituting part of the Aircraft but
not then installed on the Airframe. All payments received by Lessor or Lessee
from such government for the use of such Airframe and Engines or engines during
the Term shall be paid over to, or retained by, Lessee (or, if directed by
Lessee, any Sublessee); and all payments received by Lessor or Lessee from such
government for the use of such Airframe and Engines or engines after the end of
the Term shall be paid over to, or retained by, Lessor unless Lessee shall have
exercised its purchase option hereunder, in which case such payments shall be
made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft or any agency or instrumentality of any
thereof (other than in the circumstances contemplated by subsection (d)),
Lessee shall replace such Engine hereunder by complying (or causing any
Sublessee to comply) with the terms of Section 10(b) to the same extent as if
an Event of Loss had occurred with respect thereto, and, upon compliance with
Section 10(b) hereof, any payments received by Lessor or Lessee from such
government with respect to such requisition shall be paid over to, or retained
by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or such Sublessee) if at the time of such payment or retention an Event
of Default shall have occurred and be continuing, but shall be held by or paid
over to Lessor as security for the obligations of Lessee (or such Sublessee)
under this Lease and, if Lessor declares this Lease to be in default pursuant
to Section 15 hereof, applied against Lessee's obligations hereunder as and
when due. At such time as there shall not be continuing any such Event of
Default, such amount shall be paid to Lessee (or such Sublessee) to the extent
not previously applied in accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property
Damage Insurance. (I) Except as provided in clause (II) of this Section
11(a), Lessee will carry or cause to be carried at its or any Sublessee's
expense (i) aircraft public liability (including, without limitation, passenger
legal liability) (and including aircraft war risk and hijacking insurance, if
and to the extent the same is maintained by Lessee (or any Sublessee) with
respect to the aircraft owned or leased, and operated by Lessee (or such
Sublessee) on the same routes) insurance and property damage insurance
(exclusive of manufacturer's product liability insurance) with respect to the
Aircraft, in an amount not less than the greater of (x) the amount of public
liability and property damage insurance from time to time applicable to
aircraft owned or operated by Lessee of the same type as the Aircraft and (y)
such amount per occurrence as may have been agreed to on the Delivery Date by
the Owner Participant and (ii) cargo liability insurance, in the case of both
clause (i) and clause (ii), (A) of the type and
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<PAGE> 40
covering the same risks as from time to time applicable to aircraft operated by
Lessee of the same type as the Aircraft and (B) which is maintained in effect
with insurers of recognized responsibility. Any policies of insurance carried
in accordance with this paragraph (a) and any policies taken out in
substitution or replacement for any of such policies (A) shall be amended to
name Lessor, in its individual capacity and as owner trustee, the Indenture
Trustee and the Owner Participant (but without imposing on any such parties
liability to pay the premiums for such insurance) (and, if any Sublease shall
be in effect, Lessee in its capacity as sublessor under the Sublease) as
additional insureds as their respective interests may appear, (B) shall provide
that in respect of the respective interests of Lessor, the Indenture Trustee
and the Owner Participant (and, if any Sublease shall be in effect, Lessee in
its capacity as sublessor under the Sublease) in such policies the insurance
shall not be invalidated by any action or inaction of Lessee (or, if any
Sublease is then in effect, any Sublessee) or any other Person and shall insure
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease)
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if any Sublease is then in effect,
any Sublessee), (C) may provide for self-insurance to the extent permitted by
Section 11(d) and (D) shall provide that if the insurers cancel such insurance
for any reason whatever or if any material change is made in such insurance
which adversely affects the interest of Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), or such insurance shall lapse for
non-payment of premium, such cancellation, lapse or change shall not be
effective as to Lessor, the Indenture Trustee or the Owner Participant (or, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) for thirty (30) days (seven (7) days in the case of war risk and
allied perils coverage) after issuance to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), respectively, of written notice by
such insurers of such cancellation, lapse or change; provided, however, that if
any notice period specified above is not reasonably obtainable, such policies
shall provide for as long a period of prior notice as shall then be reasonably
obtainable. Each liability policy (1) shall be primary without right of
contribution from any other insurance which is carried by Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), (2) shall expressly
provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if there were a separate policy covering
each insured, and (3) shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor or the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) to the extent of any moneys due to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and
not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by
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<PAGE> 41
Lessee of the same type as the Aircraft which are on the ground and not in
operation; and (B) the scope of the risks covered and the type of insurance
shall be the same as from time to time shall be applicable to aircraft owned or
operated by Lessee of the same type which are on the ground and not in
operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I)
Except as provided in clause (II) of this Section 11(b), Lessee shall maintain
or cause to be maintained in effect, at its or any Sublessee's expense, with
insurers of recognized responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk ground and flight coverage of
Engines and Parts while temporarily removed from the Aircraft and not replaced
by similar components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, any Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated
on routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned by Lessee of the same type as the Aircraft;
provided that such insurance shall at all times while the Aircraft is subject
to this Lease be for an amount (subject to self-insurance to the extent
permitted by Section 11(d)) not less than the Stipulated Loss Value for the
Aircraft. Any policies carried in accordance with this paragraph (b) covering
the Aircraft and any policies taken out in substitution or replacement for any
such policies (i) shall name Lessor, as owner trustee, the Indenture Trustee
and the Owner Participant (and, if any Sublease shall be in effect, Lessee in
its capacity as sublessor under the Sublease) as additional insureds, as their
respective interests may appear (but without imposing on any such party
liability to pay premiums with respect to such insurance), (ii) may provide for
self-insurance to the extent permitted in Section 11(d), (iii) shall provide
that (A) in the event of a loss involving proceeds in excess of $3,500,000 (or,
if the Aircraft is then under a Sublease, in excess of $2,000,000), the
proceeds in respect of such loss up to an amount equal to the Stipulated Loss
Value for the Aircraft shall be payable to Lessor (or, so long as the Trust
Indenture shall not have been discharged, the Indenture Trustee) (except in the
case of a loss with respect to an Engine installed on an airframe other than
the Airframe, in which case Lessee (or any Sublessee) shall arrange for any
payment of insurance proceeds in respect of such loss to be held for the
account of Lessor (or, so long as the Trust Indenture shall not have been
discharged, the Indenture Trustee) whether such payment is made to Lessee (or
any Sublessee) or any third party), it being understood and agreed that in the
case of any payment to Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, Lessor (or the Indenture Trustee) shall, upon
receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,500,000 (or, if the Aircraft is then under a Sublease, of $2,000,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless an Event of
Default shall have occurred and
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<PAGE> 42
be continuing and the insurers have been notified thereof by Lessor or the
Indenture Trustee, (iv) shall provide that if the insurers cancel such
insurance for any reason whatever, or such insurance lapses for non-payment of
premium or if any material change is made in the insurance which adversely
affects the interest of Lessor, the Indenture Trustee or the Owner Participant,
such cancellation, lapse or change shall not be effective as to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty (30)
days (seven (7) days in the case of hull war risk and allied perils coverage)
after issuance to Lessor, the Indenture Trustee or the Owner Participant (or,
if any Sublease shall be in effect, Lessee in its capacity as sublessor under
the Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change, provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable, (v)
shall provide that in respect of the respective interests of Lessor, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) in such
policies the insurance shall not be invalidated by any action or inaction of
Lessee (or, if a Sublease is then in effect, any Sublessee) or any other Person
and shall insure the respective interests of Lessor, the Indenture Trustee and
the Owner Participant (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), as they appear, regardless of any
breach or violation of any warranty, declaration or condition contained in such
policies by Lessee (or, if a Sublease is then in effect, any Sublessee), (vi)
shall be primary without any right of contribution from any other insurance
which is carried by Lessor, the Owner Participant or the Indenture Trustee (or,
if any Sublease shall be in effect, Lessee in its capacity as sublessor under
the Sublease), (vii) shall waive any right of subrogation of the insurers
against Lessor, the Owner Participant and the Indenture Trustee (and, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), and (viii) shall waive any right of the insurers to set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor, the Indenture Trustee, the Owner
Participant or Lessee (or any Sublessee) to the extent of any moneys due to
Lessor, the Indenture Trustee or the Owner Participant. In the case of a loss
with respect to an engine (other than an Engine) installed on the Airframe,
Lessor shall hold any payment to it of any insurance proceeds in respect of
such loss for the account of Lessee or any other third party that is entitled
to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed thereon), (i)
unless such property is replaced pursuant to the last paragraph of
Section 10(a), so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the Trust
Agreement) for reasonable costs and expenses, as shall not exceed
the Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a) hereof shall be applied in reduction of Lessee's
obligation to pay such Stipulated Loss Value, if not already paid
by Lessee, or, if already paid by Lessee, shall
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<PAGE> 43
be applied to reimburse Lessee for its payment of such Stipulated
Loss Value, and the balance, if any, of such payments remaining
thereafter will be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee); or (ii) if such property is
replaced pursuant to the last paragraph of Section 10(a), such
payments shall be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee), provided that Lessee shall
have fully performed or, concurrently therewith, will fully
perform the terms of the last paragraph of Section 10(a) with
respect to the Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an
Engine under the circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining, after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement) for
reasonable costs and expenses, shall be paid over to, or retained
by, Lessee (or if directed by Lessee, any Sublessee), provided
that Lessee shall have fully performed or, concurrently therewith,
will fully perform, the terms of Section 10(b) with respect to the
Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any balance (or if already
paid for by Lessee (or any Sublessee), all such insurance proceeds) remaining
after compliance with such Sections with respect to such loss shall be paid to
Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and
not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft
owned by Lessee of the same type similarly on the ground and not in operation,
provided that Lessee shall maintain insurance against risk of loss or damage to
the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft
during such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants
or the Owner Participant to anyone except (A) to permitted transferees of
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<PAGE> 44
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's interest who agree to hold such information confidential, (B) to
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's counsel or independent certified public accountants or independent
insurance advisors who agree to hold such information confidential or (C) as
may be required by any statute, court or administrative order or decree or
governmental ruling or regulation. Lessee will cause such Insurance Brokers to
agree to advise Lessor, the Indenture Trustee and the Owner Participant in
writing of any default in the payment of any premium and of any other act or
omission on the part of Lessee of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate of insurance, substantially in the same form as delivered by Lessee
to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or
the Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or
the Indenture Trustee, as the case may be, without waiver of any other rights
Lessor or the Indenture Trustee may have; provided, however, that no exercise
by Lessor or the Indenture Trustee, as the case may be, of said option shall
affect the provisions of this Lease, including the provisions of Section 14(g)
hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to
this Section 11 under a program applicable to all aircraft in Lessee's fleet,
but in no case shall the aggregate amount of self-insurance in regard to
Section 11(a) and Section 11(b) exceed during any policy year, with respect to
all of the aircraft in Lessee's fleet (including, without limitation, the
Aircraft), the lesser of (a) 50% of the largest replacement value of any single
aircraft in Lessee's fleet or (b) 1-1/2% of the average aggregate insurable
value (during the preceding policy year) of all aircraft (including, without
limitation, the Aircraft) on which Lessee carries insurance. In addition,
Lessee (and any Sublessee) may self-insure to the extent of any applicable
mandatory minimum per aircraft (or, if applicable, per annum or other period)
hull or liability insurance deductible imposed by the aircraft hull or
liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and
any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance
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<PAGE> 45
with respect to its interest in the Aircraft, provided that such insurance does
not prevent Lessee (or any Sublessee) from carrying the insurance required or
permitted by this Section 11 or adversely affect such insurance or the cost
thereof. Notwithstanding any other provision of this Lease, all proceeds of
insurance carried by Lessor shall be paid to Lessor.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written
consent of Lessor, other government of registry of the Aircraft or any agency
or instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default shall have occurred and be continuing, but shall
be held by or paid over to Lessor as security for the obligations of Lessee (or
any Sublessee) under this Lease and, if Lessor declares this Lease to be in
default pursuant to Section 15 hereof, applied against Lessee's obligations
hereunder as and when due. At such time as there shall not be continuing any
such Event of Default, such amount shall be paid to Lessee (or such Sublessee)
to the extent not previously applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, Lessor, the
Owner Participant or the Indenture Trustee or their respective authorized
representatives may (not more than once every calendar year (unless an Event of
Default has occurred and is continuing when such inspection right shall not be
so limited)) inspect the Aircraft and inspect and make copies (at Lessor's, the
Owner Participant's or the Indenture Trustee's expense, as the case may be) of
the books and records of Lessee relating to the maintenance of the Aircraft;
any such inspection of the Aircraft shall be limited to a visual, walk-around
inspection and shall not include opening any panels, bays or the like without
the express consent of Lessee; provided that no exercise of such inspection
right shall interfere with the operation or maintenance of the Aircraft by, or
the business of, Lessee (or any Sublessee). Upon receipt by Lessee of a
written request from the Owner Participant specifying that the Owner
Participant desires to have an authorized representative observe the next
scheduled major overhaul to be performed on the Aircraft, Lessee shall
cooperate with the Owner Participant to enable the Owner Participant's
authorized representative to observe the next scheduled major overhaul to be
performed on the Aircraft; provided that Lessee shall be required to so
cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe one scheduled major overhaul during each
three year period of the Term and (notwithstanding the foregoing but only if a
major overhaul is scheduled during the last year of the Term) one scheduled
major overhaul during the last year of the Term;
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<PAGE> 46
provided that the Owner Participant's authorized representative shall merely
observe such major overhaul, shall not interfere with or extend in any manner
the conduct or duration of the major overhaul and shall not be entitled to
direct any of the work performed in connection with such overhaul. None of
Lessor, the Owner Participant or the Indenture Trustee shall have any duty to
make any such inspection nor shall any of them incur any liability or
obligation by reason of not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein,
Lessee will not, without prior written consent of Lessor, assign in whole or in
part any of its rights or obligations hereunder. Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
(a) Lessee shall not have made a payment of Interim
Rent, Basic Rent or Stipulated Loss Value within ten (10) days
after the same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for ten
(10) Business Days after Lessee's receipt of written demand
therefor by the party entitled thereto (provided that any failure
to pay any amount owed by Lessee under the Tax Indemnity Agreement
or any failure of Lessee to pay to Lessor or the Owner Participant
when due any Excluded Payments (as defined in the Trust Indenture)
shall not constitute an Event of Default unless notice is given by
the Owner Participant to Lessee and the Indenture Trustee that
such failure shall constitute an Event of Default); or
(c) Lessee shall have failed to perform or observe
(or caused to be performed and observed) in any material respect
any covenant or agreement (except the covenants set forth in the
Tax Indemnity Agreement and in clauses (i)(B) and (ii) of the
first sentence of second paragraph of Exhibit G) to be performed
or observed by it under any Operative Document, and such failure
shall continue unremedied for a period of thirty (30) days after
receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause (ii)
or clause (iii) of the first sentence of Section 7(a), or
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<PAGE> 47
under the second sentence of Section 7(a) as it relates to
maintenance, service, repair or overhaul or under Section 8 and,
notwithstanding the diligence of Lessee in attempting to cure such
failure, such failure is not cured within said thirty day period
but is curable with future due diligence, there shall exist no
Event of Default under this Section 14 so long as Lessee is
proceeding with due diligence to cure such failure and such
failure is remedied not later than one hundred eighty (180) days
after receipt by Lessee of such written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the Tax
Indemnity Agreement and such documents or certificates as are
furnished to the Owner Participant solely in connection with
matters dealt with in the Tax Indemnity Agreement and for no other
purpose and except the representations and warranties in, or in
connection with, the Credit Agreement) shall prove to have been
incorrect in any material respect at the time made and such
incorrectness shall not have been cured (to the extent of the
adverse impact of such incorrectness on the interests of the Owner
Participant, Lessor or the Certificate Holders) within thirty (30)
days after the receipt by Lessee of a written notice from Lessor
or the Indenture Trustee advising Lessee of the existence of such
incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of Lessee or for all or substantially all of
its property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other proceeding
undismissed and unstayed for a period of ninety (90) consecutive
days or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing,
without the consent of Lessee, a receiver, trustee or liquidator
of Lessee, or of any substantial part of its property, or
sequestering any substantial part of the property of Lessee and
any such order, judgment or decree or appointment or sequestration
shall be final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of entry
thereof; or
(f) the commencement by Lessee of a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the
consent by Lessee to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of Lessee or for all or substantially
all of its property,
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<PAGE> 48
or the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to authorize
any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance with
the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as
Lessee is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one
or more of the following with respect to all or any part of the Airframe and
any or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then in effect; provided, however, that during any period
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 7(b) hereof and in possession of the United
States government or an agency or instrumentality of the United States, Lessor
shall not, on account of any Event of Default, be entitled to do any of the
following in such manner as to limit Lessee's control under this Lease (or any
Sublessee's control under any Sublease) of any Airframe or any Engines
installed thereon, unless at least sixty (60) days' (or such lesser period as
may then be applicable under the Air Mobility Command program of the United
States Government) written notice of default hereunder shall have been given by
Lessor by registered or certified mail to Lessee (and any Sublessee) with a
copy addressed to the Contracting Office Representative for the Air Mobility
Command of the United States Air Force under any contract with Lessee (or any
Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's
expense, cause Lessee to return promptly, and Lessee shall return
promptly, the Airframe or any Engine as Lessor may so demand to
Lessor or its order in the manner and condition required by, and
otherwise in accordance with all the provisions of, Section 5 as
if such Airframe or Engine were being returned at the end of the
Term, or Lessor, at its option, may enter upon the premises where
all or any part of the Airframe or any Engine is located and take
immediate possession of and remove the same by summary proceedings
or otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all without
liability accruing to Lessor for or by reason of such entry or
taking of possession or removing whether for the restoration of
damage to property caused by such action or otherwise;
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<PAGE> 49
(b) sell the Airframe and/or any Engine at public or
private sale, as Lessor may determine, or otherwise dispose of,
hold, use, operate, lease to others or keep idle the Aircraft as
Lessor, in its sole discretion, may determine, all free and clear
of any rights of Lessee, except as hereinafter set forth in this
Section 15;
(c) whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) or paragraph (b) above with respect to the Airframe
and/or any Engine, Lessor, by written notice to Lessee specifying
a payment date which shall be the Lease Period Date not earlier
than ten days from the date of such notice, may demand that the
Lessee pay to Lessor, and Lessee shall pay Lessor, on the payment
date so specified, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the installments of Interim Rent or
Basic Rent for the Aircraft due for the Commencement Date, Lease
Periods commencing on or after the Commencement Date or the Lease
Period Date specified as the payment date in such notice), any
unpaid Interim Rent or Basic Rent due on the Commencement Date and
Lease Period Dates prior to the payment date so specified
(including, without limitation, any adjustments to Basic Rent
payable pursuant to Section 3(d)) plus whichever of the following
amounts Lessor, in its sole discretion, shall specify in such
notice (together with interest, if any, on such amount at the Past
Due Rate from such specified payment date until the date of actual
payment of such amount): (i) an amount equal to the excess, if
any, of the Stipulated Loss Value for the Aircraft, computed as
of the Lease Period Date specified as the payment date in such
notice, over the aggregate fair market rental value (computed as
hereafter in this Section 15 provided) of such Aircraft for the
remainder of the Term, after discounting such aggregate fair
market rental value to present value as of the Lease Period Date
specified as the payment date in such notice at an annual rate
equal to the Base Rate plus 1%; or (ii) an amount equal to the
excess, if any, of the Stipulated Loss Value for such Aircraft,
computed as of the Lease Period Date specified as the payment date
in such notice over the fair market sales value of such Aircraft
(computed as hereafter in this Section provided) as of the Lease
Period Date specified as the payment date in such notice;
(d) in the event Lessor, pursuant to paragraph (b)
above, shall have sold the Airframe and/or any Engine, Lessor, in
lieu of exercising its rights under paragraph (c) above with
respect to such Aircraft, may, if it shall so elect, demand that
Lessee pay Lessor, and Lessee shall pay to Lessor, on the date of
such sale, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the installments of Interim Rent or Basic
Rent for the Aircraft due on or after such date), any unpaid
Interim Rent or Basic Rent with respect to the Aircraft due prior
to such date (including, without limitation, any adjustments to
Basic Rent payable pursuant to Section 3(d)) plus the amount of
any deficiency between the net proceeds of such sale (after
deduction of all
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<PAGE> 50
reasonable costs of sale) and the Stipulated Loss Value of such
Aircraft, computed as of the Stipulated Loss Value Date on or
immediately following the date of such sale together with
interest, if any, on the amount of such deficiency, at the Past
Due Rate, from the date of such sale to the date of actual payment
of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to the
Aircraft, and/or may exercise any other right or remedy which may
be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages for
breach hereof.
For the purposes of paragraph (c) above, the "fair market rental
value" or the "fair market sales value" of the Aircraft shall be the rental
value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser,
as the case may be, under no compulsion to lease or purchase, as the case may
be, and an informed and willing lessor or seller in possession under no
compulsion to sell, as the case may be, in each case based upon the actual
condition and location of the Aircraft, which value shall be determined by
mutual agreement or, in the absence of mutual written agreement, pursuant to an
appraisal prepared and delivered by a nationally recognized firm of independent
aircraft appraisers nominated by Lessor, and Lessor shall immediately notify
Lessee of such nomination. Unless Lessee shall have objected in writing within
ten days after its receipt of Lessor's notice, Lessor's nomination shall be
conclusive and binding. If Lessee shall object, however, Lessor and Lessee
shall endeavor, within ten days after such objection is made, to select a
mutually acceptable appraiser; provided that, if Lessee shall not so endeavor
to make such selection, Lessor's nomination referred to in the preceding
sentence hereof shall be conclusive and binding. If Lessor and Lessee fail to
reach agreement (except for the reason referred to in the proviso in the
preceding sentence), or if any appraiser selected fails to act for any reason,
then the question shall be determined by an appraisal (applying the definitions
of "fair market rental value" and "fair market sales value" as set forth above
based upon the actual condition of the Aircraft) mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount
of such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the
City of New York (or any successor organization thereto) or, in his absence,
failure, refusal or inability to act, then either Lessor or Lessee may apply to
the American Arbitration Association (or any successor organization thereto) in
New York, New York for the appointment of such third appraiser. The decision
of the third appraiser so appointed shall be given within twenty Business Days
after the appointment of such third appraiser. As soon as the third appraiser
has delivered his appraisal, that appraisal
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shall be compared with the appraisals given by the other two appraisers. If
the determination of one appraiser is more disparate from the average of all
three determinations than each of the other two determinations, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. The cost of
such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees
to give Lessee at least fifteen (15) days' prior written notice of the date
fixed for any public sale of the Airframe or any Engine or of the date on or
after which will occur the execution of any contract providing for any private
sale and any such public sale shall be conducted in general so as to afford
Lessee (and any Sublessee) a reasonable opportunity to bid. Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all of such other remedies. No waiver by Lessor of any Event
of Default shall in any way be, or be construed to be, a waiver of any future
or subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the
execution and delivery of any amendment to this Lease, to the Trust Indenture
or to the Trust Agreement, Lessee will cause such Lease Supplement, Trust
Supplement (and, in the case of the initial Lease Supplement and Trust
Supplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. In addition, Lessee will promptly and duly execute and deliver to
Lessor such further documents and take such further action as Lessor or the
Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor and the Indenture Trustee hereunder, including, without limitation,
if requested by Lessor or the Indenture Trustee, at
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<PAGE> 52
the expense of Lessee, the execution and delivery of supplements or amendments
hereto or to the Trust Indenture, each in recordable form, subjecting to this
Lease and the Trust Indenture, any airframe or engine substituted for the
Airframe or any Engine pursuant to the terms thereof and the recording or
filing of counterparts thereof, in accordance with the laws of such
jurisdictions as Lessor or the Indenture Trustee may from time to time deem
advisable. Lessee agrees to furnish to Lessor and the Indenture Trustee
promptly after execution and delivery of any supplement and amendment hereto
and promptly after the execution and delivery of any supplement and amendment
to the Trust Indenture (except for any such supplement or amendment which does
not require or receive the approval of Lessee pursuant to the Operative
Documents and is not required pursuant to the terms of the Operative
Documents), an opinion of counsel reasonably satisfactory to Lessor and the
Indenture Trustee as to the due recording or filing of such supplement or
amendment. Commencing in 1996, on or before April 30 of each year during the
Term, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
Lessee, signed by the President, a Vice President or the Chief Financial
Officer of Lessee to the effect that the signer is familiar with or has
reviewed the relevant terms of this Lease and the signer does not have actual
knowledge of the existence, as of the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default. Lessee
agrees that if the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Treasurer or an Assistant Treasurer of Lessee has actual
knowledge of the existence of a Default, then Lessee shall promptly give to
Lessor, the Owner Participant and the Indenture Trustee notice thereof and such
other information relating thereto as Lessor, the Owner Participant or the
Indenture Trustee may reasonably request. Lessee agrees that if an officer of
Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee may reasonably
request. Lessee will deliver to Lessor, the Owner Participant and the
Indenture Trustee (i) within sixty (60) days after the end of each of the first
three quarterly periods of each fiscal year of the Guarantor, the publicly
filed Form 10-Q report of the Guarantor; and (ii) within one hundred twenty
(120) days after the close of such fiscal year, the publicly filed annual
report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms
and provisions hereof shall be by telecopy or other telecommunication means
(with such telecopy or other telecommunication means to be confirmed in
writing), or if such notice is impracticable, by registered, first-class
airmail, with postage prepaid, or by personal delivery of written notice and
any such notice shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight
courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121,
Attention: Senior Vice President-Finance and Treasurer (Telecopy
No. (612) 726-0665), or to such other address, telex number or
telecopy number as Lessee shall from time to time designate in
writing to Lessor,
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(ii) if to Lessor, at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department (Telecopy
No. (801) 246-5053), or to such other address or telecopy number
as Lessor shall from time to time designate in writing to Lessee,
and
(iii) if to a Loan Participant, the Indenture Trustee
or the Owner Participant, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at such address or
telecopy number as such Loan Participant, the Indenture Trustee or
the Owner Participant shall have furnished by notice to Lessor and
to Lessee, and, until an address is so furnished, addressed to
such Loan Participant, the Indenture Trustee or the Owner
Participant at its address or telecopy number set forth in
Schedule I to the Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. All Rent shall be
paid by Lessee to Lessor in funds of the type specified in Section 3(f).
Except as provided in Section 3(g) hereof, Lessee's obligation to pay all Rent
payable hereunder shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, in its individual capacity or as Owner Trustee under the Trust
Agreement, the Indenture Trustee (in its individual capacity or as Indenture
Trustee), any Loan Participant, the Owner Participant, or anyone else for any
reason whatsoever (whether in connection with the transactions contemplated
hereby or any other transactions), including, without limitation, any breach by
Lessor or the Owner Participant of their respective warranties, agreements or
covenants contained in any of the Operative Documents, (ii) any defect in the
title, registration, airworthiness, condition, design, operation, or fitness
for use of, or any damage to or loss or destruction of, the Aircraft, or any
interruption or cessation in or prohibition of the use or possession thereof by
Lessee (or any Sublessee) for any reason whatsoever, including, without
limitation, any such interruption, cessation or prohibition resulting from the
act of any government authority, (iii) any insolvency, bankruptcy,
reorganization or similar case or proceedings by or against Lessee (or any
Sublessee) or any other person, or (iv) any other circumstance, happening, or
event whatsoever, whether or not unforeseen or similar to any of the foregoing.
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 without limitation of the other rights or remedies of Lessor
hereunder, subject to the rights of Lessee to setoff under Section 3(g) hereof,
to pay to Lessor an amount equal to each Rent payment at the time such payment
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or in part. Lessee hereby waives, to the
extent permitted by applicable law, any and all rights which it may now have or
which at any time hereafter may be conferred upon it, by statute or otherwise,
to terminate, cancel, quit or surrender this Lease except in accordance with
the express terms hereof.
SECTION 19. RENEWAL OPTION; PURCHASE OPTIONS; VALUATION. (a)
Renewal Option. (1) Fixed Renewal Term. Lessee shall have the right to renew
this Lease for up to three consecutive one year renewal terms the first of
which shall commence only upon the
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<PAGE> 54
expiration of the Basic Term (any such renewal term, a "FIXED RENEWAL TERM") by
delivery to Lessor at least ninety (90) days before the end of the Basic Term,
the first Fixed Renewal Term or the second Fixed Renewal Term, as the case may
be, a written notice irrevocably electing to renew this Lease for a Fixed
Renewal Term. Basic Rent during any Fixed Renewal Term shall be payable in an
amount and at the times specified in Section 19(a)(4).
(2) Fair Market Renewal Term. Not less than ninety (90) days
before the end of the third Fixed Renewal Term, the first Fair Market Renewal
Term or the second Fair Market Renewal Term for the Aircraft, Lessee shall have
the right to renew this Lease by delivery to Lessor of a written notice
irrevocably electing to renew this Lease for a renewal term of not less than
one year and not more than two years for a Basic Rent equal to the "fair market
rental value" of the Aircraft for such period (any such renewal term, a "FAIR
MARKET RENEWAL TERM"); provided that Lessee shall not be entitled to renew this
Lease pursuant to this Section 19(a)(2) more than three times.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(a)(1) or 19(a)(2) on or before the day specified
therefor, Lessee shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Default of the type referred
to in Section 14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all
necessary governmental authorizations and approvals shall have been received
and that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease
shall continue in full force and effect during the Renewal Term, except that
(x) Lessee shall pay Lessor Basic Rent for the Aircraft during the Renewal Term
in an amount equal to the "fair market rental value" thereof determined in
accordance with Section 19(c), but not to exceed in the case of a Fixed Renewal
Term one-half of the average Basic Rent during the Basic Term (such average
being determined as the total of all payments of Basic Rent during the Basic
Term added together and divided by the number of payments of Basic Rent during
the Basic Term), which Basic Rent shall be payable in semi-annual installments
in arrears unless in the case of a Fixed Renewal Term, any portion of Basic
Rent during the Basic Term is payable in advance, in which case the same
proportion of Basic Rent during such Fixed Renewal Term shall also be payable
in advance, each such installment being due and payable on each Lease Period
Date occurring during the Renewal Term, commencing with the Lease Period Date
immediately following the commencement of the Renewal Term, and (y) the
Stipulated Loss Values applicable during the Renewal Term shall be determined
separately for each Renewal Term by the Owner Participant in good faith to
reflect Stipulated Loss Values determined in accordance with the following
sentence. Stipulated Loss Values during a Renewal Term shall on the date on
which such Renewal Term begins be equal to the fair market sales value of the
Aircraft as of such date, determined in accordance with the provisions of this
Section 19(a)(4) and Section 19(c) hereof, and shall decline ratably on a
monthly basis to the fair market sales value of the
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<PAGE> 55
Aircraft as of the last day of such Renewal Term, determined in accordance with
the provisions of this Section 19(a)(4) and Section 19(c) hereof.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon at
least ninety (90) days' irrevocable prior written notice to Lessor, to purchase
the Aircraft on the last Business Day of the Basic Term or any Renewal Term for
a purchase price equal to the lesser of the fair market sales value of the
Aircraft and 50% of Lessor's Cost. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred
sixty-five (365) days prior to the date on which Lessee may purchase the
Aircraft pursuant to Section 19(b) hereof or renew this Lease pursuant to
Section 19(a)(1) or Section 19(a)(2) hereof, Lessee may deliver to Lessor a
revocable notice of its intent to exercise its renewal option or purchase
option. For all purposes of this Section 19, including the appraisal referred
to in this Section 19(c), in determining "fair market rental value" or "fair
market sales value", the Aircraft shall be valued (i) as if in the condition
and otherwise in compliance with the terms of Section 5 upon a return of the
Aircraft to the United States and as if it had been maintained at all times as
required in accordance with Section 7(a)(I) during periods when no Sublease was
in effect, (ii) on the basis of the value which would obtain in an arm's-length
transaction between an informed and willing buyer-user or lessee (other than a
lessee or an Affiliate of a lessee currently in possession or a used equipment
scrap dealer) under no compulsion to buy or lease and an informed and willing
seller or lessor unaffiliated with such buyer-user or lessee and under no
compulsion to sell or lease and disregarding the purchase and renewal options
of the lessee provided in this Lease, and (iii) in the case of such valuation
for determining "fair market rental value", assuming such lessee would have
substantially the same obligations during the Fair Market Renewal Term as
provided hereunder including without limitation the obligations of Lessee to
carry and maintain the insurance required by Section 11 hereof and to make
certain payments with reference to Stipulated Loss Value during the applicable
Fair Market Renewal Term. Upon receipt of such notice Lessor and Lessee shall
confer in good faith with a view to reaching agreement on the "fair market
rental value" or "fair market sales value" of the Aircraft. If the parties
have not so agreed by two hundred seventy (270) days prior to the end of the
Basic Term or the Renewal Term in question, then the question shall be
determined by an appraisal mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by
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<PAGE> 56
the party giving the notice or, if such appraisers cannot agree on the amount
of such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the
City of New York (or any successor organization thereto) or, in his absence,
failure, refusal or inability to act, then either Lessor or Lessee may apply to
the American Arbitration Association (or any successor organization thereto) in
New York, New York for the appointment of such third appraiser. The decision
of the third appraiser so appointed shall be given within twenty Business Days
after the appointment of such third appraiser. As soon as the third appraiser
has delivered his appraisal, that appraisal shall be compared with the
appraisals given by the other two appraisers. If the determination of one
appraiser is more disparate from the average of all three determinations than
each of the other two determinations, then the determination of such appraiser
shall be excluded, the remaining two determinations shall be averaged and such
average shall be final and binding upon the parties hereto. If no
determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. Lessee and Lessor shall share equally all
expenses relating to such appraisal procedure provided if Lessee elects not to
renew this Lease or purchase the Aircraft following such appraisal, Lessee
shall pay all expenses of such appraisal.
(d) Special Purchase Option. On July 2, 2011 (or, if July 2,
2011 is not a Business Day, the Business Day immediately preceding July 2,
2011), Lessee shall have the option, upon at least ninety (90) days'
irrevocable prior notice to Lessor and, if any Secured Certificates are then
outstanding, the Indenture Trustee, to purchase the Aircraft on such date for a
purchase price equal to the Special Purchase Price. In addition, if on such
date there shall be any Secured Certificates outstanding, Lessee shall have the
option to assume, pursuant to Section 8(x) of the Participation Agreement and
Section 2.15 of the Trust Indenture, all of the obligations of Lessor under the
Trust Indenture. If such assumption is made, Lessee shall pay Lessor a
purchase price equal to (I) the Special Purchase Price minus (II) an amount
equal to principal of, and accrued but unpaid interest on, any Secured
Certificates that are outstanding on such date. Upon such payment in full and
payment of any other amounts then due hereunder (including costs or expenses of
the Owner Participant in connection with such purchase, any installments of
Basic Rent due prior to such date and, if Basic Rent is payable in arrears on
such date as indicated on Exhibit B, on such date (but not any installment of
Basic Rent due on such date if Basic Rent is payable in advance on such date),
and all unpaid Supplemental Rent due on or prior to such date), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft and under the Trust Indenture and,
unless there shall be any Secured Certificates outstanding after such payment,
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Trust Indenture.
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<PAGE> 57
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF
SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this Lease, the Lease Supplements
and any amendments to this Lease and to mortgage its interest in the Aircraft
in favor of the Indenture Trustee, subject to the reservations and conditions
therein set forth. To the extent, if any, that this Lease, the Lease
Supplements and any amendments to this Lease constitute 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, the Lease Supplements and
any amendments to this Lease may be created through the transfer or possession
of any counterpart other than the original counterpart, which shall be
identified as the counterpart containing the receipt therefor executed by the
Indenture Trustee on the signature page thereof. Lessee hereby accepts and
consents to the assignment of all Lessor's right, title and interest in and to
this Lease pursuant to the terms of the Trust Indenture. Subject to Section
3(f) hereof, Lessee agrees to pay directly to the Indenture Trustee (or, after
receipt by Lessee of notice from the Indenture Trustee of the discharge of the
Trust Indenture, to Lessor), all amounts of Rent due or to become due hereunder
and assigned to the Indenture Trustee and Lessee agrees that the Indenture
Trustee's right to such payments hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
the circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon
demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor as
security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of ninety (90) days or less from date of purchase
thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated under the laws of the United States of America or one of the
states thereof having combined capital and
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surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("MOODY'S") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of A1 by S&P or P1 by Moody's and having a
final maturity of ninety (90) days or less from the date of purchase thereof;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing.
Lessee shall be responsible for any net loss realized as a result of any such
investment and shall reimburse Lessor (or the Indenture Trustee, as the case
may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under
the Trust Agreement, and the institution acting as Lessor shall not be liable
in its individual capacity for any breach thereof except for its gross
negligence or willful misconduct or for breach of its covenants,
representations and warranties contained herein, to the extent covenanted or
made in its individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each
hereby irrevocably submits itself to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. This Lease shall constitute an
agreement of lease, and nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee only. Neither Lessee nor any affiliate of Lessee will file any tax
returns in a manner inconsistent with the foregoing fact or with Lessor's
ownership of the Aircraft. The section and paragraph headings in this Lease
and the table of contents are for convenience of reference only and shall not
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modify, define, expand or limit any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 10 of the Participation Agreement) and without in
any way altering the terms of this Lease or Lessee's obligations hereunder.
One such appointment and designation of a successor Owner Trustee shall not
exhaust the right to appoint and designate further successor Owner Trustees
pursuant to the Trust Agreement, but such right may be exercised repeatedly as
long as this Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event
of Default shall have occurred and be continuing and notwithstanding any
default by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations pursuant to the Overall Transaction during the Term of this Lease,
and this Lease shall not be terminated except as expressly provided herein.
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<PAGE> 60
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY:
----------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:
----------------------------------
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of November, 1995.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:
----------------------------------
Title:
- SIGNATURE PAGE -
<PAGE> 61
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1995 A]
LEASE SUPPLEMENT No.
[NW 1995 A]
Lease Supplement No. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement [NW 1995 A], dated as of
November 15, 1995, between [ ] as Owner Participant,
and such Owner Trustee (such Owner Trustee, in its capacity as such Owner
Trustee, being herein called "LESSOR"), and Northwest Airlines, Inc.
("LESSEE").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement [NW 1995 A], dated as of November 15, 1995, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
Now, Therefore, in consideration of the premises and other good
and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as
of the date hereof consists of the following components:
- -------------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 62
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037 engines
bearing, respectively, manufacturer's serial nos. P______ and
P______ (each of which engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as
otherwise provided in the Lease, the Term for the Aircraft shall commence on
the Delivery Date and end on July 2, 2016.
3. Lessee hereby confirms its agreement to pay Lessor Basic
Rent for the Aircraft throughout the Term therefor in accordance with Section 3
of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted
the Aircraft for all purposes hereof and of the Lease as being airworthy, in
good working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that
nothing contained herein or in the Lease shall in any way diminish or
otherwise affect any right Lessee or Lessor may have with respect to the
Aircraft against The Boeing Company, or any subcontractor or supplier of The
Boeing Company, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee
on the signature page hereof.
EXHIBIT A - PAGE 2
<PAGE> 63
In Witness Whereof, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By
------------------------------------
Title:
Northwest Airlines, Inc.,
Lessee
By
------------------------------------
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
------------------------------------
Title:
- -------------------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 64
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1995 A]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
----------------------------- ----------------------------------
Interim Rent
Commencement (Percentage of
Date Lessor's Cost)
----------------------------- ----------------------------------
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------------------- ----------------------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
<PAGE> 65
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------------------- ----------------------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
EXHIBIT B - PAGE 2
<PAGE> 66
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - PAGE 3
<PAGE> 67
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1995 A]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
----------------------------- ----------------------------------
<PAGE> 68
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1995 A]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------------------------- ----------------------------------
<PAGE> 69
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1995 A]
RENT RECALCULATION AND
INDEMNIFICATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1995 A]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 A], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1995 A], dated as of November 15,
1995 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1995 A], dated as of November 15,
1995 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1995 A] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated November 21, 1995, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N535US; manufacturer's serial No. 26482; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727158 and P727159;
WHEREAS, Section 17 of the Participation Agreement [NW 1995
A], dated as of November 15, 1995 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants
named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor
and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates
that the Secured Certificates issued by the Owner Trustee under the Trust
Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995,
between Lessor (in its individual capacity as expressly provided therein and as
trustee) and the Indenture Trustee may be refinanced under certain
circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1995 A], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Basic
Rent, Stipulated Loss Value and Termination Value percentages in order to
reflect, among other things, the interest rate of the refinanced Secured
Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Basic
Rent, Stipulated Loss Value and Termination Value percentages, Lessor and Lessee
desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1995 A], dated as of November 15,
1995, and the Trust Agreement and Indenture Supplement [NW 1995 A], dated
November 21, 1995, was recorded by the Federal Aviation Administration (the
"FAA") on November 22, 1995, and assigned Conveyance No. P04679;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Certificated Air
Carrier", "Delivery Date", "Indemnitee", "Indenture Trustee's Liens", "Loan
Participant", "Net Present Value of Rents", "Operative Documents", "Stipulated
Loss Value", "Supplemental Rent", "Tax Indemnitee", "Termination Value" and
"Transaction Expenses" in Section 1 of the Lease are hereby amended applicable
on and after the Closing Date to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York;
Boston, Massachusetts; or Minneapolis, Minnesota.
"CERTIFICATED AIR CARRIER" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title
49, United States Code, for aircraft capable of carrying ten
or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required
to fall within the purview of 11 U.S.C. Section 1110 or any
analogous successor provision of the Bankruptcy Code.
"DELIVERY DATE" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) the Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i)
through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the
respective directors, officers, employees, agents and
servants of each of the Persons described in clauses (i)
through (viii), inclusive, (xii) the successors and permitted
assigns of the
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<PAGE> 3
Persons described in clauses (i) through (iv), inclusive, and
(xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"INDENTURE TRUSTEE'S LIENS" means any Lien which arises
as a result of (A) claims against the Indenture Trustee not
related to its interest in the Aircraft or the administration
of the Trust Estate pursuant to the Trust Indenture, (B) acts
of the Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the
Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or
willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation
Agreement pursuant to said Section 7, or (D) claims against
the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in
the Aircraft, the Trust Estate, the Trust Indenture Estate or
the Operative Documents other than a transfer of the Aircraft
pursuant to Section 9, 10 or 19 of the Lease or Article IV or
V of the Trust Indenture, or a transfer of the Aircraft
pursuant to Section 15 of the Lease while an Event of Default
is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
"NET PRESENT VALUE OF RENTS" means the net present
value, as of the Commencement Date, of Basic Rent set forth
in Exhibit B hereto, discounted at an annual interest rate of
7.70% on a semi-annual basis.
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of
the Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft as
of any date through and including July 2, 2016, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount
is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any
-3-
<PAGE> 4
date after July 2, 2016 shall be the amount determined as
provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than
Interim Rent or Basic Rent) which Lessee assumes or agrees to
pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to
clause (b) of the third paragraph of Section 2.02 of the
Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreements, and
(d) Lessor's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except
with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein,
"Lessor's pro rata share" means as of any time a fraction,
the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of
all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee
under the Trust Agreement, the Trust Estate, the Indenture
Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as of
any date through and including July 2, 2016, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with respect to which the amount is
determined (as such Exhibit D may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement).
"TRANSACTION EXPENSES" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana
& Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2)
Ray, Quinney & Nebeker, special counsel for the Owner Trustee
under the Trust Agreement, such information to be furnished
by the Owner Trustee, (3) Shearman & Sterling, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished
-4-
<PAGE> 5
by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and
financing statements, such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (iv)
the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture, such
information to be furnished by the Indenture Trustee, (v) the
fee of BK Associates, Inc. with respect to the appraisal of
the Aircraft pursuant to Section 4(a)(xxix) of the
Participation Agreement, such information to be furnished by
Lessee, (vi) the reasonable and actual fees, expenses and
disbursements of Feltman, Karesh, Major & Farbman, special
counsel to the Owner Participant, such fees not to exceed the
amount previously agreed to by the Owner Participant and
Lessee, and the reasonable and actual fees, expenses and
disbursements of David, Hagner, Kuney & Krupin, P.C., special
tax counsel to the Owner Participant, such fees not to exceed
the amount previously agreed to by the Owner Participant and
Lessee, such information to be furnished by the Owner
Participant, (vii) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation,
such information to be furnished by Lessee, and (viii) the
fee payable to the Loan Participants on the Delivery Date.
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable
on and after the Closing Date:
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing shall
occur.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the two Revolving Credit
Agreements between the Subordination Agent, as borrower, and
the Liquidity Provider, and any replacement thereof, in each
case as the same may be amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider and Class B Liquidity Provider under the
Liquidity Facilities, or any successor thereto.
-5-
<PAGE> 6
"MAJORITY IN INTEREST OF CERTIFICATE HOLDERS" has the
meaning set forth in the Trust Indenture.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and
Security Agreement [NW 1995 A], dated as of November 15,
1995, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENTS" means the pass
through trust agreement and supplements pursuant to which
each of the Class C and Class D pass through certificates are
issued.
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the two separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as
trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as
successor trustee under any such Pass Through Trust
Agreement.
"PURCHASERS" means the Pass Through Trustees under each
Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
-6-
<PAGE> 7
"REFINANCING DATE" means the proposed date on which the
outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers
pursuant to the Trust Indenture Amendment and the Refunding
Agreement on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption
of the Secured Certificates issued on November 21, 1995 and
the concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1995 A], dated as of June 3, 1996, among
Lessor, Lessee, the Owner Participant, the Purchasers, the
Indenture Trustee, the Subordination Agent, and the
Guarantor, as the same may from time to time be supplemented
or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms
thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust
Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1995 A],
dated as of the Closing Date, between Lessor and State Street
Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
-7-
<PAGE> 8
SECTION 2. AMENDMENT OF SECTION 2 OF THE LEASE.
Section 2 of the Lease is hereby amended by deleting on and
after the Closing Date the word "to" following the word "title" in the first
sentence thereof and replacing it with the word "from".
SECTION 3. AMENDMENT OF SECTIONS 3(B), 3(C), 3(D), 3(E), 3(F)
AND 3(G) OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(b) Interim Rent. Lessee shall pay Interim Rent on the
Closing Date and on the Commencement Date in an amount equal
to Lessor's Cost multiplied by the percentage specified in
Exhibit B hereto for Interim Rent on the Closing Date or the
Commencement Date, as the case may be.
(b) Section 3(c) of the Lease is hereby amended by deleting
on and after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs other
than on June 12, 1996, or (B) Refinancing Expenses paid by
Lessor or the Owner Participant pursuant to Section 11(a) of
the Refunding Agreement are determined to be other than
1.0270% of Lessor's Cost, then in each case, the Basic Rent
percentages set forth in Exhibit B and the Stipulated Loss
Value percentages set forth in Exhibit C and the Termination
Value percentages set forth in Exhibit D shall be
recalculated by the Owner Participant, on or prior to October
1, 1996 using the same methods and assumptions used to
calculate original Basic Rent and Stipulated Loss Value and
Termination Value percentages, in order to: (1) maintain the
Owner Participant's Net Economic Return and (2) minimize the
Net Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof. In such recalculation
there will be no change in the amortization of the Secured
Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by
deleting on and after the Closing Date the words "or a refunding" in the first
line thereof.
(e) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the words "column 3 of" in the first
sentence thereof and deleting the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is
hereby amended to read in its entirety on and after the Closing Date as follows:
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<PAGE> 9
"Lessee shall pay as Supplemental Rent the Make-Whole
Amount, if any, due pursuant to Section 2.10(b) or Section
2.11 of the Trust Indenture in connection with a prepayment
of the Secured Certificates upon redemption of such Secured
Certificates in accordance with such Section 2.10(b) or
Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the numbers and punctuation "124-000-12"
in the first sentence thereof and substituting therefor the numbers and
punctuation "124-0000-12", (ii) adding on and after the Closing Date the word
"irrevocably" after the word "hereby" in the proviso in the first sentence
thereof and (iii) deleting on and after the Closing Date the word "All" at the
beginning of the second sentence thereof and substituting the words "Lessor
hereby directs and Lessee agrees that all" therefor.
(h) Section 3(g) of the Lease is hereby amended by deleting
it in its entirety on and after the Closing Date.
SECTION 4. AMENDMENT OF SECTIONS 5(A) AND 5(B) OF THE LEASE.
Section 5(a) and Section 5(b) of the Lease are hereby amended
by inserting on and after the Closing Date the words and punctuation "(including
for this purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens)" after the words "Lessor Liens" in both the
parenthetical in clause (ii) of the last sentence of the first paragraph of
Section 5(a) and the second parenthetical in Section 5(b).
SECTION 5. AMENDMENT OF SECTION 7 OF THE LEASE.
(a) Section 7(b)(iii)(B) of the Lease is hereby amended by
deleting on and after the Closing Date the punctuation "," following the word
"Indenture".
(b) Section 7(b)(x)(2) of the Lease is hereby amended by
deleting on and after the Closing Date the words "the Owner Participant and the
Indenture Trustee" and substituting therefor the word "Lessor".
(c) Section 7(b)(x)(IV) of the Lease is hereby amended by
deleting on and after the Closing Date the word "mane" and substituting the word
"name" therefor.
(d) The third sentence of the last paragraph of Section 7(b)
of the Lease is hereby amended by deleting on and after the Closing Date the
word "prevent" and substituting the word "prohibit" therefor.
SECTION 6. AMENDMENT OF SECTION 9 OF THE LEASE.
(a) Section 9(a)(3)(ii) of the Lease is hereby amended by
deleting on and after the Closing Date the words "whether or not" and replacing
them with the word "that".
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<PAGE> 10
(b) Section 9(c) of the Lease is hereby amended by deleting
on and after the Closing Date the word "premium" each time it appears therein
and substituting therefor the words "Make-Whole Amount" and by deleting on and
after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss
Amount" each time such words and such words and punctuation appear.
SECTION 7. AMENDMENT OF SECTION 10 OF THE LEASE.
(a) Section 10(a) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the words "the third Business Day
following the receipt of insurance proceeds in respect of such occurrence (but
not earlier than thirty (30) days after such occurrence)" in clause (i)(y)
thereof and substituting therefor the words "an earlier Business Day irrevocably
specified fifteen days in advance by notice from Lessee to Lessor and the
Indenture Trustee", and (ii) deleting on and after the Closing Date the words
"the sum of" and "clauses (A) and (B) of" from the first sentence of the
penultimate paragraph thereof, and by deleting the word "should" and replacing
it with the word "will" in Section (6) in the last paragraph thereof.
(b) Section 10(d) of the Lease is hereby amended by deleting
on and after the Closing Date the words and punctuation "(but not under any
other Section)" following the word and number "Section 5" and replacing them
with the words and punctuation "(including Exhibit G) but not under any other
Section".
SECTION 8. AMENDMENT OF SECTION 11 OF THE LEASE. Section
11(a)(I)(i) of the Lease is hereby amended by deleting on and after the Closing
Date the word "the" immediately preceding the word "aircraft" and replacing it
with the word "other".
SECTION 9. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section
14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date
the words and punctuation ", the Refunding Agreement" after the words
"Participation Agreement" and (ii) adding on and after the Closing Date the
words "and except for representations or warranties contained in the Pass
Through Trust Agreement or the Underwriting Agreement (as defined in the
Refunding Agreement) or any document or instrument furnished pursuant to either
thereof" after the word "Agreement" at the end of the first parenthetical phrase
therein.
SECTION 10. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17
of the Lease is hereby amended to read in its entirety on and after the Closing
Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective
when received, addressed:
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<PAGE> 11
(i) if to Lessee, for U.S. Mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight
courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota
55121, Attention: Senior Vice President - Finance and
Treasurer, (Telecopy No. (612) 726-0665), or to such other
address, telex number or telecopy number as Lessee shall
from time to time designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), or to such other address or telecopy
number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at such address
or telecopy number as such Loan Participant, the Indenture
Trustee or the Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until an address is so
furnished, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at its address
or telecopy number set forth on the signature pages of the
Refunding Agreement."
SECTION 11. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The first and second sentences of Section 19(d) of the Lease
are hereby amended to read in their entirety on and after the Closing Date as
follows:
On July 2, 2011 (or, if July 2, 2011 is not a Business Day,
the Business Day immediately succeeding July 2, 2011), Lessee
shall have the option, upon at least ninety (90) days'
irrevocable prior notice to Lessor and, if any Secured
Certificates are then outstanding, the Indenture Trustee, to
purchase the Aircraft on such date for a purchase price equal
to the Special Purchase Price. In addition, if on such date
there shall be any Secured Certificates outstanding, Lessee
shall have the option to assume, pursuant to Section 8(x) of
the Participation Agreement and Section 2.13 of the Trust
Indenture, all of the obligations of Lessor under the Trust
Indenture.
SECTION 12. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26
of the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
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<PAGE> 12
SECTION 13. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
(b) The parties hereto agree that Exhibits B, C and D
attached hereto reflect the recalculation of Basic Rent, Stipulated Loss Value
and Termination Value percentages to take into account the interest rates borne
by the Secured Certificates as of the Closing Date, the actual amount of
Transaction Expenses and the actual amount of the Excess Amount.
SECTION 14. EFFECTIVENESS OF AMENDMENTS. The amendments to
the Lease set forth in Sections 1 through 13 hereof shall be effective as of the
date hereof.
SECTION 15. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 16. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 13
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By:
--------------------------------------
Title:
NORTHWEST AIRLINES, INC.
Lessee
By:
---------------------------------------
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of __________________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By:
---------------------------------------
Title:
- ----------------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1995 A]
This GUARANTEE [NW 1995 A], dated as of November 15, 1995 (as amended,
modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST
AIRLINES CORPORATION, a Delaware corporation (together with its permitted
successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I
hereto (collectively, together with their successors and permitted assigns,
the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the
"LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1995 A], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1995 A], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the Parties
to consummate the transactions contemplated by the Participation Agreement that
the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security certain
of its right, title and interest in and to this Guarantee to the Indenture
Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security
Agreement [NW 1995 A], dated as of the date hereof, between the Lessor and the
Indenture Trustee (as amended, modified or supplemented from time to time, the
"TRUST INDENTURE"), as security for the obligations of the Lessor referred to
therein; and
WHEREAS, the capitalized terms used herein that are not defined herein
are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into the Lease
and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
<PAGE> 2
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Lease, the Participation Agreement and the
other Operative Documents and the transactions and the other documents
contemplated thereby, and does hereby irrevocably and fully and unconditionally
guarantee, as primary obligor and not as surety merely, to the Parties, as
their respective interests may appear, the payment by the Lessee of all payment
obligations when due under the Lease (including, without limitation, Basic Rent
and Supplemental Rent), the Participation Agreement, the Tax Indemnity
Agreement and the other Operative Documents to which the Lessee is a party
(such obligations of the Lessee guaranteed hereby being hereafter referred to,
individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL
OBLIGATIONS") in accordance with the terms of the Operative Documents, and the
timely performance of all other obligations of the Lessee thereunder
(individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL
OBLIGATIONS" or, collectively with the Financial Obligations, the
"OBLIGATIONS"). The Guarantor does hereby agree that in the event that the
Lessee fails to pay any Financial Obligation when due for any reason (including,
without limitation, the liquidation, dissolution, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceedings
affecting the status, existence, assets or obligations of, the Lessee, or the
disaffirmance with respect to the Lessee of the Lease or the Operative
Documents to which the Lessee is a party in any such proceeding) within five
days after the date on which such Financial Obligation became due and payable
and the applicable grace period has expired, the Guarantor shall pay or cause
to be paid forthwith, upon the receipt of notice from any Party (such notice to
be sent to the Lessee (to the extent such Party is not stayed or prevented from
doing so by operation of law) and the Guarantor) stating that such Financial
Obligation was not paid when due and for five days after the applicable grace
period has expired, the amount of such Financial Obligation. The Guarantor
hereby agrees that in the event the Lessee fails to perform any Nonfinancial
Obligation for any reason (including, without limitation, the liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or
other similar proceedings affecting the status, existence, assets or
obligations of, the Lessee, or the disaffirmance with respect to the Lessee of
the Lease or the Operative Documents to which the Lessee is a party in any such
proceeding) within 10 Business Days after the date on which such Nonfinancial
Obligation is required to be performed (for avoidance of doubt, to include any
applicable grace period), the Guarantor shall cause such Nonfinancial
Obligation to be performed within 10 Business Days following the receipt of
notice from any Party (such notice to be sent to the Lessee (to the extent such
Party is not stayed or prevented from doing so by operation of law) and the
Guarantor) stating that such Nonfinancial Obligation was not performed when so
required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not be, to the
fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the
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<PAGE> 3
Lease or such other Operative Document (except that any such amendment or other
modification shall be given effect in determining the obligations of the
Guarantor hereunder), or by any substitution, release or exchange of collateral
for or other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in accordance with the terms of
said Obligations) without the consent of the Guarantor, or by any priority or
preference to which any other obligations of the Lessee may be entitled over
the Lessee's obligations under the Lease and the other Operative Documents to
which the Lessee is a party, or by any other circumstance that might otherwise
constitute a legal or equitable defense to or discharge of the obligations of a
surety or guarantor including, without limitation, any defense arising out of
any laws of the United States of America or any State thereof which would
excuse, discharge, exempt, modify or delay the due or punctual payment and
performance of the obligations of the Guarantor hereunder. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not, to the fullest extent permitted by law, affect
the liability of the Guarantor hereunder: (a) the extension of the time for or
waiver of, at any time or from time to time, without notice to the Guarantor,
the Lessee's performance of or compliance with any of its obligations under the
Operative Documents (except that such extension or waiver shall be given effect
in determining the obligations of the Guarantor hereunder)), (b) any
assignment, transfer, sublease or other arrangement by which the Lessee
transfers possession or loses control of the use of the Aircraft, (c) any
defect in the title, condition, design, operation or fitness for use of, or
damage to or loss or destruction of, the Aircraft, whether or not due to the
fault of the Lessee, (d) any merger or consolidation of the Lessee or the
Guarantor into or with any other Person, or any sale, transfer, lease or
disposal of any of its assets or (e) any change in the ownership of any shares
of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing guaranty
of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any
unpaid amounts due or otherwise to enforce performance by the Lessee. The
Guarantor specifically agrees, to the fullest extent permitted by law, that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Party (i) file suit or proceed to obtain or
assert a claim for personal judgment against the Lessee for the Obligations, or
(ii) make any effort at collection of the Obligations from the Lessee, or (iii)
foreclose against or seek to realize upon any security now or hereafter
existing for the Obligations, including the Trust Estate or the Trust Indenture
Estate (as such term is defined in the Trust Indenture), or (iv) file suit or
proceed to obtain or assert a claim for personal judgment against any other
Person liable for the Obligations, or make any effort at collection of the
Obligations from any such other Person, or exercise or assert any other right
or remedy to which any Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, or (v) assert or file
any claim against the assets of the Lessee or any other guarantor or other
Person liable for the Obligations, or any part thereof, before or as a
condition of enforcing the liability of the Guarantor under this Guarantee or
requiring payment of said Obligations by the guarantor hereunder, or at any
time thereafter.
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<PAGE> 4
(d) The Guarantor agrees, to the fullest extent permitted by law,
that, without limiting the generality of this Guarantee, if an Event of Default
shall have occurred and be continuing and the Lessor (or any assignee thereof
including, without limitation, the Indenture Trustee) shall be prevented by
applicable law from exercising its remedies (or any of them) under Section 15
of the Lease, the Lessor (or any assignee thereof, including, without
limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive
hereunder from the Guarantor, upon demand therefor the sums that would
otherwise have been due from the Lessee under the Lease had such remedies been
able to be exercised. The Guarantor hereby unconditionally waives, to the
fullest extent permitted by law, any requirement that, as a condition precedent
to the enforcement of the obligations of the Guarantor hereunder, the Lessee or
all or any one or more of any other guarantors of any of the Obligations be
joined as parties to any proceedings for the enforcement of any provision of
this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not
be deemed to create any right in any Person except a party and shall not be
construed in any respect to be a contract in whole or in part for the benefit
of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor
waives notice of the acceptance of this Guarantee and of the performance or
nonperformance by the Lessee, demand for payment from the Lessee or any other
Person, notice of nonpayment or failure to perform on the part of the Lessee,
diligence, presentment, protest, dishonor and, to the fullest extent permitted
by law, all other demands or notices whatsoever, other than the request for
payment hereunder and notice provided for in Section 1 hereof. The obligations
of the Guarantor shall be absolute and unconditional and shall remain in full
force and effect until satisfaction of all Obligations hereunder and, without
limiting the generality of the foregoing, to the extent not prohibited by
applicable law, shall not be released, discharged or otherwise affected by the
existence of any claims, set-off, defense or other rights that the Guarantor
may have at any time and from time to time against any Party, whether in
connection herewith or any unrelated transactions. This Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any Financial Obligation is rescinded or must otherwise be
returned by any party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect of
any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim by
the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or
in the event of any proceedings for voluntary liquidation, dissolution
or other winding-up of the Lessee, whether or not
-4-
<PAGE> 5
involving insolvency or bankruptcy proceedings, in which case the
Obligations shall be paid and performed in full before any payment in
respect of a claim by the Guarantor shall be made by or on behalf of
the Lessee.
4. AMENDMENTS, ETC. No amendment of or supplement to this
Guarantee, or waiver or modification of, or consent under, the terms hereof,
shall be effective unless evidenced by an instrument in writing signed by the
Guarantor and each Party against whom such amendment, supplement, waiver,
modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payment hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing
to such Person as Supplemental Rent for indemnities provided in Section 7 of
the Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the
Trust Indenture, the Lessor will assign, and create a security interest in,
certain of its rights hereunder to and for the benefit of the Indenture
Trustee. From and after the execution and delivery of the Trust Indenture, and
until receipt by the Guarantor of a written notice from the Indenture Trustee
to the effect that the Trust Indenture has been fully satisfied and discharged,
no remedy or election hereunder may be exercised by the Lessor or consent given
by the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents
and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing
in good standing pursuant to the laws of the State of Delaware. It has
all requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to enter
into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any
-5-
<PAGE> 6
public office or any other place, is now, or under existing law in
the future will be, required or necessary on its behalf to authorize
the execution, delivery and performance (other than as contemplated
by the Operative Documents in the case of the performance of the
Non-Financial Obligations) by it of this Guarantee, or for the
legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation
of the transactions contemplated hereby, will conflict with or result
in any breach of, or constitute a default under, or result in any
creation or imposition of any Lien upon any of its property or assets
under, any applicable laws or any indenture, mortgage, deed of trust
or other instrument or agreement to which it is a party or by which
it may be bound or to which any of its property or assets may be
subject, or its Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporation action.
This guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Guarantee brought by any party, and (b) hereby waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of
the suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Tate, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor
in New York City as from time to time may be designated by the Guarantor in
writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS.
This Guarantee (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the Guarantor
and the Parties, with respect to the subject matter hereof, (b) may be executed
in several counterparts, each of which shall be deemed an original, by all of
which together shall constitute one and the same instrument, and (c) shall be
binding upon the successors and assigns of the Guarantor shall inure to the
benefit of, and shall be enforceable by, each of the Parties to the fullest
extent permitted by applicable laws. The headings in this Guarantee are for
purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
-6-
<PAGE> 7
10. NOTICES. All requests, notices or other communications
hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and
Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to exercise, no
delay in exercising, and no course of dealing with respect to, any right or
remedy hereunder will operate as a waiver thereof; nor will any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise of such right or remedy or the exercise of any other right or remedy.
12. SURVIVAL. All representations and warranties contained herein or
made in writing by the Guarantor in connection herewith shall survive the
execution and delivery of this Guarantee regardless of any investigation made
by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by applicable
law, any provision of this Guarantee that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or any provision in any other Operative Document, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND
THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING
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<PAGE> 8
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL
BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party
any and all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
16. TERMINATION. Subject to the provisions of Section 3 hereof,
this Guarantee shall terminate upon the indefeasible payment and performance in
full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates
only to the Obligations described in Section 1 and nothing in this Guarantee
shall be deemed to constitute a guarantee of payment of any of the Secured
Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be
duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
-----------------------------------
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
------------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
------------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1995 A]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1995 A]
THIS PARTICIPATION AGREEMENT [NW 1995 A] dated as of November
15, 1995, among (i) Northwest Airlines, Inc., a corporation existing pursuant
to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the
institution listed on Schedule I hereto and identified therein as the "OWNER
PARTICIPANT" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below, (iii) the institutions listed on Schedule I and identified
therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (herein, in such latter capacity, together with any successor
owner trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other
things, certain Boeing 757-251 aircraft, including the Aircraft which has been
delivered by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a
Purchase Agreement Assignment [NW 1995 A], dated as of the date hereof
(herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee
assigns to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and
Agreement [NW 1995 A] (herein called the "CONSENT AND AGREEMENT"),
substantially in the form attached to the Purchase Agreement
Assignment (herein called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1995
A], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.1 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture and Security Agreement [NW 1995 A], dated as of the
date hereof (said Trust Indenture and Security Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
INDENTURE", such term to include, unless the context otherwise requires, the
Trust Supplement referred to below) pursuant to which the Owner Trustee issues
to each of the Loan Participants one or more secured certificates (herein
called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement
and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1995 A], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE
AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and
conditions of this Agreement, each Loan Participant agrees to finance, in part,
the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a
secured loan to the Owner Trustee (herein called a "LOAN") in the amount set
forth on Schedule II opposite the name of such Loan Participant. Each Loan
Participant shall make such Loan to the Owner Trustee on a date to be
designated pursuant to Section 2 hereof, but in no event later than November
30, 1995, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No.
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<PAGE> 3
01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on
the Delivery Date in immediately available funds in Dollars, the amount set
forth opposite such Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the
Trust Indenture to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon. The Owner Trustee agrees to pay the
Secured Certificates in installments in the amounts and on the dates provided
in the Trust Indenture together with interest thereon and all other amounts
payable with respect thereto, all as more fully provided in the Trust
Indenture.
(b) Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than November
30, 1995, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not
later than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite the Owner
Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation
of each of the Loan Participants and the Owner Participant to be made as
provided above in the payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "COMMITMENT" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee
agrees to give each Participant, the Owner Trustee and the Indenture Trustee at
least two Business Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in
the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner
Participant agrees that its releasing the amount of its Commitment for the
Aircraft to the account of the Owner Trustee in accordance with the terms of
Section 1 shall constitute, subject to satisfaction or waiver of the conditions
set forth in Section 4(a), without further act, authorization and direction by
the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA
Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture;
and
(vi) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of
the Loan Participants and the Owner Participant to participate in the payment
of Lessor's Cost and to make available the amount of its respective Commitment
are subject to the satisfaction prior to or on the Delivery Date of the
following conditions precedent, except that paragraphs (iii), (v)(5), (x)
(insofar as it relates to representations and warranties only contained in the
Tax Indemnity Agreement), (xxv) (insofar as it relates to the Loan
Participants), (xxvi) and (xxvii) shall not be a condition precedent to the
obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it
relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a
condition precedent to the obligation of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant
to Section 2 hereof (or shall have waived such notice either in
writing or as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 2 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the
Documentation Agent and the Owner Participant and shall be in full
force and effect and executed counterparts shall have been delivered
to the Loan Participants and the Owner Participant, or their
respective counsel, provided that only each Loan Participant shall
receive an executed original of its respective Secured Certificate and
provided, further, that an excerpted copy of the Purchase Agreement
shall only be delivered to and retained by the Owner Trustee (but the
Indenture Trustee shall also retain an excerpted copy of the Purchase
Agreement which may be inspected by the Owner Participant and the
Documentation Agent and their respective counsel before the Delivery
Date and subsequent to the Delivery Date may be inspected and reviewed
by the Indenture Trustee, any Loan Participant or their respective
counsel if and only if there shall occur and be continuing an Event of
Default), the chattel paper counterpart of the Lease and the Lease
Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement
shall only be delivered to Lessee and the Owner Participant and their
respective counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent, the
Owner Participant and Lessee (herein called the "ACCEPTANCE
CERTIFICATE") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement; and
(14) the Guarantee.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act, shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Documentation Agent shall have been executed and delivered by
Lessee or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified
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<PAGE> 7
by a Vice President, the Secretary or an Assistant Secretary
of Lessee, duly authorizing the sale of the Aircraft and the
lease by Lessee of the Aircraft under the Lease and the
execution, delivery and performance by Lessee of this
Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease,
the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Tax Indemnity Agreement and each
other document required to be executed and delivered by Lessee
on or before the Delivery Date in accordance with the
provisions hereof and thereof, and a certified copy of the
Certificate of Incorporation and By-Laws of the Guarantor and
a copy of resolutions of the Board of Directors of the
Guarantor, certified by a Vice President, the Secretary or an
Assistant Secretary of the Guarantor, duly authorizing the
execution, delivery and performance by the Guarantor of the
Guarantee;
(2) such other documents and evidence with
respect to Lessee, the Guarantor, the Manufacturer, the Owner
Trustee, the Owner Participant, the Indenture Trustee, and the
Loan Participants as the Documentation Agent or the Owner
Participant, or the respective counsel for the Loan
Participants or the Owner Participant, may reasonably request
in order to establish the authority of such parties to
consummate the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection
therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall
be true, and the Documentation Agent and the Owner Participant shall
have received evidence satisfactory to it to the effect that:
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft
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<PAGE> 8
on such Delivery Date, free and clear of Liens other than the
rights of Lessee under the Lease and Lease Supplement covering
the Aircraft, the mortgage and security interests created by
the Trust Indenture, the rights of the Owner Participant under
the Trust Agreement and the Trust Supplement, and Liens
permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft
in the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and
as of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, as to
New York and certain federal law matters, and Lessee's and the
Guarantor's in-house or other counsel, as to Minnesota and certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and perform
its obligations under the Lessee Documents. Lessee is a
Certificated Air Carrier. The Guarantor is a corporation duly
organized and validly existing
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<PAGE> 9
pursuant to the laws of the State of Delaware and has the
corporate power and authority to enter into and perform its
obligations under the Guarantee;
(2) the execution, delivery and performance of
the Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel, any approval or consent of any trustee or
holders of any indebtedness or obligations of Lessee or the
Guarantor, as the case may be (or that any such approval or
consent as is required has been obtained), and neither the
execution and delivery of any thereof by Lessee or the
Guarantor, as the case may be, nor the performance by Lessee
or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel,
judgment or order applicable to or binding on Lessee or the
Guarantor, as the case may be, or (B) to the knowledge of such
counsel, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Permitted Liens) upon any property of
Lessee or the Guarantor, as the case may be, under, any
indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter, by-law
or permit issued by any Minnesota or United States
governmental authority to which Lessee or the Guarantor, as
the case may be, is a party or by which Lessee or the
Guarantor, as the case may be, or its properties may be bound
or affected;
(3) neither the execution and delivery by Lessee
of the Lessee Documents or by the Guarantor of the Guarantee
nor the performance by Lessee or the Guarantor of their
respective obligations thereunder requires the consent or
approval of, or the giving of notice to, or the registration
with, or the taking of any other action in respect of, any
Federal or state governmental authority in the United States,
except for (A) the registration of the Aircraft (including the
placement on board of the owner's copy of the application for
registration of the Aircraft and, if necessary, a flying time
wire), recordations and other actions referred to in paragraph
5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the
Lessee Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
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<PAGE> 10
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft
with the Federal Aviation Administration in the name of the
Owner Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Agreement and the Trust Supplement attached thereto and made a
part thereof, with respect to such portion of the Aircraft as
is covered by the recording system established by the Federal
Aviation Administration pursuant to Section 44107 of Title 49
of the United States Code by virtue of the same constituting
an "aircraft" or an "aircraft engine" as defined in the
Federal Aviation Act, no further filing or recording of any
document (including any financing statement with respect to
the Lease under Article 9 of the Uniform Commercial Code of
Minnesota or Utah), is necessary in any applicable
jurisdiction within the United States in order (x) to
establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee or any third parties or (y) to
create and perfect the Indenture Trustee's security interest
in such portion of the Aircraft as against the Owner Trustee
or any third parties. With respect to such portion of the
Aircraft, if any, as may not be deemed to constitute an
"aircraft" or "aircraft engine" as defined in the Federal
Aviation Act, except for the filing of financing statements in
appropriate filing offices in the States of Minnesota and Utah
and such other states as may be specified in such counsel's
opinion, and for the filings of periodic continuation
statements with respect to such filings as and when required,
(x) under the federal laws of the United States and the laws
of the State of New York no filing or recording of any
document (including any financing statement) is necessary
under Article 9 of the Uniform Commercial Code in order to
establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and the laws of
the State of New York no filing or recording of any document
(including any financing statement) is necessary or advisable
under Article 9 of the Uniform Commercial Code in order to
create or
- 10 -
<PAGE> 11
perfect the Indenture Trustee's security interest in such
portion of the Aircraft as against the Owner Trustee and any
third parties in any applicable jurisdiction within the United
States; and
(6) to the best knowledge of such in-house
counsel, there are no legal or governmental proceedings
pending or threatened to which Lessee or any of its
subsidiaries is a party or to which any of the properties of
Lessee or any of its subsidiaries is subject other than those
proceedings summarized in the Guarantor's publicly filed
annual, quarterly and other reports filed with the Securities
and Exchange Commission, and proceedings which such in-house
counsel believes would not reasonably be expected to have a
material adverse effect on Lessee and its subsidiaries, taken
as a whole, or on the power or ability of Lessee to perform
its obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of
Ray, Quinney & Nebeker with respect to the opinion in paragraph (5)
above insofar as it relates to the laws of the State of Utah and (C)
upon the representations and warranties set forth herein, including,
without limitation, in Section 8 hereof, with respect to matters of
fact, and may state that no opinion is expressed as to laws other than
laws of the State of New York (in the case of such special counsel's
opinion), the State of Minnesota and the Delaware General Corporation
Law (in the case of Lessee's in-house or other counsel's opinion) and
the Federal laws of the United States. Such counsel may assume that,
except for the filings and recordations contemplated herein, there are
no filings or recordations with respect to the Aircraft, the Lease,
the Lease Supplement covering the Aircraft, the Trust Agreement, the
Trust Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be
identified in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the Manufacturer Documents and such other matters as such
parties may reasonably request.
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<PAGE> 12
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National
Association is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States, is a Citizen of the United States and has under
the laws of the State of Utah and federal banking law the
power, authority and legal right to execute, deliver and carry
out in its capacity as Owner Trustee or in its individual
capacity, as the case may be, the terms of the Owner Trustee
Documents, including the Secured Certificates;
(2) each of the Owner Trustee Documents has been
duly authorized, executed and delivered by First Security Bank
of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by
the Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to such counsel after due inquiry to which First
Security Bank of Utah, National Association in its individual
capacity or as the Owner Trustee is a party or by which it is
bound, or of any Federal or Utah law, governmental rule or
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<PAGE> 13
regulation applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the
Owner Trustee and, where appropriate, by First Security Bank
of Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal laws governing
the banking and trust powers of First Security Bank of Utah,
National Association, or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the
Trust Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated in substantial part in the State of New York, and
that the closing of a substantial portion of the transactions
contemplated by the Operative Documents occurred in the State
of New York, the choice of New York law to govern the
Participation Agreement, the Lease, and each other Operative
Document (other than the Trust Agreement) to which the Owner
Trustee or First Security Bank
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<PAGE> 14
of Utah, National Association in its individual capacity, or
both, is a party is, under the laws of the State of Utah, a
valid choice of law and should, in a properly presented case,
be honored by the courts of the State of Utah;
(8) the Owner Trustee has received from Lessee
such title to the Aircraft as Lessee had immediately prior to
the conveyance to the Owner Trustee, subject to the rights of
the Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) to the knowledge of such counsel, there are
no pending or threatened proceedings against or affecting the
Owner Trustee before any court or administrative agency,
individually or in the aggregate, which, if determined
adversely to it, would materially adversely affect the power
or ability of the Owner Trustee to perform its obligations
under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such
other matters incident to the matters covered thereby as the
Documentation Agent, the Owner Participant, the Indenture Trustee or
Lessee may reasonably request. Such opinion may state that (A) no
opinion is expressed as to laws other than the laws of the State of
Utah, the Federal laws of the United States governing the banking and
trust powers of First Security Bank of Utah, National Association, and
the Federal Aviation Act as it relates to paragraph (1) and (B) no
opinion is expressed as to the priority of security interests or as to
title to any part of the Trust Estate. Such opinion may assume (M)
the due authentication of the Secured Certificates by the Indenture
Trustee, (N) that the Operative Documents (other than the Trust
Agreement) are legal, valid and binding under the laws of the State of
New York and (O) the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and of the other Operative
Documents by each of the parties thereto other than First Security
Bank of Utah, National Association in its individual capacity and as
the Owner Trustee.
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<PAGE> 15
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from Feltman, Karesh, Major & Farbman, special
counsel for the Owner Participant, as to New York and certain Federal
law matters, and the Owner Participant's in-house counsel, as to New
York and certain Federal law matters and the Delaware General
Corporation Law, to the collective effect that:
(1) the Owner Participant is a duly incorporated
and validly existing corporation in good standing under the
laws of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents;
(2) the Owner Participant Documents have been
duly authorized, executed and delivered by the Owner
Participant and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute
legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with
their respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations;
(3) neither the execution and delivery by the
Owner Participant of the Owner Participant Documents nor the
consummation of any of the transactions by the Owner
Participant contemplated thereby (A) requires the consent or
approval of, the giving of notice to, or the registration
with, or the taking of any other action with respect to, any
governmental authority or agency of the United States or of
the State in which the principal office of the Owner
Participant is located (or any governmental subdivision
thereof) (except as shall have been duly obtained or given,
specifying the same), or (B) violates any law, governmental
rule or regulation of the United States or the State in which
the principal office of the Owner Participant is located (or
any governmental subdivision thereof);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles
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<PAGE> 16
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
or similar laws affecting the rights of creditors generally;
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee as aforesaid and the
Indenture Trustee, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) assuming the due authorization, execution and
delivery by the Owner Trustee of the Secured Certificates
being issued and delivered on the Delivery Date, and the due
authentication thereof by the Indenture Trustee, such Secured
Certificates are legal, valid and binding obligations of the
Owner Trustee, enforceable against the Owner Trustee in
accordance with their terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(7) the execution, delivery and performance of
the Owner Participant Documents by the Owner Participant does
not require any approval of stockholders of the Owner
Participant, or, to the knowledge of such counsel, any
approval or consent of any trustee or holders of any
indebtedness or obligations of the Owner Participant (or that
any such approval or consent as is required has been
obtained), and neither the execution and delivery of the Owner
Participant Documents by the Owner Participant, nor the
performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or
regulation or, to the knowledge of such counsel, judgment or
order applicable to or binding on the Owner Participant or (B)
to the knowledge of such counsel, contravenes or results in
any breach of, or constitutes any default under, or results in
the creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner
Participant under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, or any other agreement or instrument, corporate
charter or by-law or permit issued by any Delaware or United
States governmental authority to which the Owner Participant
is a party or by which it or its properties may be bound or
affected; and
(8) to the knowledge of such counsel, there are
no pending or threatened actions or proceedings against or
affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material
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<PAGE> 17
adverse effect on the Owner Participant or the ability of the
Owner Participant to perform its obligations under the Owner
Participant Documents;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's obligations in
connection with this Agreement as the Documentation Agent, the
Indenture Trustee, the Owner Trustee or Lessee may reasonably request.
Such opinion may rely upon the representations and warranties set
forth herein, including, without limitation, in Section 8 hereof, as
to matters of fact. Such opinion may state that (M) no opinion is
expressed as to laws other than the laws of the State of New York (in
the case of such special counsel's opinion), the laws of the State of
New York and the General Corporation Law of the State of Delaware (in
the case of the Owner Participant's in-house or other counsel), and
the Federal laws of the United States, and (N) no opinion is expressed
as to the priority of security interests or as to title to any part of
the Trust Estate.
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the
Lease Supplement covering the Aircraft, the Trust Indenture
and the Trust Supplement attached thereto and the Trust
Indenture, with the Trust Supplement attached thereto are in
due form for recording by and have been duly filed for
recordation with the Federal Aviation Administration in
accordance with the provisions of Section 44107 of Title 49 of
the United States Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of
all Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in
the name of the Owner Trustee and will be duly registered in
due course in the name of the Owner
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<PAGE> 18
Trustee pursuant to and in accordance with the provisions of
Sections 44102 and 44103 of Title 49 of the United States
Code;
(5) the Trust Indenture as supplemented by the
Trust Supplement creates a duly and validly perfected first
priority security interest in the Aircraft and a duly
perfected assignment of all the right, title and interest of
the Owner Trustee in, to and under the Lease as supplemented
by the Lease Supplement (insofar as such security interest
affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), subject
only to the Lease and to Liens permitted by the Lease and the
Trust Indenture, it being understood that no opinion need be
expressed as to the validity or enforceability of such
security interest under local law or as against third parties
in respect of the Aircraft when the same is outside the United
States;
(6) none of the Trust Indenture, the Trust
Agreement, the Trust Supplement, the Lease or the Lease
Supplement is required to be filed or recorded in any other
place within the United States in order to perfect the
security interest in the Aircraft and the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), under
the applicable laws of any jurisdiction within the United
States; and
(7) no authorization, approval, consent, license
or order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States, and may assume that the
Aircraft is not registered in any other country. Said opinion may
also contain a statement to the effect that such opinion is limited to
the records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the
filing of notice thereof with the Federal Aviation Administration,
such as Federal tax liens, liens arising under Section 1368(a) of
Title 29 of the United States Code and possessory artisans' liens, and
is subject to the accuracy of FAA personnel in the filing, indexing
and recording of instruments filed with the FAA and in the search for
encumbrance cross-reference index cards for the Engines. Said opinion
may also rely on the opinion obtained by such counsel from counsel for
the Aeronautical Center of the FAA, satisfactory in form and scope to
such counsel, and on past practice of the FAA which is consistent with
such Aeronautical Center counsel's opinion.
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<PAGE> 19
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould, special counsel for the Indenture Trustee, to the effect that:
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power, authority
and legal right to enter into and perform its obligations
under the Indenture Trustee Documents and, in its capacity as
Indenture Trustee, to authenticate the Secured Certificates to
be delivered on the Delivery Date;
(2) the execution, delivery and performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby and compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with the terms thereof including,
without limitation, the authentication of the Secured
Certificates to be delivered on the Delivery Date, have been
duly authorized by all necessary corporate action on the part
of State Street Bank and Trust Company, and neither the
execution and delivery thereof nor the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby nor compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with any of the terms and
provisions thereof (i) does or will contravene any law or
governmental rule or regulation of the United States governing
the banking or trust powers of State Street Bank and Trust
Company or the Commonwealth of Massachusetts or any order or
judgment known to such counsel and applicable to or binding on
State Street Bank and Trust Company, or (ii) does or will
contravene or result in any breach of, or constitute any
default under, the charter documents or by-laws of State
Street Bank and Trust Company or the provisions of any
indenture, mortgage, contract or other agreement, in each case
known to such counsel, to which State Street Bank and Trust
Company is a party or by which it or any of its properties is
or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby
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<PAGE> 20
requires or required the consent or approval of, the giving of
notice to, the registration with, the recording or filing of
any document with, or the taking of any other action in
respect of, any Federal or Massachusetts governmental
authority or agency governing the banking or trust powers of
State Street Bank and Trust Company or under any Massachusetts
law;
(4) each of the Indenture Trustee Documents has
been duly executed and delivered by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each such
agreement is the legal, valid and binding obligation of each
other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
(5) the Secured Certificates to be issued and
dated the Delivery Date have been duly authenticated and
delivered by the Indenture Trustee pursuant to the terms of
the Indenture Trustee Documents;
(6) to the knowledge of such counsel, there are
no pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration bound or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other
governmental charges ("TAXES") payable under the laws of the
Commonwealth of Massachusetts with respect to the execution of
and delivery by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, of any of the Indenture Trustee Documents (except for
taxes on any fees payable to State Street Bank and Trust
Company in its
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<PAGE> 21
individual capacity) which would not have been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts. Neither State Street Bank and Trust Company, in
its individual capacity or as Indenture Trustee, as the case
may be, the Owner Participant, the Owner Trustee, nor the
trust created by the Trust Agreement will, as a result of the
transactions contemplated thereby, be subject to any taxes
under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for taxes on any fees
payable to State Street Bank and Trust Company in its
individual capacity) which would have not been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts, and there are no taxes under the laws of the
Commonwealth of Massachusetts or any political subdivision
thereof (except for taxes on any fees payable to State Street
Bank and Trust Company in its individual capacity) upon or
with respect to the Aircraft or any Engine or any part of any
interest therein, or the purchase, ownership, delivery, lease,
sublease, possession, presence, use, operation, condition,
storage, maintenance, modification, alteration, repair, sale,
return, transfer or other disposition of the Aircraft or any
Engine which would not have been imposed if State Street Bank
and Trust Company did not have its principal place of business
in Massachusetts or did not perform its administrative duties
under the Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request.
Such opinion may state that no opinion is expressed as to laws other
than the internal substantive laws of the Commonwealth of
Massachusetts and the Federal laws of the United States. Such opinion
may further state that with respect to paragraph (4) in connection
with the opinion relating to legality, validity and binding effect of
the documents there referred to, such counsel has assumed that the
laws of the jurisdictions whose laws govern such documents are not
materially different from the internal substantive laws of the
Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from
Shearman & Sterling, special counsel for the Loan Participants, a
favorable opinion satisfactory in substance and form to the
Documentation Agent, as to such matters incident to the transactions
contemplated hereby as the Documentation Agent may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive
Vice President, any Senior Vice President or any Vice President of
Lessee, dated the Delivery Date, addressed to the Loan Participants
and the Owner Participant and certifying as to the matters stated in
paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and
(xxii) of this Section 4(a). Copies of the orders, permits, waivers,
authorizations, exemptions and approvals referred to in Section
4(a)(viii) shall have been furnished to the Loan Participants and the
Owner Participant.
(xix) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b) of this Agreement, be deemed to
have reaffirmed the representations and warranties made by it in
Section 8 of this Agreement.
(xx) [Intentionally omitted.]
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<PAGE> 22
(xxi) The Loan Participants and Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to the Documentation Agent and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event
of Loss (or event which with the passage of time would become an Event
of Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from David,
Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner
Participant, a favorable opinion, in form and substance satisfactory
to the Owner Participant, with respect to certain Federal income tax
aspects of the transaction contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions
of the Internal Revenue Code of 1986, as amended through the date
hereof, and the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States, all as in effect on the date hereof, the effect of which might
preclude the Owner Participant from obtaining any of the income tax
benefits and consequences assumed to be available to the Owner
Participant as set forth in Section 1 of the Tax Indemnity Agreement.
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<PAGE> 23
(xxviii) The Loan Participants and the Owner
Participant shall have received a favorable opinion addressed to the
Loan Participants and the Owner Participant, and reasonably
satisfactory as to scope and substance to the Documentation Agent and
the Owner Participant, from Cadwalader, Wickersham & Taft, special
counsel for the Lessee, which opinion shall state (with customary
assumptions and qualifications) that the Owner Trustee, as lessor
under the Lease, and the Indenture Trustee, as assignee of the Owner
Trustee's rights under the Lease pursuant to the Trust Indenture,
would be entitled to the benefits of 11 U.S.C. Section 1110 with
respect to the Aircraft.
(xxix) The Loan Participants shall have received an opinion,
in form and substance reasonably satisfactory to the Documentation
Agent, from B.K. Associates, Inc., independent aircraft appraisers, to
the effect that the fair market value of the Aircraft on the Delivery
Date is equal to Lessor's Cost.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner
Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such
Lease Supplement, such Trust Supplement, the Lease and the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee.
It is agreed that the obligations of Lessee (A) to sell the Aircraft to the
Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are
all subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on
or prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii),
4(a)(iii) and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall
have been duly authorized, executed and delivered by the respective
party or parties thereto (other than
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<PAGE> 24
Lessee) in the manner specified in Section 4(a)(v), shall each be
satisfactory in form and substance to Lessee, shall be in full force
and effect on the Delivery Date, and an executed counterpart of each
thereof (other than the Secured Certificates) shall have been
delivered to Lessee or its special counsel.
(iv) Lessee shall have received evidence of the approval
by the Executive Committee of the Board of Directors of the Owner
Participant, or other evidence of authority satisfactory to Lessee,
certified as of the Delivery Date by the Secretary or an Assistant
Secretary of the Owner Participant, duly authorizing or evidencing
authority for the execution, delivery and performance by the Owner
Participant of all of the Owner Participant Documents, and a copy of
the general authorizing resolutions of the boards of directors of the
Indenture Trustee and the Owner Trustee, certified as of the Delivery
Date by the Secretary or an Assistant Secretary of the Indenture
Trustee and the Owner Trustee, respectively, which authorize the
execution, delivery and performance by the Indenture Trustee of the
Indenture Trustee Documents and the Secured Certificates and by the
Owner Trustee of the Owner Trustee Documents, together with such other
documents and evidence with respect to the Indenture Trustee, the
Owner Participant and the Owner Trustee as Lessee or its special
counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and Lessee shall have received a certificate signed by the
Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively, addressed to Lessee and certifying as to the foregoing
matters with respect to the Indenture Trustee, the Owner Participant
and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
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<PAGE> 25
(viii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations by appropriate regulatory
authorities which would make it a violation of law or regulations for
Lessee to enter into any transaction contemplated by the Operative
Documents.
(ix) In the opinion of Lessee and its special counsel,
there shall have been, since the date hereof, no amendment,
modification, addition or change in or to the Internal Revenue Code of
1986, as amended through the date hereof, the regulations promulgated
under the Code (including temporary regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. CONFIDENTIALITY OF PARTICIPATION AGREEMENT,
LEASE AND GUARANTEE. The Owner Trustee, the Participants, the Administrative
Agent, the Documentation Agent, the Certificate Holders and the Indenture
Trustee shall keep this Agreement, the Lease and the Guarantee confidential and
shall not disclose, or cause to be disclosed, the same to any Person, except
(A) to prospective and permitted transferees of Owner Trustee's, a Loan
Participant's, a Certificate Holder's, the Owner Participant's or the Indenture
Trustee's interest who agree to hold such information confidential, (B) to the
Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner
Participant's or the Indenture Trustee's counsel or special counsel,
independent insurance brokers or other agents who agree to hold such
information confidential, (C) as may be required by any statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having jurisdiction over them or (D) such other Persons
as reasonably deemed necessary by Owner Trustee, the Participants, the
Certificate Holders or the Indenture Trustee in order to protect the interests
of any of such parties or for the purposes of enforcing such documents by the
Owner Trustee or the Indenture Trustee; provided, however, that any and all
disclosures of all or any part of this Agreement, the Lease and the Guarantee
which are permitted by (C) or (D) above shall be made only to the extent
necessary to meet the specific requirements or needs of the Persons to whom
such disclosures are hereby permitted, and provided further, that the Owner
Participant may publish a tombstone or other advertisement disclosing
information relating to this transaction with the prior approval of Lessee.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS.
No Certificate Holder (as defined in the Trust Indenture) shall have any
further interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the principal of and
interest on all Secured Certificates held by such holder and all other sums
payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan
Participants and, by its acceptance of a Secured Certificate, each Certificate
Holder agrees that it will look solely to the income
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<PAGE> 26
and proceeds from the Trust Indenture Estate to the extent available for
distribution to such Certificate Holder as provided in Article III of the Trust
Indenture and that neither the Owner Participant nor the Owner Trustee shall be
personally liable to the Loan Participants or any Certificate Holder for any
amounts payable under the Secured Certificates, the Trust Indenture or
hereunder, except as expressly provided in the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND
INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to
each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and
the Owner Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse
effect on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises
which, if not obtained, would not have a material adverse effect on
the consolidated business assets, properties or condition (financial
or otherwise) of Lessee and its subsidiaries taken as a whole or on
the ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of
the Lessee Documents will, on the Delivery Date, have been duly
authorized by all necessary corporate action on the part of Lessee, do
not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of Lessee except
such as have been duly obtained or by the Delivery Date will have been
duly obtained, and none of such agreements contravenes any law,
judgment, government rule, regulation or order binding on Lessee or
the certificate of incorporation or by-laws of Lessee or contravenes
the provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other
- 26 -
<PAGE> 27
action in respect of, any Federal, State or foreign government
authority or agency, except for (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee
required to be obtained on or prior to the Delivery Date, which
orders, permits, waivers, exemptions, authorizations and approvals
have been duly obtained and are, or will on the Delivery Date be in
full force and effect (other than a flying time wire, all steps to
obtain the issuance of which will have been, on the Delivery Date,
taken or caused to be taken by Lessee), (B) the registration of the
Aircraft referred to in Section 4(a)(ix)(3) and (C) such consents,
approvals, notices, registrations and other actions required by the
terms of the Lessee Documents to the extent required to be given or
obtained only after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
special counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court
or administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Trust Agreement, the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement attached thereto and made a part thereof, the Trust
Indenture with the Trust Agreement and the Trust Supplement attached
thereto and made a part thereof and the FAA Bill of Sale, (C) the
filing of financing statements (and continuation statements at
periodic intervals) with respect to the security and other interests
created by such documents under the Uniform Commercial Code of
Minnesota and Utah and such other states as may be specified in the
opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the
taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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
Owner Trustee's title to and the Indenture Trustee's security interest
in the Aircraft as against Lessee and any third parties in any
applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving
of notice or the passage of time or both would constitute an Event of
Default under the Lease) which is presently continuing;
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<PAGE> 28
(viii) Lessee is solvent and will not be rendered insolvent
by the sale of the Aircraft; after the sale of the Aircraft the
capital of Lessee will not be unreasonably small for the conduct of
the business in which Lessee is engaged or is about to engage; Lessee
has no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1994 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated
subsidiaries for the year then ended, which have been audited by
independent certified public accountants, and (b) the consolidated
balance sheets of the Guarantor and its consolidated subsidiaries as
of June 30, 1995 and the related consolidated statements of
operations, cash flows and common stockholders' equity for the
six-month period then ended, copies of which have been furnished to
the Owner Participant and each Loan Participant, fairly present the
consolidated financial condition of the Guarantor and its consolidated
subsidiaries as at such date and the results of operations and cash
flow of the Guarantor and its consolidated subsidiaries for the period
ended on such date, all in accordance with generally accepted
accounting principles consistently applied and since June 30, 1995
there has been no material adverse change in the consolidated
financial condition, cash flow or results of operations of the
Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive
good title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of
Lessee under the Lease and the Lease Supplement covering the Aircraft,
the Lien of the Trust Indenture and the beneficial interest of the
Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation G or U of the Board of Governors of
the Federal Reserve System;
(xii) Lessee is not in default in the performance of any
term or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due
and for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture
or loss of the Aircraft; and
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<PAGE> 29
(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease.
(b) General Tax Indemnity. [Reserved]
- 29 -
<PAGE> 30
(c) General Indemnity. [Reserved]
- 30 -
<PAGE> 31
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than sales, use, license or property Taxes or Taxes in the
nature thereof) (including, without limitation, capital gains taxes, minimum
taxes, income taxes collected by withholding and taxes on tax
- 31 -
<PAGE> 32
preference items), and Taxes which are capital, doing business, excess profits
or net worth taxes and interest, additions to tax, penalties, or other charges
in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Owner Participant represents that it is acquiring its interest in the
Trust Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Secured Certificates
or any similar securities for sale to, or solicited any offer to acquire any of
the same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended.
(b) Lessee represents and warrants that neither Lessee
nor anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended.
(c) Each of the Owner Participant and First Security Bank
of Utah, National Association, in its individual capacity, represents and
warrants to the other parties to this Agreement that it is, and on the Delivery
Date will be, a Citizen of the United States without making use of any voting
trust, voting powers agreement or similar arrangement. The Owner Participant
agrees, solely for the benefit of Lessee and the Loan Participants, that if (i)
it shall cease to be, or believes itself likely to cease to be, a Citizen of
the United States and (ii) the Aircraft shall or would therefore become
ineligible for registration in the name of the Owner Trustee under the Federal
Aviation Act and regulations then applicable thereunder, then the Owner
Participant shall (at its own expense and without any reimbursement or
indemnification from Lessee) promptly effect a voting trust, voting powers
agreement or other similar arrangement or take any other action as may be
necessary to prevent any deregistration and to maintain the United States
registration of the Aircraft. It is agreed that: (A) the Owner Participant
shall be liable to pay on request to each of the other parties hereto and to
each holder of a Secured Certificate for any damages suffered by any such other
party or holder as the result of the representation and warranty of the Owner
Participant in the first sentence of this Section 8(c) proving to be untrue as
of the Delivery Date; and (B) the Owner Participant shall be liable to pay on
request to Lessee, any Sublessee and the Loan Participants for any damages
which may be incurred by Lessee, any Sublessee or the Loan Participants as a
result of the Owner Participant's failure to comply with its obligations
pursuant to the second sentence of this Section 8(c). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under
the provisions of the second sentence of this Section 8(c). First Security
Bank of Utah, National Association, in its individual capacity, agrees that if
at any time an officer or responsible employee of the Corporate Trust
Department of First Security Bank of Utah, National Association, shall obtain
actual knowledge that First Security Bank of Utah, National Association, has
ceased to be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement, it will promptly resign
as Owner Trustee (if and so long as such citizenship is necessary under the
Federal Aviation Act
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<PAGE> 33
as in effect at such time or, if it is not necessary, if and so long as the
Owner Trustee's citizenship would have any material adverse effect on the Loan
Participants, Lessee or the Owner Participant), effective upon the appointment
of a successor Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or First Security Bank of Utah, National
Association, in its individual capacity, does not comply with the requirements
of this Section 8(c), the Owner Trustee, the Indenture Trustee and the
Participants hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the giving of notice or
both) shall not have occurred and be continuing under the Lease due to
non-compliance by Lessee with the registration requirements in the Lease.
(d) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that both the principal place
of business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of
Utah, National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and delivered, shall have been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such instruments
on behalf of the Owner Trustee. First Security Bank of Utah, National
Association, in its individual capacity, represents that it has not offered any
interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire the same from,
anyone, and that no officer or responsible employee of the Corporate Trust
Department of First Security Bank of Utah, National Association, has knowledge
of any such offer or solicitation except by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
for sale to, or solicited any offer to buy any Secured Certificate from, any
person or entity other than in a manner in compliance with, and which does not
require registration under, the Securities Act of 1933, as amended, or the
rules and regulations thereunder.
(f) The Owner Participant and each of the Loan
Participants agree that, at any time after the Depreciation Period, Lessee may
elect to effect a change in registration of the Aircraft, at Lessee's cost and
expense, so long as (a) the country of registry of the Aircraft is a country
listed on Exhibit A hereto (or such other country as the Owner Trustee
approves) and (b) the following conditions are met: (i) unless the country of
registry is Taiwan, the United States maintains normal diplomatic relations
with the country of registry of the Aircraft, and if the country of registry is
Taiwan, the United States maintains diplomatic relations at least as good as
those in effect on the Delivery Date; and (ii) the Owner Trustee
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<PAGE> 34
and the Indenture Trustee shall have received favorable opinions (subject to
customary exceptions) addressed to each such party, from counsel of recognized
reputation qualified in the laws of the relevant jurisdiction to the effect
that:
(A) the Owner Trustee's ownership interest in the
Aircraft shall be recognized under the laws of such jurisdiction, (B)
the obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under
the laws of such jurisdiction (or the laws of the jurisdiction to
which the laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's
right, title and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the
opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible preparations
to accomplish such filing, recording and other action shall have been
done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior
to the effective date of such change in registration), (D) it is not
necessary, solely as a consequence of such change in registration and
without giving effect to any other activity of the Owner Trustee, the
Owner Participant or the Indenture Trustee (or any Affiliate thereof),
as the case may be, for the Owner Trustee, the Owner Participant or
the Indenture Trustee to qualify to do business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction (it being
agreed that, in the event such latter opinion cannot be given in a
form satisfactory to the Owner Participant, such opinion shall be
waived if insurance reasonably satisfactory to the Owner Participant
is provided to cover such risk), and (F) (unless Lessee shall have
agreed to provide insurance covering the risk of requisition of use of
such Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws
of such jurisdiction require fair compensation by the government of
such jurisdiction payable in currency freely convertible into Dollars
for the loss of use of such Aircraft in the event of the requisition
by such government of such use.
In addition, as a condition precedent to any such change in registration,
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such change in
registration after giving effect to such change in registration and that the
new country of registry imposes aircraft maintenance standards not materially
different from those of the United States, France, Germany, Japan, the
Netherlands or the United Kingdom. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the
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<PAGE> 35
reasonable fees and expenses of counsel to the Owner Trustee, the Owner
Participant and the Indenture Trustee, and other charges in connection with any
such change in registration.
(g) The Owner Participant represents and warrants to
Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of organization, has the corporate power and authority to
carry on its business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations under the
Owner Participant Documents, and has a tangible net worth (exclusive
of goodwill) greater than $75,000,000;
(ii) the Owner Participant Documents have been duly
authorized by all necessary corporate action on the part of the Owner
Participant, do not require any approval not already obtained of
stockholders of the Owner Participant or any approval or consent not
already obtained of any trustee or holders of any indebtedness or
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and neither the execution and
delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by the Owner Participant with any
of the terms and provisions thereof will contravene any United States
Federal or state law, judgment, governmental rule, regulation or order
applicable to or binding on the Owner Participant (it being understood
that no representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter,
by-law or other agreement or instrument to which the Owner Participant
is a party or by which it or its properties may be bound or affected;
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with the terms
thereof (subject to the qualifications set forth in clause (2) of the
opinion of special counsel to the Owner Participant in Section
4(a)(xiv));
(iv) there are no pending or, to the knowledge of the
Owner Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the
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<PAGE> 36
ability of the Owner Participant to perform its obligations under the
Owner Participant Documents;
(v) upon the execution and delivery of the Trust
Indenture, the Trust Indenture Estate will be free and clear of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant; and
(vi) neither the execution and delivery of the Owner
Participant Documents nor the performance by the Owner Participant of
its obligations thereunder require the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action in respect of any Federal, state or foreign government
authority or agency except for those exceptions referred to in Section
7(a)(iii) applicable to the Owner Participant and the Owner
Participant Documents.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants
and agrees that it shall not cause or permit to exist a Lessor Lien
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate. Each of First Security Bank of Utah, National Association, in
its individual capacity, and the Owner Participant agrees that it will
promptly, at its own expense, take such action as may be necessary duly to
discharge such Lessor Lien attributable to it. Each of First Security Bank of
Utah, National Association, in its individual capacity, and the Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses (as such terms are defined in Section 7 hereof) imposed on the Trust
Estate against which Lessee is not required to indemnify the Trust Estate
pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Lien, arising as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitute gross negligence or willful misconduct,
(C) claims against the Indenture Trustee relating to Taxes or Expenses (as such
terms are defined in Section 7 hereof) which are excluded from the
indemnification provided by Section 7 pursuant to said Section 7, or (D) claims
against the Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft, the Trust
Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or
Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9
hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while
an Event of
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<PAGE> 37
Default is continuing and prior to the time that the Indenture Trustee has
received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants
and agrees as to itself: (i) that this Agreement has been duly authorized,
executed and delivered by such Loan Participant and this Agreement constitutes
a legal, valid and binding obligation of such Loan Participant enforceable
against such Loan Participant in accordance with its terms except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that
such Loan Participant is duly organized and validly existing under the laws of
its jurisdiction of organization; and (iii) that such Loan Participant has
full power, authority and legal right to execute, deliver and carry out the
terms of this Agreement.
(k) Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the Trust Indenture is
being acquired by it for investment and not with a view to resale or
distribution (it being understood that such Loan Participant may pledge or
assign as security its interest in each Secured Certificate issued to it),
provided that the disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may sell, transfer or
otherwise dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement.
(l) The Indenture Trustee, and by acceptance of the
Secured Certificates the Certificate Holders, hereby (i) agree that for
purposes of the application of Section 1111(b) of Title 11 of the United States
Code or any successor provision or any comparable provisions that the "debtor"
in any bankruptcy proceeding involving the assets held or administered pursuant
to the Trust Agreement shall be strictly limited to the Trust Estate (excluding
the Excluded Payments) and (ii) make (and hereby agree to make), with respect
to the Trust Indenture Estate, the election provided for in Section 1111(b)(2)
of Title 11 of the United States Code. It is hereby agreed by the Indenture
Trustee, and by the acceptance of the Secured Certificates the Certificate
Holders hereby agree, that if (i) all or any part of the Trust Estate becomes
the property of, or the Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision or any comparable proceeding, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Secured Certificates or to the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Owner Participant under
this Participation Agreement), to make payment on account of any amount payable
as principal or interest on the Secured Certificates and (iii) any holder(s) of
the Secured Certificates or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on account of
(ii) above, then such holder(s) or the Indenture Trustee, as the case may be,
shall promptly refund
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<PAGE> 38
to the Owner Trustee or the Owner Participant (whichever shall have made such
payment) such Excess Payment. For purposes of this Section 8(l), "EXCESS
PAYMENT" means the amount by which such payment exceeds the amount which would
have been received by the holder(s) of the Secured Certificates or the
Indenture Trustee if the Owner Trustee (in its individual capacity) or the
Owner Participant had not become subject to the recourse liability referred to
in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder
of a Secured Certificate or the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of the Owner Trustee
(in its individual capacity) or the Owner Participant under this Agreement or
the Trust Indenture (and any exhibits or annexes thereto).
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making
use of any voting trust, voting powers trust agreement or other
similar arrangement, will notify promptly all parties to this
Agreement if in its reasonable opinion its status as a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement, is likely to change and
that it will resign as Indenture Trustee as provided in Section 8.02
of the Trust Indenture if it should cease to be a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate power
and authority to enter into and perform its obligations under the
Trust Indenture and this Agreement and to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the
authentication of the Secured Certificates to be delivered on the
Delivery Date have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor
its performance of any of the terms and provisions thereof will
violate any Federal or state law or governmental rule or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its charter or by-laws or
the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it or its properties may be bound
or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and
binding obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be,
enforceable against State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, in
accordance with its terms except as limited by bankruptcy, insolvency,
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<PAGE> 39
reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors'
rights.
(n) The Owner Participant will not, directly or
indirectly, sell, assign, convey or otherwise transfer any of its right, title
or interest in and to this Agreement, the Trust Estate or the Trust Agreement
or any proceeds therefrom to any person or entity, unless (i) the proposed
transferee is a "Transferee" (as defined below), (ii) Lessee shall have (1)
received an opinion (in form and substance reasonably satisfactory to Lessee)
of counsel to the Owner Participant (who shall be reasonably satisfactory to
Lessee) to the effect that such transfer will not result in any risk of loss of
tax benefits to, or any increase in the tax liability of, Lessee and (2)
received from the Owner Participant so seeking to transfer such right, title or
interest reasonably satisfactory indemnification for any loss of tax benefits
to, and increase in the tax liability of, Lessee, and (iii) the Owner
Participant sells, assigns, conveys or otherwise transfers all of its right,
title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and the proceeds therefrom to a single entity. A "TRANSFEREE" shall
mean either (A) a bank or other financial institution with a combined capital,
surplus and undivided profits of at least $75,000,000 or a corporation whose
tangible net worth is at least $75,000,000, exclusive of goodwill, in either
case as of the proposed date of such transfer, as determined in accordance with
generally accepted accounting principles, or (B) any subsidiary of such a bank,
financial institution or corporation, provided that such bank, financial
institution or corporation furnishes to the Owner Trustee, the Loan
Participants, the Indenture Trustee and Lessee a guaranty with respect to the
Owner Participant's obligations, in the case of the Owner Trustee, under the
Trust Agreement and, in the case of the Loan Participants, the Indenture
Trustee and Lessee, the Owner Participant's obligations hereunder, including
but not limited to, under Section 8(c) and Section 8(h) hereof, in form and
substance reasonably satisfactory to Lessee, the Owner Trustee and the Majority
in Interest of Certificate Holders; provided, however, that any Transferee
shall not be an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person or a corporation or other entity controlling, controlled by or under
common control with such an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or
other similar person. Each such transfer to a Transferee shall be subject to
the conditions that (M) upon giving effect to such transfer, the Transferee is
a Citizen of the United States (without making use of a voting trust agreement,
voting powers agreement or other similar arrangement unless approved by
Lessee), and has full power and authority to enter into the transactions
contemplated hereby, (N) the Transferee has the requisite power and authority
to enter into and carry out the transactions contemplated hereby and such
Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture
Trustee and the Loan Participants an opinion of counsel in form and substance
reasonably satisfactory to such persons as to the due authorization, delivery,
legal, valid and binding effect and enforceability of the agreement or
agreements referred to in the next clause with respect to the Transferee and
any guaranty provided pursuant to the provisions of this Section 8(n) as to the
guarantor, (O) the Transferee enters into an agreement or agreements, in form
and substance reasonably satisfactory to the Owner Trustee, the Majority in
Interest of Certificate Holders, Lessee and the Indenture Trustee, whereby the
Transferee confirms that it shall be deemed a party to this Agreement and a
party to the Trust Agreement and agrees to be
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<PAGE> 40
bound by all the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in, the Owner Participant Documents (to
the extent of the participation so transferred to it) and makes the
representations and warranties made by the Owner Participant thereunder, (P)
such transfer does not affect registration of the Aircraft under the Federal
Aviation Act, or any rules or regulations promulgated thereunder or create a
relationship which would be in violation thereof or violate any provision of
the Securities Act of 1933, as amended, or any other applicable Federal or
state law, (Q) the transferor Owner Participant assumes the risk of any loss of
Interest Deductions, Amortization Deductions and MACRS Deductions and the risk
of any Inclusion Event (each as defined in the Tax Indemnity Agreement)
resulting from such transfer, (R) the transferor Owner Participant pays all of
the costs and expenses (including, without limitation, fees and expenses of
counsel) incurred in connection with such transfer, including the costs and
expenses of the Owner Trustee, the Indenture Trustee, Lessee and the Loan
Participants in connection therewith, and (S) the terms of the Operative
Documents and the Overall Transaction shall not be altered. Upon any such
transfer by the Owner Participant as above provided, the Transferee shall be
deemed the Owner Participant for all purposes hereof and of the other Operative
Documents and each reference herein to the transferor Owner Participant shall
thereafter be deemed for all purposes to be to the Transferee and the
transferor Owner Participant shall be relieved of all obligations of the
transferor Owner Participant under the Owner Participant Documents arising
after the date of such transfer except to the extent fully attributable to or
arising out of acts or events occurring prior thereto and not assumed by the
Transferee (in each case, to the extent of the participation so transferred).
If the Owner Participant intends to transfer any of its interests hereunder, it
shall give 30 days' prior written notice thereof to the Loan Participants, the
Indenture Trustee, the Owner Trustee and Lessee, specifying the name and
address of the proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x)
hereof, unless waived by the Loan Participants, Lessee shall not be entitled to
assume the Secured Certificates on the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease if on such date an Event of Default
shall have occurred and be continuing or any condition or event shall exist
which, with the passage of time or giving of notice or both, would become such
an Event of Default.
(p) First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its individual capacity,
agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code. Each Loan Participant agrees that it will not transfer any
Secured Certificate (or any part thereof) to any entity (except pursuant to
Section 2.14 of the Trust Indenture) unless such entity makes (or is deemed to
have made) a representation and warranty as of the date of transfer that either
no part of the funds to be used by it for the purchase of such Secured
Certificate (or any part thereof) constitutes assets of any "employee benefit
plan" or that such transfer will not result in a non-exempt prohibited
transaction (as defined in Section 4975 of the Code and ERISA). The Owner
Participant agrees that it will not transfer any of its right, title or
interest in and to this Agreement, the Trust Estate or the Trust Agreement or
any proceeds therefrom to any entity unless such entity makes (or is deemed to
have made) a
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<PAGE> 41
representation and warranty as of the date of transfer that either no part of
the funds to be used by it for the purchase of such right, title and interest
(or any part thereof) constitutes assets of any "employee benefit plan" or that
such transfer will not result in a prohibited transaction (as defined in
Section 4975 of the Code and ERISA).
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement, (ii) the initial purchase by the Loan
Participants of the Secured Certificates, and (iii) the initial acquisition by
the Owner Participant of its beneficial interest in the Trust Estate will
involve any prohibited transaction within the meaning of Section 406(a) of
ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation
being made in reliance upon and subject to the accuracy of the representations
contained in subparagraph (A) of this Section 8(q)).
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, and (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to the Owner Trustee under the
Purchase Agreement Assignment and not specifically reserved to Lessee under
Section 1 thereof, to bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant
severally, not jointly, represent and warrant that none of the funds made
available by the Loan Participants pursuant to Section 1 hereof will be used
for the purpose of purchasing or carrying any "margin security" as defined in
Regulation G of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the
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<PAGE> 42
meaning of Regulation X of the Board of Governors of the Federal Reserve
System, assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it
shall not cause or permit to exist a Loan Participant Lien attributable to it
with respect to the Aircraft or any other portion of the Trust Estate. Each
Loan Participant agrees that it will promptly, at its own expense, take such
other action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificate of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the
date of payment of such principal amount. For purposes of this Section 8(t),
"affected Certificate Holder" shall mean a Certificate Holder which has
asserted claims against the Owner Trustee or Lessee under or sought rights or
remedies provided by Section 7(b) hereof or Sections 11.01 or 11.02 of the
Trust Indenture.
(u) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Indenture Trustee's Liens with respect to the Trust Indenture Estate
or the Trust Estate. State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense, take such action as
may be necessary duly to discharge such Indenture Trustee's Liens. State
Street Bank and Trust Company, in its individual capacity, agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Indenture Estate or the Trust Estate resulting from such Indenture
Trustee's Liens.
(v) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, each of the other Owner Trustee Documents has been duly
executed and delivered by one of its officers who is duly authorized
to execute and deliver such instruments on behalf of First Security
Bank of Utah, National Association or the Owner Trustee, as the case
may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First
Security Bank of Utah, National Association, in its individual
capacity, arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by
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<PAGE> 43
this Agreement or any of the Operative Documents, including any such
Lien resulting from the nonpayment by First Security Bank of Utah,
National Association, in its individual capacity, of any Taxes (as
defined in Section 7(b)(i) hereof) imposed or measured by its net
income;
(iii) there has not occurred any event which constitutes
(or to the best of its knowledge would, with the passage of time or
the giving of notice or both, constitute) an Event of Default as
defined in the Trust Indenture which has been caused by or relates to
First Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the
terms and provisions thereof will violate any Federal law governing
the banking and trust powers of First Security Bank of Utah, National
Association, or Utah law or regulation or contravene or result in any
breach of the provisions of its articles of association or By-Laws or
any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both,
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with their respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association
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<PAGE> 44
for services rendered in connection with the transactions contemplated
by the Operative Documents.
(w) The Owner Participant covenants and agrees that if
(i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate
the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the
Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease,
given to Lessee written notice of Lessor's election to retain title to the
Aircraft and (iii) the Owner Trustee has failed to make, on or before the
Termination Date, any payment required to be made by the Owner Trustee pursuant
to Section 9(c) in connection with its retention of title to the Aircraft, the
Owner Participant will indemnify Lessee for any losses, damages, costs or
expenses of any kind (including any additional rents paid by Lessee and any
fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by the Owner Trustee. The Owner Participant
further covenants and agrees to pay those costs and expenses specified to be
paid by the Owner Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to purchase the Aircraft pursuant to Section 19(b) of the
Lease or (b) to terminate the Lease and purchase the Aircraft pursuant to
Section 19(d) of the Lease, then each of the parties will execute and deliver
appropriate documentation transferring all right, title and interest in the
Aircraft to Lessee (including, without limitation, such bills of sale and other
instruments and documents as Lessee shall reasonably request to evidence (on
the public record or otherwise) such transfer and the vesting of all right,
title and interest in and to the Aircraft in Lessee), and if Lessee, in
connection with such purchase, elects to assume the obligations of the Owner
Trustee pursuant to the Trust Indenture and the Secured Certificates each of
the parties will execute and deliver appropriate documentation permitting
Lessee to assume such obligations on the basis of full recourse to Lessee,
maintaining the security interest in the Aircraft created by the Trust
Indenture, releasing the Owner Participant and the Owner Trustee from all
future obligations in respect of the Secured Certificates, the Trust Indenture
and all other Operative Documents and all such other actions as are reasonably
necessary to permit such assumption by Lessee.
(y) (A) Lessee will not consolidate with or merge
into any other corporation or convey, transfer or lease substantially all of
its assets as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
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<PAGE> 45
reasonably satisfactory to such Participant containing an assumption
by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction,
no Default or Event of Default under the Lease shall have occurred and
be continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned
in clause (ii) above comply with this subparagraph (A) of Section 8(y)
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Lessee under
this Agreement with the same effect as if such successor corporation or Person
had been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its
corporate existence except as permitted by subparagraph (A) of this Section
8(y).
(z) Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing, re-recording and
refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture, the Trust Supplement and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the interest of the Owner Trustee in the Aircraft or
will furnish to the Owner Trustee and the Indenture Trustee timely notice of
the necessity of such action, together with such instruments, in execution
form, and such other information as may be required to enable them to take such
action. Lessee will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief executive office
(as such term is used in Article 9 of the Uniform Commercial Code) promptly
after making such change or in any event within the
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period of time necessary under applicable law to prevent the lapse of
perfection (absent refiling) of financing statements filed under the Operative
Documents.
(aa) Section 3 of the Lease contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations
of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and
the Owner Participant hereby agrees to make such recalculations as and when
contemplated by the Lease and subject to all the terms and conditions of the
Lease and promptly to take such further actions as may be necessary or
desirable to give effect to and to cause the Owner Trustee to give effect to
the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee, and
only with Lessee, and not for the benefit of any other party to this
Participation Agreement, that it will promptly pay in full to the Owner Trustee
any funds necessary to enable the Owner Trustee promptly to pay to Lessee the
full amount of any Reimbursement Amount owed to Lessee.
(cc) The Owner Participant hereby agrees to notify Lessee
or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York
time on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) Bankers Trust Company agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the
Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the
actual interest expected to accrue on the Secured Certificates during each
Interest Period promptly after the commencement of such Interest Period and
after the occurrence of any event that would cause such actual interest
expected to accrue during such Interest Period to change from the amount
previously notified. The Administrative Agent further agrees to perform all of
the functions that are required to be performed by the Administrative Agent
pursuant to the terms of the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that
it will pay, or cause to be paid, all costs and expenses that are for the
account of the Owner Trustee pursuant to Section 5(d) of the Lease.
(ff) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate
unless and until the transferee agrees in writing (copies of which shall be
provided by the Indenture Trustee to Lessee, the Owner Trustee and the Owner
Participant) to make the representations contemplated to be made by a Loan
Participant in this Agreement and to be bound by the terms of this Agreement
and the Trust Indenture (including, without limitation, the representations and
covenants set forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t)
hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust
Indenture).
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<PAGE> 47
(gg) [ ] agrees to act as Documentation
Agent hereunder and to perform all of the functions that are required to be
performed by the Documentation Agent hereunder.
(hh) [ ], [ ] and
[ ] each agrees to furnish to the Administrative Agent timely
information for the purpose of determining each Eurodollar Rate (as defined in
the Trust Indenture).
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN
PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of
an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner
Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized representative of the Owner Participant (the
"REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of
debt amortization and Basic Rent, Excess Amounts, Stipulated Loss Value and
Termination Value percentages. Within forty-five days of its receipt of the
Reoptimization Certificate, Lessee may demand a verification, pursuant to
Exhibit E of the Lease, of the information set forth in the Reoptimization
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Reoptimization Certificate or the determination pursuant to
such verification procedures of such information, the Owner Participant will
cause the Owner Trustee (M) to execute a Lease Supplement setting forth the
reoptimized Basic Rent, Excess Amounts, Stipulated Loss Value and Termination
Value percentages, and (N) to exchange new Secured Certificates containing
reoptimized amortization schedules for the Secured Certificates outstanding
immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of
Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to
this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will
agree to changes in the amortization schedule of the Secured Certificates, and
(N) each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided that such changes do
not (X) change the final maturity of any Secured Certificates to beyond twenty
years from the Delivery Date or (Y) reduce Basic Rent, the Stipulated Loss
Value or the Termination Value percentages below the amount necessary (together
with the Excess Amount and all other amounts simultaneously payable by Lessee)
to permit payment of all amounts payable pursuant to the Secured Certificates
or (Z) increase the weighted average lives of the Secured Certificates as of
the Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner
Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan
Participants to comply with all of the terms of the Trust Agreement (as the
same may hereafter be amended or supplemented from time to time in accordance
with the terms thereof) applicable to it; (B) agrees with
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Lessee, the Loan Participants and the Indenture Trustee not to amend,
supplement or otherwise modify any provision of the Trust Agreement in a manner
adversely affecting such party without the prior written consent of such party;
and (C) agrees with Lessee and the Loan Participants not to revoke the Trust
Agreement without the prior written consent of Lessee and the Loan
Participants. Notwithstanding the foregoing, so long as the Lease has not been
terminated, the Indenture Trustee and the Owner Trustee hereby agree for the
benefit of Lessee that without the consent of Lessee they will not (i) amend or
modify Article III or IX of the Trust Indenture, (ii) make any amendment which
will affect the stated principal amount or interest on the Secured Certificates
or (iii) amend or modify the provisions of Sections 2.05 or 10.05 of the Trust
Indenture. The Indenture Trustee and the Owner Trustee agree to promptly
furnish to Lessee copies of any supplement, amendment, waiver or modification
of any of the Operative Documents to which Lessee is not a party.
Notwithstanding anything to the contrary contained herein, in the Trust
Agreement or in any other Operative Document, the Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without the
prior written consent of Lessee. Each Loan Participant agrees that it will not
take any action in respect of the Trust Indenture Estate except through the
Indenture Trustee pursuant to the Trust Indenture or as otherwise permitted by
the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee
covenants and agrees with each of the Loan Participants, the Owner Participant,
the Indenture Trustee and the Owner Trustee, in its capacity as such and in its
individual capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as
the Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements,
all amendments to the Lease, the Trust Indenture, all supplements and
amendments to the Trust Indenture and this Agreement 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. Upon the execution
and delivery of the FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Bill of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and
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<PAGE> 49
the Trust Supplement attached, and third, the Trust Indenture, with the Trust
Supplement attached.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee will be the lessee thereof,
and each party hereto agrees to characterize the Lease as a lease for Federal
income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set
forth in the Trust Indenture. Unless the context otherwise requires, any
reference herein to any of the Operative Documents refers to such document as
it may be amended from time to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this
Section 13(b). Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 13(b), 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 telecopier numbers) as follows: (A) if to Lessee, the Owner
Trustee, the Loan Participants, the Administrative Agent, the Documentation
Agent, the Indenture Trustee or the Owner Participant, to the respective
addresses set forth below the signatures of such parties at the foot of this
Agreement, or (B) if to a subsequent Owner Participant, addressed to such
subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action or
proceeding is
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brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document or the subject matter of any thereof
or any of the transactions contemplated hereby or thereby may not be enforced
in or by such courts. Lessee hereby generally consents to service of process
at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of Lessee in New York City as from
time to time may be designated by Lessee in writing to the Owner Participant,
the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to
any Taxes (as defined in Section 7(b) hereof) for which it is indemnified
pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should
request that the situs of the trust be moved to another state in the United
States from the state in which it is then located, the situs of the trust may
be moved with the written consent of the Owner Participant (which consent shall
not be unreasonably withheld) and the Owner Participant will take whatever
action may be reasonably necessary to accomplish such removal; provided that
(A) Lessee shall provide such additional tax indemnification as the Owner
Participant and the Loan Participants may reasonably request, (B) the rights
and obligations under the Operative Documents of the Owner Participant and the
Loan Participants shall not be altered as a result of the taking of such
action, (C) the lien of the Trust Indenture on the Trust Indenture Estate shall
not be adversely affected by such action, and (D) the Owner Participant and the
Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner
Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to the Loan Participants and to the Owner
Participant covering the matters described in Section 4(a)(xiii) hereof and
such other matters as the Loan Participants and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner
Participant, the Indenture Trustee and the Loan Participants on a net after-tax
basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred
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by the Owner Trustee, the Owner Participant, the Indenture Trustee and the Loan
Participants in connection with such change of situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan
Participants and the Owner Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner
Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which
by its terms is not to be unreasonably withheld by the Owner Trustee, as
Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's,
the Documentation Agent's and the Owner Participant's obligations under any and
all thereof, shall survive the making available of the respective Commitments
by the Loan Participants and the Owner Participant, the delivery or return of
the Aircraft, the transfer of any interest of the Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Loan Participant in any Secured Certificate or the Trust Indenture Estate
and the expiration or other termination of this Agreement or any other
Operative Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, Lessee and its successors and
assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, the Administrative Agent
and the Documentation Agent. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the
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Trust Estate and establishing the existence of rights and remedies which can be
exercised and enforced against the Trust Estate. Therefore, anything contained
in this Agreement or such other agreements to the contrary notwithstanding
(except for any express provisions that the Owner Trustee is responsible for in
its individual capacity), no recourse shall be had with respect to this
Agreement or such other agreements against the Owner Trustee in its individual
capacity or against any institution or person which becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Agreement or such
other agreements of rights and remedies against the Trust Estate. The
foregoing provisions of this Section 15(d) shall survive the termination of
this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the
Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as
assignee of such Owner Trustee's rights under the Lease pursuant to the Trust
Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the
event of any reorganization of Lessee under such Section.
SECTION 16. EXPENSES. (a) Invoices and Payment. Each
of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and
the Loan Participants shall promptly submit to the Owner Trustee and Lessee for
their prompt approval (which shall not be unreasonably withheld) copies of
invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than January 15, 1996). The Owner Participant agrees to transfer to the
Owner Trustee promptly but in any event no later than January 31, 1996 such
amount as shall be necessary in order to enable the Owner Trustee to pay
Transaction Expenses. To the extent of funds received by it, the Owner Trustee
agrees to pay all invoices of Transaction Expenses that have been approved by
it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to
the extent that Transaction Expenses exceed 1.5% of Lessor's Cost, Lessee at
its sole option shall have the right to pay directly any or all Transaction
Expenses which are in excess of 1.5% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the
transaction contemplated by this Participation Agreement fails to close as a
result of the Owner Participant's failure to negotiate in good faith or to
comply with the terms and conditions upon which its participation in the
transaction was predicated, the Owner Participant will be responsible for all
of its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default shall have occurred
and be continuing, Lessee shall have the right to refinance all (but not less
than all) of the Secured Certificates no
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more than three times by giving written notice to the Owner Participant and the
Owner Trustee that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refinancing operation (including the terms of any debt to be
issued in connection with such refinancing); provided that no such refinancing
shall require an increase in the amount of the Owner Participant's investment
in the beneficial ownership of the Aircraft or in the principal amount of the
Secured Certificates.
The Owner Participant understands and agrees that the debt to
be issued in connection with such refinancing may be issued in several classes,
each of which may have a different interest rate, final maturity date and
priority of payment. The Owner Participant further understands and agrees that
one or more of such classes may be entitled to the benefit of a liquidity
facility, which will entitle the Indenture Trustee (or a collateral agent
therefor) to make drawings thereunder to pay interest on a current basis on the
enhanced classes of debt for up to three semi-annual interest payments
following a payment default with respect to such enhanced classes. In such a
structure the Owner Participant agrees that drawings of the entire amount
available under the liquidity facility for any class (and the deposit of the
proceeds thereof into a cash collateral account) will be required in the event
of a ratings decline with respect to the related liquidity provider or in the
event that the liquidity facility is not extended or replaced prior to its
scheduled expiration. Amounts owed to the liquidity facility provider for both
drawings and interest thereon will generally be senior to all Loan Participant
claims. The Owner Participant understands and agrees that in any refinancing
operation it will agree to these and any other conditions which do not impair
the customary rights of an owner participant in a leveraged lease transaction.
Upon such agreement:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth (i) the proposed date on which the outstanding
Secured Certificates will be redeemed, any new debt will be issued and the
other aspects of such refinancing will be consummated (such date, the
"REFINANCING DATE") and (ii) the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
decreased and (D) the proposed revised schedules of Basic Rent percentages,
debt amortization, Stipulated Loss Value percentages and Termination Value
percentages. The Refinancing Certificate shall not provide for a debt/equity
ratio of more than 4:1. Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification pursuant to Exhibit E to the
Lease of the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such verification
procedures), as to the debt/equity ratio, the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date and the revised Basic Rent
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percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages (such information, whether as set forth or as so
determined, the "REFINANCING INFORMATION") the appropriate parties will take
the actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate
and/or the Aircraft and its resale to the Owner Trustee) with the institution
or institutions to be named therein providing for (i) the issuance and sale by
the Owner Trustee to such institution or institutions on the Refinancing Date
of debt securities in an aggregate principal amount specified in the
Refinancing Information which amount shall be equal to the aggregate principal
amount of all Secured Certificates outstanding on the Refinancing Date (such
debt securities, the "NEW DEBT") except that the principal amount of New Debt
may exceed the principal amount of all outstanding Secured Certificates in
connection with the first refinancing under this Section 17, (ii) the
application of the proceeds of the sale of the New Debt to the redemption of
all such Secured Certificates on the Refinancing Date and (iii) the payment of
the excess, if any, of such proceeds over the amounts necessary to effect such
redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to
provide for the securing thereunder of the New Debt in like manner as the
Secured Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses
(other than those of Lessee) of such refinancing (including, but not limited
to, the fees, expenses and disbursements of counsel and any placement or
underwriting fees) and such expenses shall be treated as Transaction Expenses;
and
(6) when calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the Lease
or such assumptions are the subject of the recalculations being conducted by
the Owner Participant), and (B) minimizes the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (A). All adjustments to
Basic Rent shall also be in compliance with the tests of Sections 4.02(5),
4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc.
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75-28 Section 4.08(1) shall be applied on a prospective basis from the date of
such adjustment) and no such adjustment shall cause the Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning of Section
467 of the Code.
(b) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes
each of the Administrative Agent and the Documentation Agent (each, an "AGENT")
to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the Trust Indenture as are delegated to
such Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. Each Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the Trust Indenture. As to any matters not expressly provided for hereby
or by the Trust Indenture, each Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority in Interest of Certificate Holders (as
defined in the Trust Indenture), and such instructions shall be binding upon
all Loan Participants and all Certificate Holders; provided,however, that such
Agent shall not be required to take any action that exposes such Agent to
personal liability or that is contrary to this Agreement, the Trust Indenture
or applicable law. Each Agent agrees to give to each Loan Participant prompt
notice of each notice given to it by the Owner Trustee pursuant to the terms of
this Agreement or the Trust Indenture.
(b) No Agent nor such Agent's directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the Trust Indenture,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (i) may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Loan Participant and
shall not be responsible to any Loan Participant for any statements, warranties
or representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Operative Documents on the part of any party thereto or to
inspect the property (including the books and records) of any such party; (iv)
shall not be responsible to any Loan Participant for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, the Operative Documents or
any other instrument or document furnished pursuant thereto; and (v) shall
incur no liability under or in respect of the Operative Documents by acting
upon any notice, consent, certificate or other instrument or writing
- 55 -
<PAGE> 56
(which may be by telecopier, telegram or telex) believed by it to be genuine
and signed or sent by the proper party or parties.
(c) With respect to their Loans and any Secured
Certificates issued to them, [______________] and [______________] shall have
the same rights and powers under the Operative Documents as any other Loan
Participant and may exercise the same as though they were not Agents and the
term "Loan Participant" or "Certificate Holder" shall, unless otherwise
expressly indicated, include [______] and [______] in their individual capacity.
[______] and its Affiliates and [______] and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, the
Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and
any Person who may do business with or own securities of any of such Persons,
all as if [______] and [______] were not Agents and without any duty to account
therefor to the Loan Participants.
(d) Each Loan Participant acknowledges that it has,
independently and without reliance upon the Agents or any other Loan
Participant and based on the financial statements referred to in Section
7(a)(ix) of this Agreement and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Loan Participant also acknowledges that it will,
independently and without reliance upon the Agents or any other Loan
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a
successor agent as provided below, any Agent may resign at any time by giving
written notice thereof to the Loan Participants, the Owner Trustee and Lessee
and may be removed at any time with or without cause by the Majority in
Interest of Certificate Holders (as defined in the Trust Indenture). Upon any
such resignation or removal, the Majority in Interest of Certificate Holders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority in Interest of Certificate Holders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Trust Indenture. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 18 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the Trust Indenture.
Notwithstanding anything contrary herein, the Administrative Agent and the
Documentation Agent hereunder and under the Trust Indenture
- 56 -
<PAGE> 57
shall be the same institution, respectively, as the Administrative Agent and
the Documentation Agent under (and as defined in) the Credit Agreement.
- 57 -
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
---------------------------------------
Title:
Address: U.S. Mail
---------
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
-----------------
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[_______________________________],
Owner Participant
By:
---------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 59
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
---------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
---------------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 60
[INSERT BRIDGE LENDERS]
- Signature Page -
<PAGE> 61
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
<PAGE> 62
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1995 A
Owner Trustee: First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1995 A
SCHEDULE I - PAGE 2
<PAGE> 63
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ----------------- -------------
<S> <C>
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
Owner Participant:
- -----------------
<S> <C>
-------------
Total Commitments: 100%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 65
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1995 A]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1995 A]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 A],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [_________________________], a Delaware
corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the
Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each
of the two separate Pass Through Trust Agreements (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as subordination agent and trustee (in such
capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as
defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original
Indenture and the Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[____________________________________________________________________________],
as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and
the Indenture Trustee entered into the Participation Agreement [NW 1995 A],
dated as of November 15, 1995 (the "ORIGINAL PARTICIPATION AGREEMENT"),
providing for the sale and lease of one Boeing 757-251 aircraft (the
"AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1995 A], dated as of
November 15, 1995, as supplemented by Trust Agreement and Indenture Supplement
[NW 1995 A], dated November
<PAGE> 2
21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner
Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15,
1995, as supplemented by Lease Supplement No. 1 [NW 1995 A] dated November 21,
1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set
forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to
lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1995 A], dated as of November 15, 1995 (the
"TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1995 A] relating to the Aircraft, dated as of November
15, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1995 A] dated as of November 15, 1995 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and Owner Trustee pursuant to such Section 17 of its
desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1995 A], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1995 A], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue
-2-
<PAGE> 3
new secured certificates substantially in the form set forth in Section 2.01
thereof (the "REFINANCING SECURED CERTIFICATES") in two series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1995 A], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1995 A] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), two separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into two revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date hereof (the
"INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
-3-
<PAGE> 4
SECTION 1. AMENDMENT OF THIRD WHEREAS CLAUSE OF THE ORIGINAL
PARTICIPATION AGREEMENT. The Third "Whereas" Clause of the Original
Participation Agreement is hereby amended by deleting "1.1" therefrom and
inserting "1.01" in lieu thereof.
SECTION 2. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 3. AMENDMENT OF SECTION 5 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 5 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 4. AMENDMENT OF SECTION 7(a)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(a)(iii) of the Original Participation
Agreement is hereby amended by deleting "4(a)(ix)(3)" therefrom and substituting
therefor "4(a)(ix)(4)".
SECTION 5. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1), (3) and (10) thereof, (ii) deleting clauses (2)
and (4) thereof in their entirety and substituting therefor "Intentionally
Omitted", (iii) deleting the words "any Loan Participant or any Certificate
Holder" from clause (9) thereof and substituting therefor the words "the
Indenture Trustee or the Trust Indenture Estate", (iv) deleting clause (11)(B)
thereof in its entirety, (v) deleting "(C)" from clause (11) thereof and
substituting therefor "(B)", and (vi) deleting the parenthetical clause and the
last proviso from clause (13) thereof.
SECTION 6. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by deleting the second sentence of the last
paragraph thereof.
SECTION 7. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation
Agreement is hereby amended by (i) deleting the second and third sentences
thereof and (ii) deleting the words "other than a Loan Participant" in the first
sentence thereof.
SECTION 8. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement
is hereby amended by (i) deleting the word "and" between the words "expenses"
and "Transaction Expenses" in the second parenthetical phrase of the first
paragraph thereof and substituting a comma therefor, (ii) inserting after the
phrase "to Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) adding the words and punctuation "and, only in the case of an Indemnitee
who is the Subordination Agent, the Intercreditor Agreement and the Liquidity
Facilities" after the words "in respect
-4-
<PAGE> 5
thereof" in the first clause (A) thereof, (iv) adding the words and punctuation
"the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust
Agreements" after the words "Operative Documents" in the second clause (A)
thereof and in the second clause (B) thereof, and (v) deleting the words and
punctuation "(as defined in Section 7(b) hereof)" from the second clause (E)
thereof.
SECTION 9. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended by deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof.
SECTION 10. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is
hereby amended by deleting the words and punctuation "(as such terms are defined
in Section 7 hereof)" from the fourth sentence thereof.
SECTION 11. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is
hereby amended by deleting the words and punctuation "(as such terms are defined
in Section 7 hereof)" from clause (C) thereof.
SECTION 12. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "the Loan
Participants," each time they appear in the second sentence thereof, (ii)
deleting the words "the Majority in Interest of the Certificate Holders" from
the first proviso of the second sentence thereof and substituting therefor the
words "Indenture Trustee"; (iii) deleting the "," between the words "Owner
Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof
and substituting therefor "and", (iv) deleting the words "and the Loan
Participants" each time they appear in the third sentence thereof other than in
clause (R) thereof, (v) deleting the words and punctuation "the Majority in
Interest of the Certificate Holders," from clause (O) of the third sentence
thereof, and (vi) deleting the words and punctuation "to the Loan Participants,"
from the fifth sentence thereof.
SECTION 13. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the word "Each" in the first sentence thereof
and substituting therefor the words "The Owner" and (ii) adding a new sentence
to the end thereof to read as follows: "The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of
the initial supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust
Agreement without the prior written consent of the Owner Participant.".
SECTION 14. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is
hereby amended by deleting the fourth and fifth sentences thereof.
-5-
<PAGE> 6
SECTION 15. AMENDMENT OF SECTION 8(v)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(v)(ii) of the Original Participation
Agreement is hereby amended by deleting the words and punctuation "(as defined
in Section 7(b)(i) hereof)" therefrom.
SECTION 16. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by (i) deleting the words "each Loan Participant" therefrom and
(ii) adding a new second paragraph thereto at the end thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section 1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section 1110.
SECTION 17. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the words "each" the first time it appears in
Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii)
deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Indenture Trustee and the Owner", (iii)
inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the
Indenture Trustee and the Owner Participant".
SECTION 18. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 19. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 20. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 21. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
-6-
<PAGE> 7
SECTION 22. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (B) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (C) thereof and substituting
therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05"
from clause (iii) of the second sentence thereof.
SECTION 23. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 24. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "(as defined in Section
7(b) hereof)" from the first clause thereof, (ii) deleting the words "Loan
Participants" each time they appear in clauses (A), (B), and (D) thereof and
substituting therefor the words "Indenture Trustee", (iii) deleting the "," both
times it appears between the words "Owner Participant" and "the Indenture
Trustee" in clause (E) thereof and substituting therefor "and", and (iv)
deleting the words "and the Loan Participants" both times they appear in clause
(E) thereof.
SECTION 25. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as
Lessor, under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor.
SECTION 26. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 27. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
-7-
<PAGE> 8
SECTION 28. MISCELLANEOUS. (a) Each of the parties hereto
agrees that the transactions contemplated hereby shall constitute one of the
three refinancing operations permitted in Section 17 of the Participation
Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement, and (iii) the Purchaser has no liability or obligation
under any covenant in any of such agreements for any period prior to the
Closing.
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: ____________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its
individual capacity,
except as expressly
provided herein, but
solely as Owner
Trustee
By: ____________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY,
as Pass Through
Trustee under each
of the Pass Through
Trust Agreements
By: ____________________
Name:
Title:
[_________________________],
as Owner Participant
By: ____________________
Name:
Title:
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<PAGE> 10
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
By: _______________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By: _______________________________
Name:
Title:
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<PAGE> 11
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
<PAGE> 1
REFUNDING AGREEMENT
[NW 1995 A]
This REFUNDING AGREEMENT [NW 1995 A], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[__________], a [__________] corporation (the "OWNER PARTICIPANT"),
(iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
[Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1995 A], dated as of November 15, 1995 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
<PAGE> 2
Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, as
supplemented by Trust Agreement and Indenture Supplement [NW 1995 A], dated
November 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which
the Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995,
as supplemented by Lease Supplement No. 1 [NW 1995 A] dated November 21, 1995
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1995 A], dated as of November 15, 1995 (the "TRUST
AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to
hold the Trust Estate defined in Section 1.01 thereof for the benefit of the
Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995
(the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 A]
dated as of November 15, 1995 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in two series;
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1995 A], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1995 A], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1995 A] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, two separate grantor
trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS
THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by the
Pass Through Trustee by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
two revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
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<PAGE> 4
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Lessee shall pay to
the Owner Trustee, as a payment of Interim Rent under the Lease, an
amount equal to the unpaid interest on the Original Secured
Certificates accrued up to but not including the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders under the Original Indenture and the Original Participation
Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture; and
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the maturity and aggregate principal amount, bearing
the interest rate and for the purchase price set forth on Schedule II
hereto opposite the name of such Pass Through Trust.
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<PAGE> 5
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
any amount in respect of the prepayment of the Original Secured Certificates,
the Original Secured Certificates shall remain outstanding and in full force and
effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall
not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated as
of the date hereof, among the Lessee, the Guarantor and the several underwriters
(the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject
to the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such Pass Through Trust on Schedule II hereto, which Refinancing
Secured Certificates in the aggregate shall be in the principal amounts set
forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through
Trust Agreements and of the other Operative Documents, all such Refinancing
Secured Certificates shall be dated and authenticated as of the Refinancing Date
and shall bear interest therefrom, shall be registered in such names as shall be
specified by the Subordination Agent and shall be paid in the manner and at such
places as are set forth in the Indenture.
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<PAGE> 6
SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through
Trustee to make the payment described in Section l(a)(ii) and the obligations of
the Owner Trustee and the Owner Participant to make the payments and participate
in the transactions contemplated by this Agreement on the Refinancing Date are
subject to the fulfillment, prior to or on the Refinancing Date, of the
following conditions precedent (except that paragraphs (a), (f) and (j) shall
not be conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraph (r) shall not be a condition
precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. 1;
(5) the Trust Agreement Amendment No. 1;
(6) each of the Pass Through Trust Agreements;
(7) the Intercreditor Agreement; and
(8) the Liquidity Facility for each of the Class A and Class B
Trusts.
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1 and any other documents to be
executed on behalf of the Lessee or the Guarantor (as the case may
be) in connection with the
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<PAGE> 7
transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Trust Agreement
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and
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<PAGE> 8
warranties (other than those contained in clause (v) of Section
8(d)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1 and any other documents to be executed on
behalf of the Owner Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
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<PAGE> 9
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal
department, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
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<PAGE> 10
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Feltman, Karesh, Major & Farbman,
special counsel for the Owner Participant, and an opinion addressed to it from
corporate counsel to the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel to the Liquidity Provider, and in house German counsel to
the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and
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<PAGE> 11
the PA Amendment No. 1 are subject to the receipt by the Lessee and the
Guarantor of (i) each opinion referred to in subsections (j) through (n) of
Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter
from counsel rendering such opinion authorizing the Lessee and the Guarantor to
rely on such opinion as if it were addressed to the Lessee and the Guarantor,
(ii) each certificate referred to in subsections (e) through (g) of Section 3,
(iii) executed counterparts or conformed copies of the TIA Amendment No. 1, and
(iv) such other documents and evidence with respect to each other party hereto
as the Lessee, the Guarantor or their counsel may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
(b) The respective obligations of each of the Lessee, the Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee to
participate in the transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Refinancing Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee and the Indenture Trustee to execute and deliver the
Indenture, and the Owner Trustee and the Indenture Trustee, by execution and
delivery hereof, agree to execute and deliver the Indenture. The Lessee and the
Guarantor, by execution and delivery hereof, consent to such execution and
delivery of the Indenture. The Indenture shall be effective as of the
Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1,
and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to
execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall
be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner
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Participant, by execution and delivery hereof, requests, authorizes and directs
the Owner Trustee and the Indenture Trustee to execute and deliver the PA
Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution
and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon
the execution and delivery of the PA Amendment No. 1 by each of the parties
thereto, the Original Participation Agreement shall be amended as set forth in
the PA Amendment No. 1, and the Subordination Agent and each Pass Through
Trustee shall be a party thereto from and after the Refinancing Date to the
extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be
effective as of the Refinancing Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all
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necessary corporate action on the part of the Lessee or the Guarantor,
do not require any stockholder approval, or approval or consent of any
trustee or holder of any material indebtedness or material obligations
of the Lessee or the Guarantor, except such as have been duly obtained
and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on the Lessee or the
Guarantor (as the case may be) or the certificate of incorporation or
by-laws of the Lessee or the Guarantor (as the case may be), or
contravene the provisions of, or constitute a default under, or result
in the creation of any Lien (other than Permitted Liens) upon the
property of the Lessee or the Guarantor (as the case may be) under, any
indenture, mortgage, contract or other agreement to which the Lessee or
the Guarantor (as the case may be) is a party or by which it may be
bound or affected which contravention, default or Lien, individually or
in the aggregate, would be reasonably likely to have a material adverse
effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
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(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease and the Lease Amendment No. 1 (to
the extent the Lease constitutes chattel paper), and the filing of
continuation statements at periodic intervals with respect to the
Uniform Commercial Code financing statements in effect on the
Refinancing Date covering the security interests created by the
Original Indenture or describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
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(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the
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Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Trust Agreement, has the corporate
power and authority to carry out the terms of the Trust Agreement, and
has, or had on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust Agreement by the
Owner Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the corporate
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1 and each other Operative Document
(other than the Trust Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, and the Lease, when the
Lease Amendment No. 1 shall have been entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee,
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in its individual capacity or as Owner Trustee, as the case may be,
enforceable against it in its individual capacity or as Owner Trustee,
as the case may be, in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Trust Agreement, the Original Indenture, the Indenture, the
Original Lease, the Lease Amendment No. 1, the Refinancing Secured
Certificates or any other Operative Document to which it is a party,
nor the consummation by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, 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 it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any provision
of, or constitutes or will constitute a default under, or results or
will result in any breach of, or results or will result in the creation
of any Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any
law, governmental rule or regulation of the United States of America or
the State of Utah governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of,
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or the carrying out by, the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement, the Participation
Agreement, the Indenture, the Lease, the Refinancing Secured
Certificates, or any other Operative Document to which it is a party or
by which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings, and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings, and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were
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not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of [__________] and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has, or had on the
respective dates of execution thereof, as the case may be, the
corporate power and authority to enter into and to perform its
obligations under this Agreement, the Original Participation Agreement,
the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No.
1, and the TIA Amendment No. 1; this Agreement has been duly
authorized, executed and delivered by it; and this Agreement
constitutes, and the
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Participation Agreement when the PA Amendment No. 1 shall have been
entered into, and the Tax Indemnity Agreement when the TIA Amendment
No. 1 shall have been entered into, will constitute, the legal, valid
and binding obligations of the Owner Participant enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights
of creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1 or any other Operative Document to which it is a party
nor (B) compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Owner Participant
(it being understood that no representation or warranty is made with
respect to laws, rules or regulations relating to aviation or to the
nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by it of this Agreement, the PA
Amendment No. 1 and the TIA Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person; the Owner Participant's interest in
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the Trust Estate and the Trust Agreement was acquired for its own
account and was purchased for investment and not with a view to any
resale or distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings, and
(E) the existence of which does not result in actual interruption in
the receipt and distribution by the Indenture Trustee in accordance
with the Indenture of Rent assigned to the Indenture Trustee for the
benefit of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the full corporate power, authority and legal
right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 and this Agreement and
to perform its obligations under this Agreement, the Pass Through Trust
Agreements, the Intercreditor Agreement and the Participation
Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
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affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under
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<PAGE> 23
subpart E, Part I of Subchapter J of the Code, such trusts will not be
subject to any Taxes imposed by the Commonwealth of Massachusetts or
any political subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement will constitute, the legal, valid and binding
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<PAGE> 24
obligations of the Subordination Agent enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
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<PAGE> 25
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States mail, with proper postage for first-class registered or
certified mail prepaid, or when delivered personally or, if promptly confirmed
by mail as provided above, when dispatched by facsimile or other written
telecommunication, addressed, if to the Lessee, the Guarantor, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, at their respective addresses or facsimile
numbers set forth below the signatures of such parties at the foot of this
Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for
the Underwriters, and
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<PAGE> 26
(E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original
Loan Participants;
(2) the reasonable fees, expenses and disbursements of Feltman,
Karesh, Major & Farbman, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(5) underwriting fees and commissions;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section
11 and the agreements referred to herein are not consummated, the Lessee shall
bear and pay all costs, expenses and fees referred to in this Section 11;
provided that if the transactions fail to be consummated as a result of the
failure of the Owner Participant to act in good faith in consummating the
transactions, or to otherwise comply with the terms hereof, the Owner
Participant shall bear and pay its own fees, costs and expenses (including,
without limitation, the fees and expenses of its special counsel) and the Lessee
shall pay all other reasonable fees, costs and expenses as aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each
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<PAGE> 27
counterpart of this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this Agreement, but all
of such counterparts together shall constitute one instrument. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
party against which the enforcement of the termination, amendment, supplement,
waiver or modification is sought; and no such termination, amendment,
supplement, waiver or modification shall be effective unless a signed copy
thereof shall have been delivered to each party hereto. The index preceding this
Agreement and the headings of the various Sections of this Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the Lessee and, subject to the terms of
the Participation Agreement, its successors and permitted assigns, the
Guarantor, the Pass Through Trustee and its successors as Pass Through Trustee
(and any additional trustee appointed) under any of the Pass Through Trust
Agreements, the Indenture Trustee and its successors as Indenture Trustee (and
any additional Indenture Trustee appointed) under the Indenture, the
Subordination Agent and its successors as Subordination Agent under the
Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee
under the Trust Agreement, and the Owner Participant, and, subject to the
provisions of the Participation Agreement, its successors and permitted assigns.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 29
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 30
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Owner Trustee
By: __________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 31
[__________],
Owner Participant
By: ____________________________________
Name:
Title:
Address:
Attention:
Facsimile:
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<PAGE> 32
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as Pass
Through Trustee
By: _____________________________________________
Title:
Address: Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 33
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, except
as otherwise provided herein, but solely
as Subordination Agent
By: _____________________________________________
Title:
Address: c/o State Street Bank
and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Indenture Trustee
By:_____________________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 35
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
<PAGE> 36
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- ------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1995 B]
This TRUST AGREEMENT [NW 1995 B] dated as of December 13, 1995
between [_____________________], a [___________] corporation (the "ORIGINAL
OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association in its individual capacity (in such individual
capacity, "FSBU") and otherwise not in its individual capacity but solely as
trustee hereunder (herein in such capacity with its permitted successors and
assigns called the "OWNER TRUSTEE");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context
shall otherwise require and except as contained in this Section 1.01, the
capitalized terms used herein shall have the respective meanings assigned
thereto in the Lease (as hereinafter defined) for all purposes hereof. All
definitions contained in this Section 1.01 shall be equally applicable to both
the singular and plural forms of the terms defined. For all purposes of this
Trust Agreement the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in
the Trust Indenture.
"Indenture Event of Default" has the meaning which the term
"Event of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1995 B], to be
dated as of the date hereof, and to be entered into by the Owner Trustee and
Lessee concurrently with the execution and delivery of this Trust Agreement, as
said Lease Agreement may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Trust Agreement. The term "Lease" shall also include
each Lease Supplement from time to time entered into pursuant to the terms of
the Lease.
"Lease Event of Default" has the meaning which the term "Event
of Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota
corporation, and its permitted successors and assigns.
<PAGE> 2
"Owner Participant" means the Original Owner Participant and
each Subsequent Owner Participant to the extent that the same shall, at the
relevant time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner
Participant, the percentage of its undivided beneficial interest in the Trust
Estate created by this Trust Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such
term in the Lease.
"Replacement Airframe" has the meaning ascribed to such term in
the Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in
the Trust Indenture.
"Subsequent Owner Participant" means any corporation to which
the Original Owner Participant or any transferee from the Original Owner
Participant or any Subsequent Owner Participant shall have transferred at any
time after the Delivery Date all of the undivided right, title and interest
originally held by the Original Owner Participant in this Trust Agreement, the
Trust Estate and the Participation Agreement, to the extent permitted by
Section 8.01 of this Trust Agreement and Section 8 of the Participation
Agreement, provided that any such transfer: (i) shall be effected by a written
agreement, in form and substance reasonably satisfactory to the Owner Trustee
in its individual capacity, among such transferee, its transferor and the Owner
Trustee, which shall provide that such transferee thereby becomes a party to,
and beneficiary of, this Trust Agreement and an Owner Participant for all
purposes hereof and that such transferee assumes all of the obligations of its
transferor under this Trust Agreement; and (ii) so long as the Lease shall be
in effect or any Secured Certificates remain unpaid, such transferee and its
transferor shall have complied with all of the terms of Section 8(n) of the
Participation Agreement.
"Trust Estate" means all estate, right, title and interest of
the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in
its individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term
in the Trust Indenture.
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<PAGE> 3
"Trust Office" shall mean the principal corporate trust office
of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture
and to this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner
Participant hereby authorizes and directs the Owner Trustee to execute and
deliver the Operative Documents and any other agreements, instruments or
documents to which the Owner Trustee is a party in the respective forms thereof
in which delivered from time to time by the Owner Participant to the Owner
Trustee for execution and delivery and, subject to the terms hereof, to perform
its duties and, upon instructions from the Owner Participant, exercise its
rights under said Operative Documents in accordance with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee
hereby declares that it will hold the Trust Estate upon the trusts hereinafter
set forth for the use and benefit of the Owner Participant, subject, however,
to the provisions of and the Lien created by the Trust Indenture and to the
provisions of the Lease.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the benefit of the Owner Participant that it will, on the
Delivery Date, subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale
and the FAA Bill of Sale;
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<PAGE> 4
(c) cause the Aircraft to be leased to Lessee under the
Lease, and in furtherance thereof execute and deliver a Lease
Supplement covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates
in the amounts and otherwise as provided in Section 1(a) of the
Participation Agreement;
(f) execute and deliver the financing statements referred
to in Section 4(a)(vi) of the Participation Agreement, together with
all other agreements, documents and instruments referred to in Section
4 of the Participation Agreement to which the Owner Trustee is a
party; and
(g) effect the registration of the Aircraft in the name
of the Owner Trustee by filing or causing to be filed with the FAA:
(i) the FAA Bill of Sale; (ii) an application for registration of the
Aircraft in the name of the Owner Trustee (including without
limitation an affidavit from the Owner Trustee in compliance with the
provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the
Trust Agreement.
SECTION 3.02. CONDITIONS PRECEDENT. The right and
obligation of the Owner Trustee to take the action required by Section 3.01
hereof with respect to the Aircraft shall be subject to the following
conditions precedent:
(a) the Original Owner Participant shall have made the
full amount of its Commitment set forth in Schedule II of the
Participation Agreement available to the Owner Trustee, in immediately
available funds, in accordance with Section 1 of the Participation
Agreement; and
(b) the terms and conditions of Section 4 of the
Participation Agreement, insofar as they relate to the Aircraft, shall
have been complied with in a manner satisfactory to the Original Owner
Participant and the Owner Trustee.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF
THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee
agrees for the benefit of the Owner Participant that it will, take the actions
specified to be taken by the Owner Trustee in Section 8(x) of the Participation
Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of
the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured
Certificates in accordance with the provisions of such Section 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT
AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and
directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of
the Owner Participant that it will, in the event of a Replacement Airframe and
Replacement Engines, if any, being substituted pursuant to Section 10(a) of the
Lease, or a Replacement Engine being substituted pursuant to
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<PAGE> 5
Section 10(b) of the Lease, subject to due compliance with the terms of Section
10(a) or 10(b) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees of Lessee) to
accept delivery of the Replacement Airframe and Replacement Engines,
if any, or the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement
Airframe and Replacement Engines, if any, or the Replacement Engine a
bill of sale or bills of sale (if tendered), and the invoice, if any,
with respect to the Replacement Airframe and Replacement Engines, if
any, or the Replacement Engine being furnished pursuant to Section
10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make
application to the Federal Aviation Administration for the
registration in the name of the Owner Trustee of the Aircraft of which
such Replacement Airframe is a part;
(d) execute and deliver a Lease Supplement and a Trust
Supplement covering (i) the Aircraft of which such Replacement
Airframe is part or (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) and to the Airframe and Engines (if any) or the
Engine being replaced to Lessee;
(f) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to release the Airframe
and Engines or engines (if any) or the Engine or engine being replaced
from the lien created under the Trust Indenture and release the
Purchase Agreement and the Purchase Agreement Assignment (solely with
respect to such replaced Airframe and Engines, if any, or Engine) from
the assignment and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take
such further action as may be contemplated by clauses (A) and (B) of
the third paragraph of Section 10(a) of the Lease or clauses (ii) and
(iii) of Section 10(b) of the Lease, as the case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND
EFFECT. In the event of the substitution of a Replacement Airframe for the
Airframe or the substitution of a Replacement Engine for any Engine or engine,
all provisions of this Trust Agreement relating to such replaced Airframe or
Engine or engine shall be applicable to such Replacement Airframe or
Replacement Engine with the same force and effect as if such Replacement
Airframe or Replacement Engine were the same airframe or engine as the Airframe
or Engine being replaced but for the Event of Loss with respect to such
Airframe or Engine.
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<PAGE> 6
SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN
ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee
to, and the Owner Trustee agrees for the benefit of the Owner Participant that
it will, in the event of an engine being transferred to the Owner Trustee
pursuant to Section 5(b) of the Lease, subject to due compliance with the terms
of such Section 5(b):
(a) accept from Lessee the bill of sale with respect to
such engine contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) and to an Engine to Lessee as contemplated by such
Section 5(b); and
(c) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to release the Engine
being transferred to Lessee pursuant to such Section 5(b) from the
lien of the Trust Indenture and to release the Purchase Agreement and
the Purchase Agreement Assignment (solely with respect to such Engine)
from the assignment and pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to
Indenture Trustee. Until the Trust Indenture shall have been discharged
pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance
proceeds and requisition or other payments of any kind included in the Trust
Estate (other than Excluded Payments) payable to the Owner Trustee shall be
payable directly to the Indenture Trustee (and if any of the same are received
by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee
without deduction, set-off or adjustment of any kind) for distribution in
accordance with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the
Trust Indenture shall have been discharged pursuant to Section 10.01 thereof,
any payment of the type referred to in Section 4.01(a) hereof (other than
Excluded Payments) received by the Owner Trustee, any payments received from
the Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents
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shall be applied and distributed in accordance with the terms of the Lease or
such other Operative Document; and third, the balance, if any, shall be paid to
the Owner Participant.
(c) Certain Distributions to Owner Participant. All
amounts from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the Trust Indenture shall, if paid to the Owner
Trustee, be distributed by the Owner Trustee to the Owner Participant in
accordance with the provisions of Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by
the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such
Excluded Payments are payable under the provisions of the Participation
Agreement, the Tax Indemnity Agreement or the Lease.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall
make distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of the Owner Participant as the Owner
Participant may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will, if so requested by the
Owner Participant in writing, pay any or all amounts payable to the Owner
Participant pursuant to this Article IV either (i) by crediting such amount or
amounts to an account or accounts maintained by the Owner Participant with the
Owner Trustee in its individual capacity in immediately available funds, (ii)
by payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to the Owner Participant at such address as the Owner
Participant shall have designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner
Trustee shall have knowledge of a Lease Event of Default or Indenture Event of
Default (or an event which with the passage of time or the giving of notice or
both would constitute a Lease Event of Default or an Indenture Event of
Default) the Owner Trustee shall give to the Owner Participant prompt
telephonic or telecopy notice thereof followed by prompt confirmation thereof
by certified mail, postage prepaid, provided that (i) in the case of an event
which with the passage of time would constitute an Indenture Event of Default
referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such
notice shall in no event be furnished later than ten (10) days after the Owner
Trustee shall first have knowledge of such event and (ii) in the case of a
misrepresentation by the Owner Trustee which with the passage of time would
constitute an Indenture Event of Default referred to in paragraph (d) of
Section 4.02 of the Trust Indenture, such notice shall in no event be furnished
later than ten (10) days after the Owner Trustee shall first have knowledge of
such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee
shall take such action or shall refrain from taking such action, not
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inconsistent with the provisions of the Trust Indenture, with respect to such
Lease Event of Default, Indenture Event of Default or other event as the Owner
Trustee shall be directed in writing by the Owner Participant. If the Owner
Trustee shall not have received instructions as above provided within twenty
(20) days after the mailing of such notice to the Owner Participant, the Owner
Trustee until instructed otherwise in accordance with the preceding sentence
may, but shall be under no duty to, take or refrain from taking such action
with respect to such Lease Event of Default, Indenture Event of Default or
other event, not inconsistent with the provisions of the Trust Indenture, as it
shall deem advisable in the best interests of the Owner Participant. For all
purposes of this Trust Agreement, the Lease and the other Operative Documents,
in the absence of actual knowledge by an officer of FSBU in the Corporate Trust
Department, the Owner Trustee shall not be deemed to have knowledge of a Lease
Event of Default, Indenture Event of Default or other event referred to in this
Section 5.01 unless notified in writing by the Indenture Trustee, the Owner
Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the
terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any
time and from time to time of the Owner Participant, the Owner Trustee will
take such of the following actions, not inconsistent with the provisions of the
Trust Indenture, as may be specified in such instructions: (i) give such
notice or direction or exercise such right, remedy or power hereunder or under
any of the Operative Documents to which the Owner Trustee is a party or in
respect of all or any part of the Trust Estate as shall be specified in such
instructions (including entering into agreements referred to in clause (i) of
the definition of "Subsequent Owner Participant"); (ii) take such action to
preserve or protect the Trust Estate (including the discharge of Liens) as may
be specified in such instructions; (iii) approve as satisfactory to it all
matters required by the terms of the Lease or the other Operative Documents to
be satisfactory to the Owner Trustee, it being understood that without written
instructions of the Owner Participant, the Owner Trustee shall not approve any
such matter as satisfactory to it (it being understood that the provisions of
Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner
Participant for the Owner Trustee to approve of or consent to the matters to be
approved of or consented to by the Owner Trustee in the sections of the Lease
referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the
rights of Lessee under the Operative Documents, after the expiration or earlier
termination of the Lease, deliver the Aircraft to the Owner Participant in
accordance with such instructions, convey all of the Owner Trustee's right,
title and interest in and to the Aircraft for such amount, on such terms and to
such purchaser or purchasers as shall be designated in such instructions, or
net lease the Aircraft on such terms and to such lessee or lessees as shall be
designated in such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not
be required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participant, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish
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such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
fees and disbursements of counsel or agents employed by the Owner Trustee in
connection therewith. The Owner Trustee shall not be required to take any
action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is contrary
to the terms of any of the Operative Documents to which the Owner Trustee is a
party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST
AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or
obligation to manage, control, use, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Estate, or to otherwise take or refrain
from taking any action under, or in connection with any of the Operative
Documents to which the Owner Trustee is a party, except as expressly required
by the terms of any of the Operative Documents to which the Owner Trustee is a
party, or (to the extent not inconsistent with the provisions of the Trust
Indenture) as expressly provided by the terms hereof or in written instructions
from the Owner Participant received pursuant to the terms of Section 5.01 or
5.02, and no implied duties or obligations shall be read into this Trust
Agreement against the Owner Trustee. FSBU agrees that it will, in its
individual capacity and at its own cost or expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.01 hereof)
promptly take such action as may be necessary to duly discharge and satisfy in
full all Lessor Liens which it is required to discharge pursuant to Section
8(h) of the Participation Agreement and otherwise comply with the terms of said
Section binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT.
Anything herein to the contrary notwithstanding, the Owner Trustee shall comply
with the provisions of Section 3.01 hereof upon the satisfaction, to the
satisfaction of special counsel for the Owner Trustee, of all the applicable
conditions precedent specified in Section 3.02 hereof and in Section 4 of the
Participation Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority
to, and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
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ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU
accepts the trusts hereby created and agrees to perform the same but only upon
the terms hereof applicable to it. The Owner Trustee also agrees to receive
and disburse all monies received by it constituting part of the Trust Estate
upon the terms hereof. FSBU shall not be answerable or accountable under any
circumstances, except (a) for its own willful misconduct or gross negligence,
(b) for performance of the terms of the last sentence of Section 5.04 hereof,
(c) for its or the Owner Trustee's failure to use ordinary care to disburse
funds and (d) for liabilities that may result from the inaccuracy of any
representation or warranty of it (or from the failure by it to perform any
covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in
Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation
Agreement.
SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in
accordance with written instructions furnished pursuant to Section 5.02 hereof
and except as provided in, and without limiting the generality of, Section 5.04
hereof and the last sentence of Section 9.01(b) hereof, neither the Owner
Trustee nor FSBU shall have any duty (i) to see to any recording or filing of
any Operative Document or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the Federal Aviation Administration or other governmental agencies, except that
FSBU, in its individual capacity, shall comply with the reporting requirements
set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner
Trustee shall, to the extent that information for that purpose is supplied by
Lessee pursuant to any of the Operative Documents, complete and timely submit
(and furnish the Owner Participant with a copy of) any and all reports relating
to the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto,
other than to forward to the Owner Participant copies of all reports and other
written information which the Owner Trustee receives from Lessee pursuant to
Section 11(c) of the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee under the Lease
or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO
CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED
TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, VALUE, CONDITION, DESIGN, OPERATION,
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MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER,
except that FSBU in its individual capacity warrants that on the Delivery Date
the Owner Trustee shall have received whatever title was conveyed to it by
Lessee and that the Aircraft shall during the Term be free of Lessor Liens
attributable to it, or (b) any representation or warranty as to the validity,
legality or enforceability of this Trust Agreement or any Operative Document to
which the Owner Trustee is a party, or any other document or instrument, or as
to the correctness of any statement contained in any thereof except to the
extent that any such statement is expressly made herein or therein as a
representation by FSBU in its individual capacity or by the Owner Trustee and
except that FSBU in its individual capacity hereby represents and warrants that
this Trust Agreement has been, and (assuming due authorization, execution and
delivery by the Original Owner Participant of this Trust Agreement) the
Operative Documents to which it or the Owner Trustee is a party have been (or
at the time of execution and delivery of any such instrument by it or the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of itself or the Owner Trustee, as the case may be.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO
INTEREST. Except as provided in Section 22 of the Lease, monies received by
the Owner Trustee hereunder need not be segregated in any manner except to the
extent required by law, and may be deposited under such general conditions as
may be prescribed by law, and the Owner Trustee shall not be liable for any
interest thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND
AGENTS. The Owner Trustee shall incur no liability to anyone in acting in
reliance upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of the
Owner Participant or Lessee mentioned herein or in any of the Operative
Documents to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be the chairman of the
board, the president, any executive vice president, any senior vice president
or any vice president or a managing director and in the name of the Owner
Participant or Lessee, as the case may be. The Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the secretary or any assistant secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board or Committee and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is
not specifically described herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by a person purporting to be the chairman
of the board, the president, any executive vice president, any senior vice
president or any vice president or a managing director of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it
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in good faith in reliance thereon. In the administration of trusts hereunder,
the Owner Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and
may, at the expense of the Trust Estate, consult with counsel, accountants and
other skilled persons to be selected and employed by it. The Owner Trustee
shall not be liable for anything done, suffered or omitted in good faith by it
in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons and the Owner Trustee shall not be liable for the
negligence of any such agent, attorney, counsel, accountant or other skilled
person appointed by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons,
other than the Owner Participant, as provided herein, having any claim against
the Owner Trustee by reason of the transactions contemplated hereby shall look
only to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in
Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no
right against the Owner Participant or (subject to the provisions of the Trust
Indenture) the Trust Estate for any fee as compensation for its services
hereunder; provided, however, that the Owner Trustee shall have a lien upon the
Trust Estate (subject, however, to the lien of the Trust Indenture) for any
such fee not paid by Lessee as contemplated by the last paragraph of Section
7(c) of the Participation Agreement.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement of all monies under this Trust Agreement or any
agreement contemplated hereby. The Owner Participant shall be responsible for
causing to be prepared and filed all income tax returns required to be filed by
the Owner Participant. The Owner Trustee shall be responsible for causing to
be prepared, at the request and expense of the Owner Participant, all income
tax returns required to be filed with respect to the trust created hereby and
shall execute and file such returns. The Owner Participant or the Owner
Trustee, as the case may be, upon request, will furnish the Owner Trustee or
the Owner Participant, as the case may be, with all such information as may be
reasonably required from the Owner Participant or the Owner Trustee, as the
case may be, in connection with the preparation of such income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnify, protect, save and keep harmless FSBU in its individual capacity and
its successors, assigns, legal representatives,
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agents and servants, from and against any and all liabilities, obligations,
losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its
individual capacity on or measured by any compensation received by FSBU in its
individual capacity for its services hereunder or in connection with the
transactions contemplated by the Operative Documents), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and
including without limitation any liability of an owner, any strict liability
and any liability without fault) of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against FSBU in its individual capacity
(whether or not also indemnified against by Lessee under the Lease or under the
Participation Agreement or also indemnified against by any other person but
only to the extent not otherwise paid or reimbursed by Lessee or such other
person) in any way relating to or arising out of this Trust Agreement or any of
the Operative Documents or the enforcement of any of the terms of any thereof,
or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement),
or in any way relating to or arising out of the administration of the Trust
Estate or the action or inaction of the Owner Trustee or FSBU in its individual
capacity hereunder, except (a) in the case of willful misconduct or gross
negligence on the part of the Owner Trustee or FSBU in its individual capacity
in the performance or non-performance of its duties hereunder or (b) those
resulting from the inaccuracy of any representation or warranty of FSBU in its
individual capacity (or from the failure of FSBU in its individual capacity to
perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its
individual capacity of its covenants in the last sentence of Section 5.04
hereof or (d) in the case of the failure to use ordinary care on the part of
the Owner Trustee or FSBU in its individual capacity in the disbursement of
funds. The indemnities contained in this Section 7.01 extend to FSBU only in
its individual capacity and shall not be construed as indemnities of the Trust
Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU
in its individual capacity has been reimbursed by the Trust Indenture Estate or
the Trust Estate for amounts covered by the indemnities contained in this
Section 7.01). The indemnities contained in this Section 7.01 shall survive
the termination of this Trust Agreement. In addition, if necessary, FSBU in
its individual capacity shall be entitled to indemnification from the Trust
Estate, subject to the Lien of the Trust Indenture, for any liability,
obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee, the Owner Participant or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same FSBU in its individual capacity shall have a Lien on the Trust
Estate, subject to the Lien of the Trust Indenture, which shall be prior to any
interest therein of the Owner Participant. The payor of any indemnity under
this Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
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ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of
Section 8(n) of the Participation Agreement shall (with the same force and
effect as if set forth in full, mutatis mutandis, in this Section 8.01) be
applicable to any assignment, conveyance or other transfer by any Owner
Participant of its right, title or interest in and to the Participation
Agreement, the Trust Estate or this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor
Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of
the Participation Agreement and (ii) may resign at any time without cause by
giving at least sixty (60) days' prior written notice to the Owner Participant,
the Indenture Trustee (so long as the Lien of the Trust Indenture has not been
fully discharged) and Lessee (so long as the Lease is in effect), such
resignation to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant
may at any time remove the Owner Trustee without cause by a notice in writing
delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of
the Trust Indenture has not been fully discharged) and Lessee (so long as the
Lease is in effect), such removal to be effective upon the acceptance of
appointment by the successor Owner Trustee under Section 9.01(b) hereof. In
the case of the resignation or removal of the Owner Trustee, the Owner
Participant may appoint a successor Owner Trustee by an instrument signed by
the Owner Participant. If a successor Owner Trustee shall not have been
appointed within thirty (30) days after such notice of resignation or removal,
the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may
apply to any court of competent jurisdiction to appoint a successor Owner
Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. Any successor Owner Trustee so appointed by such
court shall immediately and without further act be superseded by any successor
Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee and the Owner Participant an instrument accepting
such appointment, and thereupon such successor Owner Trustee, without further
act, shall become vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Owner Trustee in the trusts hereunder with
like effect as if originally named the Owner Trustee herein; but nevertheless,
upon the written request of such successor Owner Trustee, such predecessor
Owner Trustee shall execute and deliver an instrument transferring to such
successor Owner Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of such
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predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed. Upon the appointment of any successor Owner Trustee
hereunder, the predecessor Owner Trustee will execute such documents as are
provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are
reasonably required to cause registration of the Aircraft included in the Trust
Estate to be transferred upon the records of the Federal Aviation
Administration, or other governmental authority having jurisdiction, into the
name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement and shall also be
a bank or trust company organized under the laws of the United States or any
state thereof having a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally qualified to perform
the duties of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any
time it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which all or any part of the Trust Estate is located, or the
Owner Trustee being advised by counsel shall determine that it is so necessary
or prudent in the interest of the Owner Participant or the Owner Trustee, or
the Owner Trustee shall have been directed to do so by the Owner Participant,
the Owner Trustee and the Owner Participant shall execute and deliver an
agreement supplemental hereto and all other instruments and agreements
necessary or proper to constitute another bank or trust company or one or more
persons (any and all of which shall be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement)
approved by the Owner Trustee and the Owner Participant, either to act as
co-trustee, jointly with the Owner Trustee, or to act as separate trustee
hereunder (any such co-trustee or separate trustee being herein sometimes
referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of
Default not arising from a Lease Event of Default shall occur and be
continuing, the Owner Trustee may act under the foregoing provisions of this
Section 9.02 without the concurrence of the Owner Participant; and the Owner
Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to
act for it under the foregoing provisions of this Section 9.02 in such
contingency.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its
successors shall act, subject to the following provisions and conditions:
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(A) all powers, duties, obligations and rights conferred
upon the Owner Trustee in respect of the custody, control and
management of monies, the Aircraft or documents authorized to be
delivered hereunder or under the Participation Agreement shall be
exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred or
imposed upon and exercised or performed by the Owner Trustee and such
additional trustee jointly, except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be
performed (including the holding of title to the Trust Estate) the
Owner Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations
shall be exercised and performed by such additional trustee;
(C) no power given to, or which it is provided hereby may
be exercised by, any such additional trustee shall be exercised
hereunder by such additional trustee, except jointly with, or with the
consent in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument
in writing may remove any such additional trustee unless such
additional trustee was appointed by the Owner Trustee without the
concurrence of the Owner Participant during the occurrence of an
Indenture Event of Default not arising from a Lease Event of Default,
in which case the Owner Trustee shall have the power to remove any
such additional trustee without the concurrence of the Owner
Participant, and the Owner Participant hereby appoints the Owner
Trustee its agent and attorney-in-fact for it in such connection in
such contingency; and
(F) no appointment of, or action by, any additional
trustee will relieve the Owner Trustee of any of its obligations
under, or otherwise affect any of the terms of, the Trust Indenture or
affect the interests of the Indenture Trustee or the holders of the
Secured Certificates in the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements
and Amendments. This Trust Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by the Owner
Trustee and the Owner Participant. Subject to Section 10.02 hereof and the
first sentence of Section 10 of the Participation Agreement, the Owner Trustee
will execute any amendment, supplement or other
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modification of this Trust Agreement or of any other Operative Document to which
the Owner Trustee is a party which it is requested to execute by the Owner
Participant, except that the Owner Trustee shall not execute any such amendment,
supplement or other modification which, by the express provisions of any of the
above documents, requires the consent of any other party unless such consent
shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain
Parties. A signed copy of each amendment or supplement referred to in Section
10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture
Trustee and each holder of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS.
Prior to executing any document required to be executed by it pursuant to the
terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive
an opinion of its counsel to the effect that the execution of such document is
authorized hereunder. If in the opinion of the Owner Trustee any such document
adversely affects any right, duty, immunity or indemnity in favor of the Owner
Trustee hereunder or under any other Operative Document to which the Owner
Trustee is a party, the Owner Trustee may in its discretion decline to execute
such document.
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall
not be necessary for any written request furnished pursuant to Section 10.01
hereof to specify the particular form of the proposed documents to be executed
pursuant to such Section, but it shall be sufficient if such request shall
indicate the substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after
the execution by the Owner Trustee of any document entered into pursuant to
Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage
prepaid, a conformed copy thereof to the Owner Participant, but the failure of
the Owner Trustee to mail such conformed copy shall not impair or affect the
validity of such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND
TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust
Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust
Agreement and the trusts created hereby shall be of no further force or effect
upon the earlier of (a) both the final discharge of the Trust Indenture
pursuant to Section 10.01 thereof and the sale or other final disposition by
the Owner Trustee of all property constituting part of the Trust Estate and the
final distribution by the Owner Trustee of all monies or other property or
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proceeds constituting part of the Trust Estate in accordance with Article IV
hereof, provided that at such time Lessee shall have fully complied with all of
the terms of the Lease and the Participation Agreement or (b) twenty-one years
less one day after the death of the last survivor of all of the descendants of
the grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto; otherwise this Trust
Agreement and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST
ESTATE. The Owner Participant shall not have legal title to any part of the
Trust Estate. No transfer, by operation of law or otherwise, of any right,
title and interest of the Owner Participant in and to the Trust Estate
hereunder shall operate to terminate this Trust Agreement or the trusts
hereunder or entitle any successors or transferees of the Owner Participant to
an accounting or to the transfer of legal title to any part of the Trust
Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any
assignment, sale, transfer or other conveyance of its interest in the Aircraft
by the Owner Trustee made pursuant to the terms hereof or of the Lease or the
Participation Agreement shall bind the Owner Participant and shall be effective
to transfer or convey all right, title and interest of the Owner Trustee and
the Owner Participant in and to the Aircraft. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN
PARTIES ONLY. Except for the terms of Section 8(n) of the Participation
Agreement incorporated in Article VIII hereof and except as otherwise provided
in Articles IX and X hereof, nothing herein, whether expressed or implied,
shall be construed to give any Person other than the Owner Trustee and the
Owner Participant any legal or equitable right, remedy or claim under or in
respect of this Trust Agreement; but this Trust Agreement shall be held to be
for the sole and exclusive benefit of the Owner Trustee and the Owner
Participant.
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) 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 telecopier, or by prepaid courier service, and shall be deemed to be
given for purposes of this Agreement on the day that such writing is delivered
or sent to the intended recipient thereof in accordance with the provisions of
this Section 11.05(a). Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 11.05(a),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures
of such parties on the signature page of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such
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<PAGE> 19
Subsequent Owner Participant at such address as such Subsequent Owner
Participant shall have furnished by notice to the parties hereto or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the secured certificate register maintained pursuant to
Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Trust Agreement, the Participation Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document, the subject matter of any thereof or
any of the transactions contemplated hereby or thereby brought by any party or
parties thereto, or their successors or assigns, and (B) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, to the extent permitted by applicable law, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper, or that the Participation
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing entered into in compliance with the terms of Article X
hereof; and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 11.08. COUNTERPARTS. This Trust 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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Owner Trustee and its successors and assigns, and the Owner Participant,
its successors and, to the extent permitted by Article VIII hereof, its
assigns. Any request, notice, direction, consent, waiver or other instrument
or action by the Owner Participant shall bind its successors and assigns. Any
Owner Participant which shall cease to have any Ownership Interest shall
thereupon cease to be a party hereto or an Owner Participant for any reason and
shall have no further obligations hereunder.
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<PAGE> 20
SECTION 11.10. HEADINGS; REFERENCES. The headings of the
various Articles and Sections herein are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[OWNER PARTICIPANT]
By ______________________________________
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By _____________________________________
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1995 B]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1995 B], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly stated herein, but solely as
Owner Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1995 B] dated as of
December 13, 1995 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered
into the Trust Agreement and Indenture Supplement [NW 1995 B] (the "SUPPLEMENT")
dated December 21, 1995 to the Original Indenture, (iii) the Original Indenture
and the Supplement were recorded by the Federal Aviation Administration on
December 26, 1995 and were assigned Conveyance No. P05091 and (iv) the Lease
Agreement [NW 1995 B] dated as of even date with the Original Indenture between
the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1995 B] were
recorded by the Federal Aviation Administration on December 26, 1995 and were
assigned Conveyance No. P05092 and (v) pursuant to the Original Indenture, the
Owner Trustee issued and sold to the Loan Participants Secured Certificates (as
defined in the Original Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participant pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and
<PAGE> 2
restate in its entirety the Original Indenture, (ii) to provide for the issuance
by the Owner Trustee of the Refinancing Secured Certificates and (iii) to
provide for the assignment, mortgage and pledge by the Owner Trustee to the
Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other
things, of all of the Owner Trustee's right, title and interest in and to the
Aircraft and, except as hereinafter expressly provided, all of the Owner
Trustee's right, title and interest in, to and under the Lease and all payments
and other amounts received hereunder or thereunder in accordance with the terms
hereof or thereof, as security for, among other things, the Owner Trustee's
obligations to the Indenture Trustee, for the ratable benefit and security of
the Certificate Holders, subject to Section 2.15 and Article III hereof;
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines and
all replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire title as provided herein and in the Lease), all
as more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee (excluding any Excluded Payments);
(3) the Purchase Agreement (to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the lien of this
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but
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<PAGE> 4
excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
(6) all rights of the Owner Trustee to amounts paid or payable
by Lessee to the Owner Trustee under the Participation Agreement and all rights
of the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture
Estate all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee delivered to the Indenture Trustee the original executed
counterpart of the Lease and the Lease Supplement No. 1 (to each of which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, and the Purchase Agreement Assignment with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, and its successors and assigns, in trust for the
benefit and security of the Certificate Holders, except as provided in Section
2.15 and Article III hereof without any preference, distinction or priority of
any one Secured Certificate over any other by reason of priority of time of
issue, sale, negotiation, date of maturity thereof or otherwise for any reason
whatsoever, and for the uses and purposes and in all cases and as to all
property specified in paragraphs (1) through (8) inclusive above, subject to the
terms and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to any of the Indenture Agreements to which
it is a party, or, except as herein expressly provided, to make any payment, or
to make any inquiry as to the nature or sufficiency of any payment received by
it, or present or file any claim, or take any action to collect or enforce
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<PAGE> 5
the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, granted for good
and valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement any amounts distributed to it by the Indenture Trustee under this
Trust Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be
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<PAGE> 6
created hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants and agrees that it will not
assign or pledge, so long as the assignment hereunder shall remain in effect,
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its right, title or interest hereby assigned, to anyone other
than the Indenture Trustee and its predecessor(s) in this transaction, and that
it will not, except as otherwise provided in this Trust Indenture and except
with respect to Excluded Payments to which it is entitled, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment
of Rent (other than Excluded Payments), including Interim
Rent, Basic Rent, Stipulated Loss Value, Termination Value or
any other payment to be made pursuant to Section 9 or 10 of
the Lease prior to the date for the payment thereof provided
for by the Lease or assign, transfer or hypothecate (other
than to the Indenture Trustee hereunder) any payment of Rent,
including Interim Rent, Basic Rent, Stipulated Loss Value,
Termination Value or any other payment to be made pursuant to
Section 9 or 10 of the Lease, then due or to accrue in the
future under the Lease in respect of the Airframe and Engines;
or
(b) except as contemplated by the Trust Agreement in connection
with the appointment of a successor owner trustee, sell,
mortgage, transfer, assign or hypothecate (other than to the
Indenture Trustee hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be received by
it from the use or disposition of the Airframe and Engines,
other than amounts distributed to it pursuant to Article III
hereof.
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<PAGE> 7
It is hereby further agreed that any and all property
described or referred to in the granting clauses hereof which is hereafter
acquired by the Owner Trustee shall ipso facto, and without any further
conveyance, assignment or act on the part of the Owner Trustee or the Indenture
Trustee, become and be subject to the Lien herein granted as fully and
completely as though specifically described herein, but nothing contained in
this paragraph shall be deemed to modify or change the obligations of the Owner
Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and
does hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, (1) there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments, and (2)
it is understood and agreed that the Owner Trustee and the Owner Participant
shall have the rights set forth in the proviso of Section 5.02(a) hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of an officer of the Owner
Participant having direct day-to-day responsibility or any other higher officer
having direct responsibility for the transactions contemplated by the Operative
Documents.
"Amortization Amount" shall mean, with respect to any
Principal Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be
redeemed shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be
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<PAGE> 8
the number of days equal to the quotient obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity date of such
Secured Certificate, by (ii) the number of days from and including the
redemption date to but excluding the scheduled payment date of such principal
installment; by (b) the then unpaid principal amount of such Secured
Certificate.
"Cash Equivalents" shall mean the investments specified in
Section 22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time
of one or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of the Owner Trustee located at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or
such other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of
the Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest Rate" in
Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments).
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
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<PAGE> 9
"Enforcement Date" shall have meaning specified in Section
4.03 hereof.
"Event of Default" shall have the meaning specified in Section
4.02 hereof.
"Excess Amount" shall have the meaning specified in Section
2.03 hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease plus
all reasonable expenses incurred by the Owner Trustee and the Owner Participant
in connection with such assumption, as applicable, (vii) any payment of the
foregoing under the Guarantee, (viii) interest accrued on any of the above, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b) of
the Trust Indenture or (ii) the Indenture Trustee has taken action or notified
Owner Trustee that it intends to take action to
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<PAGE> 10
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy under the Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1995 B],
dated as of December 13, 1995, entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of the Original Trust Indenture, as
said Lease Agreement has been, or may from time to time be, supplemented or
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of this Indenture. The term "Lease" shall also
include each Lease Supplement from time to time entered into pursuant to the
terms of the Lease.
"Lease Default" shall mean a "Default" as defined in the
Lease.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation
Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the
Purchase Agreement Assignment and each other agreement between Lessee and any
other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than a majority
in aggregate unpaid Principal Amount of all Secured Certificates outstanding as
of such date (excluding any Secured Certificates held by the Owner Trustee or
the Owner Participant or any interests of the Owner Participant therein by
reason of subrogation pursuant to Section 4.03 hereof (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment banker
selected by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of such
Secured Certificate computed by discounting each such payment on a semiannual
basis from its respective Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield exceeds (b) the
outstanding principal amount of such Secured Certificate plus accrued interest.
For purposes of determining the Make-Whole Amount, "TREASURY YIELD" at the time
of determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield)
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<PAGE> 11
determined to be the per annum rate equal to the semiannual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Secured Certificate and trading in the public securities market either as
determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in the
public securities markets, (A) one maturing as close as possible to, but earlier
than, the Average Life Date of such Secured Certificate and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such
Secured Certificate, in each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Secured Certificate is reported on the
most recent H.15(519), such weekly average yield to maturity as published in
such H.15(519). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable redemption date and the "MOST
RECENT H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ], a
[ ] corporation, so long as such party shall have any interest in the Trust
Estate, and transferees thereof as permitted by Section 8 of the Participation
Agreement.
"PA Amendment No. 1" shall mean the First Amendment to
Participation Agreement [1995 B], dated as of the Closing Date, among Lessee,
the Owner Trustee, the Pass Through Trustee, the Owner Participant, the
Subordination Agent and State Street Bank and Trust Company, in its individual
capacity and as Indenture Trustee.
"Participants" shall mean and include the Loan Participants
and the Owner Participant.
"Participation Agreement" shall mean that certain
Participation Agreement [NW 1995 B], dated as of December 13, 1995, among the
Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by
the PA Amendment No. 1, as the same may from time to time be supplemented or
further amended, or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2,
commencing on January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Secured Certificates have been
paid in full.
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<PAGE> 12
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in accordance
with the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee,
a responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Holder" shall have the meaning specified in Section
2.15(c) hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
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<PAGE> 13
"Trust Agreement and Indenture Supplement" shall mean a
supplement to the Trust Agreement and to this Indenture, in substantially the
form of Exhibit A hereto, which shall particularly describe the Aircraft, and
any Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust
Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this
Amended and Restated Trust Indenture and Security Agreement [NW 1995 B] as it
may from time to time be supplemented or amended as herein provided, including
supplementing by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties referred to in
the Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes
of this Trust Indenture the terms used but not defined herein are used as
defined in the Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form
set forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE
SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE
SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN
EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER
TRUSTEE UNDER TRUST AGREEMENT [NW 1995 B] DATED AS OF DECEMBER 13, 1995.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED
IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N536US.
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<PAGE> 14
No.____ Date: [______,__]
$__________________
INTEREST RATE MATURITY DATE
[________] [________,_______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 B], dated as of
December 13, 1995, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the
Amended and Restated Trust Indenture and Security Agreement [NW 1995 B], dated
as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust
Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented
from time to time. All other capitalized terms used in this Secured Certificate
and not defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on
demand, at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest and any other amounts payable hereunder which are overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise).
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<PAGE> 15
All payments of Principal Amount, interest, Make-Whole Amount,
if any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for
the purpose of registering transfers and exchanges of Secured Certificates at
the Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at the
Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the
Trust Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Secured Certificate, except
that in the case of any final payment with respect to this Secured Certificate,
the Secured Certificate shall be surrendered promptly thereafter by the
Indenture Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured
Certificate, agrees that, except as provided in the Trust Indenture, each
payment received by it hereunder shall be applied, first, to the payment of
accrued interest on this Secured Certificate (as well as any interest on any
overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, second, to the payment of the Principal Amount of this
Secured Certificate then due, third, to the payment of Make-Whole Amount, if
any, and any other amount due hereunder or under the Trust Indenture, and
fourth, the balance, if any, remaining thereafter,
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<PAGE> 16
to the payment of Principal Amount of this Secured Certificate remaining unpaid
in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided
in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to
the extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of Series A Secured
Certificates, and this Secured Certificate is issued subject to such provisions.
The Certificate Holder of this Secured Certificate, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Indenture Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]
(1)
__________________________
(1) To be inserted in the case of a Series B Secured Certificate.
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<PAGE> 17
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Secured Certificate shall not be entitled to any benefit under the Trust
Indenture or be valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
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<PAGE> 18
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity but solely as
Owner Trustee
By ______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By ______________________________________
Name:
Title:
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<PAGE> 19
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in two separate series consisting of Series A and
Series B and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a
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<PAGE> 20
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity
Facility except to the extent included in Net Interest and Related Charges, and
(c) any and all amounts received by the Owner Trustee which are payable by
Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used
in this Section, "Owner Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or
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Equipment Note means a default in the payment of principal thereof or interest
thereon other than a default in the payment of principal or interest on a Series
D Equipment Note which has not been cured other than solely because of
acceleration. The following terms are used in this Section as defined in the
Intercreditor Agreement without regard to any amendment, modification or
supplement thereto after the Closing Date: Cash Collateral Account, Equipment
Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and
Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Certificate Holders under this
Trust Indenture, each Certificate Holder, by its acceptance of a Secured
Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained
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in this Trust Indenture and any agreement referred to herein other than the
Trust Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies which can be exercised and enforced against the Trust
Estate; therefore, anything contained in this Trust Indenture or such other
agreements to the contrary notwithstanding (except for any express provisions or
representations that the Owner Trustee is responsible for, or is making, in its
individual capacity, for which there would be personal liability of the Owner
Trustee), no recourse shall be had with respect to this Trust Indenture or such
other agreements against the Owner Trustee in its individual capacity or against
any institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03 shall
be construed to limit the exercise and enforcement in accordance with the terms
of this Trust Indenture or such other agreements of rights and remedies against
the Trust Estate. These provisions are not intended as any release or discharge
of the indebtedness represented by the Secured Certificates and the Trust
Indenture, but are intended only as a covenant not to sue the Owner Participant,
the Owner Trustee or the Indenture Trustee in their individual capacities,
except as expressly provided herein or in the Participation Agreement, for a
deficiency with respect to such indebtedness, the indebtedness represented by
this Trust Indenture and the Secured Certificates to remain in full force and
effect as fully as though these provisions were not contained in this Trust
Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders
have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03 shall (x) release the Owner Participant
from personal liability, or constitute a covenant not to sue the Owner
Participant, for any breach by it of any of its covenants, representations or
warranties contained in the Participation Agreement or for any of the payments
it has agreed to make pursuant to the Participation Agreement or (y) release the
Owner Trustee or constitute a covenant not to sue the Owner Trustee for any
breach by it of any representations, warranties or covenants of the Owner
Trustee contained in the Operative Documents or (z) release the Owner Trustee in
its individual capacity from personal liability, or constitute a covenant not to
sue the Owner Trustee in its individual capacity for any breach by it of any
representations, warranties or covenants of the Owner Trustee made in its
individual capacity in the Operative Documents.
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For purposes of this Section 2.03, "EXCESS AMOUNT" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03 shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount,
if any, and other amounts due under each Secured Certificate or hereunder will
be payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such
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Secured Certificate for the purpose of receiving payment of all amounts payable
with respect to such Secured Certificate and for all other purposes, and none of
the Owner Trustee or the Indenture Trustee shall be affected by any notice to
the contrary. So long as any signatory to the Participation Agreement or nominee
thereof shall be a registered Certificate Holder, all payments to it shall be
made to the account of such Certificate Holder specified in Schedule I thereto
and otherwise in the manner provided in or pursuant to the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) unless it shall have specified some other account or manner of
payment by notice to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Secured Certificate(s) held by
such holder is made (but prior to the making of such payment), or in either of
the two preceding calendar years, and has not notified the Indenture Trustee of
the withdrawal or inaccuracy of such form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate), the Indenture Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture
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Trustee of the withdrawal or inaccuracy of such certificate or form prior to the
date of such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law (and such withholding
shall constitute payment in respect of such Secured Certificates) and will, on a
timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of
Principal Amount, Make-Whole Amount, if any, and interest or other amounts due
thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE
ESTATE.
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture Estate when and
if the Principal Amount of,
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Make-Whole Amount, if any, and interest on and other amounts due under all
Secured Certificates held by such Certificate Holder and all other sums then
payable to such Certificate Holder hereunder and under the other Operative
Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall
have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured
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Certificate, and all payments of the Principal Amount marked on such new Secured
Certificate, as provided above, shall be deemed to have been made thereon. The
Owner Trustee shall not be required to exchange any surrendered Secured
Certificates as provided above during the ten-day period preceding the due date
of any payment on such Secured Certificate. The Owner Trustee shall in all cases
deem the Person in whose name any Secured Certificate shall have been issued and
registered as the absolute owner and holder of such Secured Certificate for the
purpose of receiving payment of all amounts payable by the Owner Trustee with
respect to such Secured Certificate and for all purposes until a notice stating
otherwise is received from the Indenture Trustee and such change is reflected on
the Secured Certificate Register. The Indenture Trustee will promptly notify the
Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of a Secured Certificate. Any such transferee of a Secured Certificate,
by its acceptance of a Secured Certificate, agrees to the provisions of the
Participation Agreement applicable to Certificate Holders, including Sections 5,
6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(dd), 8(gg), 10, 13(b),
13(c), 15(b) and 15(c), and shall be deemed to have represented and warranted
(except as provided above), and covenanted, to the parties to the Participation
Agreement as to the matters represented, warranted and covenanted by the
original Loan Participant in the Participation Agreement. Subject to compliance
by the Certificate Holder and its transferee (if any) of the requirements set
forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall
use all reasonable efforts to issue new Secured Certificates upon transfer or
exchange within 10 Business Days of the date a Secured Certificate is
surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed,
lost or stolen, the Owner Trustee shall, upon the written request of the holder
of such Secured Certificate, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new Secured Certificate,
payable in the same Principal Amount dated the same date and captioned as issued
in connection with the Aircraft. If the Secured Certificate being replaced has
become mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
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reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder
for any registration of transfer or exchange of Secured Certificates, but the
Indenture Trustee, as Secured Certificate Registrar, may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured
Certificates surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to
Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect
to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the
Owner Trustee in connection with a transaction described in, and subject to the
terms and conditions of, Section 17 of the Participation Agreement upon at least
30 days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
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SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Secured Certificates to be redeemed or purchased
on the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Secured
Certificates then outstanding shall cease to bear interest. Upon surrender of
any such Secured Certificate for redemption or purchase in accordance with said
notice, such Secured Certificate shall be redeemed at the redemption price. If
any Secured Certificate called for redemption or purchase shall not be so paid
upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable redemption date at the
interest rate in effect for such Secured Certificate as of such redemption date.
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SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation
Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall
assume (on a full recourse basis) all of the obligations of the Owner Trustee
hereunder, under the Secured Certificates and all other Operative Documents by
supplemental indenture satisfactory to the Indenture Trustee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and
12 of the Lease and (ii) other provisions necessary or advisable to effectuate
such assumption), then upon delivery of such supplemental indenture, payment by
Lessee of all expenses (including reasonable fees and expenses of counsel) for
the Owner Trustee and the Owner Participant, delivery by the Guarantor of a
guarantee of the Secured Certificates and other amounts owing to the Certificate
Holders substantially in the form of the Guarantee, and delivery of an opinion
of counsel for Lessee that such assumption has been duly and validly effected,
the Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon
the events and subject to the terms and conditions and for the price set forth
in this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind except as to its title to the
Secured Certificates and except against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Trust Indenture Estate, this Trust
Indenture and the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant upon any of the
following events, and, in any such event, the purchase price thereof shall equal
for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus
accrued and unpaid interest thereon to the date of purchase and all other
amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Participation Agreement to the
holder thereof. Such option to purchase the Secured Certificates may be
exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall
have occurred and be continuing a Lease Event of Default, provided that if such
option is exercised pursuant to this clause (ii) at a time when there shall have
occurred and be continuing for less than 120 days a Lease Event of Default, the
purchase price thereof shall equal the price provided in the preceding sentence
plus the Make-Whole Amount, if any.
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Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant giving written notice of
its election of such option to the Indenture Trustee, which notice shall specify
a date for such purchase not more than 30 days or less than 15 days after the
date of such notice. The Indenture Trustee shall not exercise any of the
remedies hereunder or, without the consent of the Owner Trustee or the Owner
Participant, under the Lease, during the period from the time that a notice of
exercise by the Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur pursuant to the terms
of the preceding sentence. Such election to purchase the Secured Certificates
shall become irrevocable upon the sixteenth day preceding the date specified in
the written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Certificate Holders will comply with
all the provisions of Section 2.07 to enable new Secured Certificates to be
issued to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) By acceptance of its Secured Certificates of any Series,
each Certificate Holder of such Series hereby agrees that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Certificate Holder of such Series, including any payment or distribution of
cash, property or securities after the commencement of a proceeding of the type
referred to in Section 4.02(g) hereof, except as expressly provided in Article
III hereof.
(b) By the acceptance of its Secured Certificates of any
Series (other than Series A), each Certificate Holder of such Series agrees that
in the event that such Certificate Holder, in its capacity as a Certificate
Holder, shall receive any payment or distribution on any Secured Obligations in
respect of such Series which it is not entitled to receive under this Section
2.15 or Article III hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER"
shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A
Secured Certificates shall be distributed to the
Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all
Series A Secured Certificates; and
(ii) after giving effect to paragraph (i) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the
Certificate Holders of Series B ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series B Secured Certificate bears to the
aggregate amount of the payments then due under all
Series B Secured Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee
as part of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever
of the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which
event such balance shall be distributed as provided
in this clause "Second" without reference to this
proviso, (ii)
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Section 3.03 hereof shall be applicable, in which
event such balance shall be distributed in accordance
with the provisions of such Section 3.03, or (iii)
the 120th day after the receipt of such payment in
which case such payment shall be distributed as
provided in this clause "Second" without reference to
this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY
TERMINATION; REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee (i) with respect to the Aircraft as
the result of an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in
connection with such redemption for which they are entitled to
reimbursement under the Operative Documents and then (b) to
pay any other amounts then due to the Indenture Trustee and
the Certificate Holders under this Trust Indenture, the
Participation Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series A Secured Certificates; and
(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series B Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
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SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 15 of the Lease or Article IV hereof) after
both an Event of Default shall have occurred and be continuing and the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b)
hereof, as well as all payments or amounts then held by the Indenture Trustee as
part of the Trust Indenture Estate, shall be promptly distributed by the
Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other
loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents,
revenues, issues, products and profits of, the property
included in the Trust Indenture Estate (all such property
being herein called the "MORTGAGED PROPERTY") pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to
the extent not previously reimbursed), the expenses of any
sale, taking or other proceeding, reasonable attorneys' fees
and expenses, court costs, and any other expenditures incurred
or expenditures or advances made by the Indenture Trustee or
the Certificate Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee or any Certificate Holder,
liquidated or otherwise, upon such Event of Default shall be
applied by the Indenture Trustee as between itself and the
Certificate Holders in reimbursement of such expenses and any
other expenses for which the Indenture Trustee or the
Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be
so distributed is insufficient to pay as aforesaid, then
ratably, without priority of one over the other, in proportion
to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate
Holders for payments made pursuant to Section 5.03 hereof (to
the extent not previously reimbursed) shall be distributed to
such then existing or prior Certificate Holders ratably,
without priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Certificate Holder pursuant to said Section
5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid
Principal Amount of all Series A Secured
Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured
Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series A,
and in case the
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aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date
of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Secured Certificates
held by all such holders plus the accrued but unpaid
interest and other amounts due thereon to the date of
distribution; and
(ii) after giving effect to paragraph (i) above, so much
of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid
Principal Amount of all Series B Secured
Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured
Obligations in respect of the Series B Secured
Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series B,
and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date
of distribution, bears to the aggregate unpaid
Principal Amount of all Series B Secured Certificates
held by all such holders plus the accrued but unpaid
interest and other amounts due thereon to the date of
distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which
no provision as to the application thereof is made in this Trust Indenture and
for which such provision is made in the Lease, the Participation Agreement or
any other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or Lessee in
respect of (i) the Indenture Trustee in its individual capacity, (ii) any
Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider,
and (v) the Pass Through Trustees, in each case whether
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pursuant to Section 7 of the Participation Agreement or as Supplemental Rent,
directly to the Person entitled thereto. Any payment received by the Indenture
Trustee under clause (b) of the third paragraph of Section 2.02 shall be
distributed to the Subordination Agent to be distributed in accordance with the
terms of the Intercreditor Agreement, and any payment received by the Indenture
Trustee under clause (c) of the third paragraph of Section 2.02 shall be
distributed directly to the Persons entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to
the contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
FIRST, to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated
to indemnify against thereunder, in the manner provided in
clause "First" of Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03
hereof.
Further, and except as otherwise provided in Sections 3.02,
3.03 and 3.04 hereof, all payments received and amounts
realized by the Indenture Trustee under the Lease or otherwise
with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft
after the termination of the Lease with respect thereto), to
the extent received or realized at any time after payment in
full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of
priority specified in clause (ii) of the immediately preceding
sentence of this Section 3.05.
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SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to
the Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants
and agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Secured Certificates and hereunder in
accordance with the terms of the Secured Certificates and this Trust
Indenture and all amounts, if any, payable by it to the Certificate
Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
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(c) in the event the Owner Trustee shall have Actual Knowledge
of an Event of Default, a Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Event of Default,
Default or Event of Loss to the Indenture Trustee, each Certificate
Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each report
or notice received pursuant to Section 9(a) and 11(c) of the Lease to
the extent that the same shall not have been furnished to the Indenture
Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the
consent of the Indenture Trustee (acting pursuant to instructions given
in accordance with Section 9.01 hereof), the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the
leasing thereof to Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever
the reason for such Event of Default and whether such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided
that any such Lease Event of Default caused solely by a failure of
Lessee to pay to the Owner Trustee or the Owner Participant when due
any amount that is included in the definition of Excluded Payments
shall not constitute an Event of Default unless notice is given by the
Owner Trustee to the Indenture Trustee that such failure shall
constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay
when due any payment of Principal Amount of, interest on, Make-Whole
Amount, if any, or other amount due and payable under any Secured
Certificate or hereunder (other than any such failure arising by virtue
of a tax withheld pursuant to Section 2.04(b) hereof or as a result of
a Lease Event of Default or a Lease Default) and such failure shall
have
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continued unremedied for ten Business Days in the case of any payment of
Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the
case of any other amount, for ten Business Days after the Owner Trustee or the
Owner Participant receives written demand from the Indenture Trustee or any
Certificate Holder; or
(c) any Lien required to be discharged by
the Owner Trustee, in its individual capacity pursuant to Section
4.01(b) hereof or in its individual or trust capacity pursuant to
Section 8(h) of the Participation Agreement, or by the Owner
Participant pursuant to Section 8(h) of the Participation Agreement
shall remain undischarged for a period of 30 days after the Owner
Trustee and the Owner Participant shall have received written notice
from the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by
the Owner Participant or the Owner Trustee herein, in the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the
Refunding Agreement) or in any certificate furnished by the Owner
Participant or the Owner Trustee to the Indenture Trustee or any
Certificate Holder in connection with the transactions contemplated by
the Operative Documents shall prove to have been false or incorrect
when made in any material respect and continues to be material; and if
such misrepresentation is capable of being corrected and if such
correction is being sought diligently, such misrepresentation shall not
have been corrected within 60 days (or, without affecting Section
4.02(f) hereof, in the case of the representations made in Section 8(c)
of the Participation Agreement as to the citizenship of the Owner
Trustee in its individual capacity or of the Owner Participant,
respectively, as soon as is reasonably practicable but in any event
within 60 days) following notice thereof from the Indenture Trustee or
any Certificate Holder to the Owner Trustee or the Owner Participant,
as the case may be; or
(e) other than as provided in (c) above or
(f) below, any failure by the Owner Trustee or Owner Participant to
observe or perform any other covenant or obligation of the Owner
Trustee or Owner Participant, as the case may be, for the benefit of
the Indenture Trustee or the Certificate Holders contained in the
Participation Agreement, Section 4.01(a) of the Trust Agreement, the
Secured Certificates or this Trust Indenture which is not remedied
within a period of 60 days after notice thereof has been given to the
Owner Trustee and the Owner Participant; or
(f) if at any time when the Aircraft is
registered under the laws of the United States, the Owner Participant
shall not be a Citizen of the United States, and as the result thereof
the registration of the Aircraft under the Federal Aviation Act, and
regulations then applicable thereunder, shall cease to be effective;
provided that no Event of Default shall be deemed to have occurred
under this paragraph (f) unless such circumstances continue unremedied
for more than 60 days after the Owner Participant has Actual Knowledge
of the state of facts that resulted in such ineffectiveness and of such
loss of citizenship; or
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(g) at any time either (i) the commencement
of an involuntary case or other proceeding in respect of the Owner
Participant, the Owner Trustee or the Trust Estate under the federal
bankruptcy Laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar Law
in the United States or seeking the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Owner Participant, the Owner Trustee or the Trust
Estate or for all or substantially all of its property, or seeking the
winding-up or liquidation of its affairs and the continuation of any
such case or other proceeding undismissed and unstayed for a period of
90 consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
a final non-appealable order, judgment or decree shall be entered in
such case or proceeding by a court or a trustee, custodian, receiver or
liquidator, to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g).
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the
Owner Trustee and the Owner Participant prompt written notice of any Event of
Default of which the Indenture Trustee has Actual Knowledge and, if any such
Event of Default results from a Lease Event of Default, shall give the
Certificate Holders, the Owner Trustee and the Owner Participant not less than
ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on
or after which the Indenture Trustee may commence and consummate the exercise of
any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in
respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the
Lease, the Indenture Trustee shall have insufficient funds to make any payment
of Principal Amount and interest on
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any Secured Certificate on the day it becomes due and payable, the Owner Trustee
or the Owner Participant may, but shall not be obligated to, pay the Indenture
Trustee prior to the Enforcement Date, in the manner provided in Section 2.04
hereof, for application in accordance with Section 3.01 hereof, an amount equal
to the portion of the Principal Amount and interest (including interest, if any,
on any overdue payments of such portion of Principal Amount and interest) then
due and payable on the Secured Certificates, and, unless the Owner Trustee has
cured Events of Default in respect of payments of Basic Rent on each of the
three immediately preceding Basic Rent payment dates, or on the Commencement
Date and each of the two immediately succeeding Basic Rent payment dates in
respect of payment of Interim Rent, or the Owner Trustee has cured six previous
Events of Default in respect of payments of Interim Rent and/or Basic Rent, such
payment by the Owner Trustee shall, solely for purposes of this Trust Indenture
be deemed to cure any Event of Default which would otherwise have arisen on
account of the nonpayment by Lessee of such installment of Interim Rent or Basic
Rent (but not any other Default or Event of Default which shall have occurred
and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has
occurred, the Owner Trustee or the Owner Participant may, but shall not be
obligated to, cure such Event of Default prior to the Enforcement Date as is
necessary to accomplish the observance or performance of the defaulted covenant,
condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Interim Rent or Basic Rent which was overdue at the time of such
payment and interest payable by Lessee on account of its being overdue and any
Supplemental Rent in respect of the reimbursement of amounts paid by Owner
Trustee pursuant to the immediately preceding paragraph (but in either case
shall have no rights as a secured party hereunder), and thereafter, the Owner
Trustee or the Owner Participant, as the case may be, shall be entitled to
receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the
case may be, and interest thereon upon receipt thereof by the Indenture Trustee
(and shall be entitled to bring an action against Lessee to enforce such
payment); provided, however, that (i) if the Principal Amount and interest on
the Secured Certificates shall have become due and payable pursuant to Section
4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest
on, Make-Whole Amount, if any, and all other amounts due with respect to all
Secured Certificates shall have been paid in full, be subordinate to the rights
of the Indenture Trustee and the Certificate Holders in respect of such payment
of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and
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(ii) the Owner Trustee shall not be entitled to seek to recover any such payment
(or any payment in lieu thereof) except pursuant to the foregoing right of
subrogation by demand or suit for damages.
SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an
Event of Default shall have occurred and be continuing and so long as the same
shall continue unremedied, then and in every such case the Indenture Trustee
may, subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Indenture Trustee shall not be entitled to exercise any
remedy hereunder as a result of an Event of Default which arises solely by
reason of one or more events or circumstances which constitute a Lease Event of
Default unless the Indenture Trustee as security assignee of the Owner Trustee
shall have exercised or concurrently be exercising one or more of the remedies
provided for in Section 15 of the Lease to terminate the Lease or take
possession and/or sell the Aircraft; provided, however, that such requirement to
exercise one or more of such remedies under the Lease shall not apply in
circumstances where the Indenture Trustee is, and has been, for a continuous
period in excess of 60 days or such other period as may be specified in Section
1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the
"SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "CONTINUOUS STAY
PERIOD"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section
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1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section
1110 Period with the consent of the Indenture Trustee pursuant to Section
1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during
the Section 1110 Period with the approval of the relevant court of the Lease
pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the
Indenture Trustee's own failure to give any requisite notice to any Person. In
the event that the applicability of Section 1110 of the Bankruptcy Code to the
Aircraft is being contested by Lessee in judicial proceedings, so long as the
Indenture Trustee fails to participate in such proceedings, the Owner Trustee
shall have the right (without affecting in any way any rights or remedy of the
Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to
the immediately preceding paragraph, the inability, described in such
paragraphs, of the Indenture Trustee to exercise any right or remedy under the
Lease shall in no event and under no circumstances prevent the Indenture Trustee
from exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Indenture Trustee may (and shall,
upon receipt of a written demand therefor from a Majority in Interest of
Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery
of written notice or notices to the Owner Trustee and the Owner Participant,
declare all the Secured Certificates to be due and payable, whereupon the unpaid
Principal Amount of all Secured Certificates then outstanding, together with
accrued but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition
that, if at any time after the Principal Amount of the Secured Certificates
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Secured Certificates and all other amounts payable
under the Secured Certificates (except the Principal Amount of the Secured
Certificates which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Certificate Holders may (but shall not
be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee's declaration and its consequences; but
no such rescission or annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereon.
Any acceleration pursuant to this Section 4.04(b) shall be
automatically rescinded in the event that the Owner Trustee or the Owner
Participant, as the case may be, shall have cured, in accordance with Section
4.03, the Event of Default that resulted in such acceleration.
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(c) Any Certificate Holder shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to credit against any
purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Trust Indenture (but only to the extent that such purchase price would have been
paid to such Certificate Holder pursuant to Article III hereof if such purchase
price were paid in cash and the foregoing provisions of this subsection (c) were
not given effect).
(d) In the event of any sale of the Trust Indenture Estate, or
any part thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Trust Indenture,
the unpaid Principal Amount of all Secured Certificates then outstanding,
together with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be
continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the
Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Mortgaged Property included in the Trust
Indenture Estate to which the Indenture Trustee shall at the time be entitled
hereunder. If the Owner Trustee shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee hereby specifically consents to the fullest
extent permitted by applicable law, and (ii) pursue all or part of such
Mortgaged Property wherever it may be found and, in the event that a Lease Event
of Default has occurred and is continuing, may enter any of the premises of
Lessee wherever such Mortgaged Property may be or be supposed to be and search
for such Mortgaged Property and take possession of and remove such Mortgaged
Property. All expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the Lien of this Trust
Indenture.
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(b) Upon every such taking of possession, the Indenture
Trustee may, from time to time, at the expense of the Mortgaged Property, make
all such expenditures for maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modifications or alterations to and
of the Mortgaged Property, as it may deem proper. In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, insure,
lease, control, manage, dispose of, modify or alter the Mortgaged Property and
to carry on the business and to exercise all rights and powers of the Owner
Participant and the Owner Trustee relating to the Mortgaged Property, as the
Indenture Trustee shall deem best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation, storage,
insurance, leasing, control, management, disposition, modification or alteration
of the Mortgaged Property or any part thereof as the Indenture Trustee may
determine, and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Mortgaged Property and every part thereof, except Excluded
Payments, without prejudice, however, to the right of the Indenture Trustee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Indenture Trustee hereunder. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, improvement,
modification or alteration of the Mortgaged Property and of conducting the
business thereof, and to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Mortgaged Property or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trustee), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Trust Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee, and of all persons
properly engaged and employed by the Indenture Trustee with respect hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Trust Indenture shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of the Owner Trustee or Lessee or to be an acquiescence
therein.
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SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Indenture Trustee, then and in every such case the Owner Trustee, the
Indenture Trustee and Lessee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Mortgaged Property, and all rights, remedies and powers of the
Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such
proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of
Certificate Holders, the Indenture Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such Default shall cease
to exist and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Trust Indenture, but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon;
provided, that in the absence of written instructions from all the Certificate
Holders, the Indenture Trustee shall not waive any Default (i) in the payment of
the Principal Amount, Make-Whole Amount, if any, and interest and other amounts
due under any Secured Certificate then outstanding, or (ii) in respect of a
covenant or provision hereof which, under Article IX hereof, cannot be modified
or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee thereof) for all or any part of the Mortgaged Property,
whether such receivership be incidental to a proposed sale of the Mortgaged
Property or the taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Mortgaged
Property shall be entitled to exercise all the rights and powers of the
Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee
the true and lawful attorney-in-fact of the Owner Trustee in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the
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Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering to
the Indenture Trustee or such purchaser all bills of sale, assignments, releases
and other proper instruments to effect such ratification and confirmation as may
be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this Trust Indenture,
the right of any Certificate Holder to receive payment of principal of, and
premium, if any, and interest on a Secured Certificate on or after the
respective due dates expressed in such Secured Certificate, or to bring suit for
the enforcement of any such payment on or after such respective dates in
accordance with the terms hereof, shall not be impaired or affected without the
consent of such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay Rent, the
Indenture Trustee shall give prompt written notice thereof to the Owner Trustee,
the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms
of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture Trustee, which failure
shall constitute knowledge of a Default) unless notified in writing by Lessee,
the Owner Trustee, the Owner Participant or one or more Certificate Holders.
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SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a),
4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from
time to time of a Majority in Interest of Certificate Holders, the Indenture
Trustee shall, subject to the terms of this Section 5.02, take such of the
following actions as may be specified in such instructions: (i) give such notice
or direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided, that
anything contained in this Trust Indenture, the Lease or the other Operative
Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excluded Payments from Lessee
or the Guarantor, exercise any election or option or make any decision
or determination or to give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the
rights referred to in this clause (1) shall not be deemed to include
the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at
law or in equity, to enforce payment by Lessee or the Guarantor of such
amounts included in Excluded Payments or performance by Lessee or the
Guarantor of such insurance covenant or to recover damages for the
breach thereof or for specific performance of any covenant of Lessee or
the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event
shall have occurred and be continuing and except as provided in clause
(4) below, the Indenture Trustee shall not, without the consent of the
Owner Trustee, which consent shall not be withheld if no right or
interest of the Owner Trustee or the Owner Participant shall be
diminished or impaired thereby, (i) enter into, execute and deliver
amendments, modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
provided that, whether or not a Default or Event of Default has
occurred and is continuing, the Owner Trustee's consent shall be
required with respect to any amendments, modifications, waivers or
consents in respect of any of the provisions of Sections 5, 7, 9, 11 or
19 of the Lease, or of any other section of the Lease to the extent
such action shall affect (y) the amount or timing of, or the right to
enforce payment of any Excluded Payment or (z) the amount or timing of
any amounts payable
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by Lessee under the Lease as originally executed (or as subsequently modified
with the consent of the Owner Trustee) which, absent the occurrence and
continuance of an Event of Default hereunder would be distributable to the Owner
Trustee under Article III hereof;
(3) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee and
the Owner Participant shall have the right, together with the Indenture
Trustee, (i) to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel and other documents and all information
which any thereof is permitted or required to give or furnish to the
Owner Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on Lessor
or the Owner Participant, (iv) to exercise, to the extent necessary to
enable it to exercise its rights under Section 4.03 hereof, the rights
of Lessor under Section 21 of the Lease and (v) to give notices of
default under Section 14 of the Lease;
(4) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee shall
have the right to the exclusion of the Indenture Trustee to adjust
Rent, Stipulated Loss Values and Termination Values as provided in
Section 3(d) of the Lease and to select counsel with respect to any
opinion relating to tax matters to be delivered solely to the Owner
Participant;
(5) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee may,
without the consent of the Indenture Trustee, (i) solicit and make bids
with respect to the Aircraft under Section 9 of the Lease in respect of
a termination of the Lease by Lessee pursuant to Section 9 thereof,
(ii) determine "fair market sales value" and "fair market rental value"
under Section 19 of the Lease for all purposes except following an
Event of Default pursuant to Section 15 of the Lease, and (iii) make an
election pursuant to and in accordance with the provisions of Section
9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights
of the "Lessor" under the Lease shall be exercised by the Owner Trustee
to the exclusion of the Indenture Trustee including, without
limitation, the right to (i) exercise all rights with respect to
Lessee's use and operation, modification or maintenance of the Aircraft
and any Engine which the Lease specifically confers on Lessor, and (ii)
consent to and approve any assignment pursuant to Section 13 of the
Lease; provided that the foregoing shall not limit (A) any rights
separately granted to the Indenture Trustee under the Operative
Documents or (B) the right of the Indenture Trustee to receive any
funds to be delivered to the "Lessor" under the Lease (except with
respect to Excluded Payments) and under the Purchase Agreement.
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Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 2.14,
4.03, 4.04(a) and 5.02(a) hereof, exercise the remedies set forth in such
Section 15 (other than in connection with Excluded Payments) at any time that a
Lease Event of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to
take any action under this Trust Indenture and nothing herein or therein shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
the risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action,
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if the Indenture Trustee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE
OR INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they
will not use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Indenture Estate
except (i) as required by the terms of the Lease or (ii) in accordance with the
powers granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Trust Indenture and in accordance with the
express terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
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(2) A certificate signed by a duly authorized officer of
Lessee stating the following:
A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to
be received (including the manufacturer,
model, FAA registration number (or other
applicable registration information) and
manufacturer's serial number) as
consideration for the Airframe to be
released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Airframe the Owner Trustee will
be the legal owner of such Replacement
Airframe free and clear of all Liens except
as are permitted by Section 6 of the Lease,
that such Replacement Airframe will on such
date be in good working order and condition,
and that such Replacement Airframe has been
or, substantially concurrently with such
withdrawal, will be duly registered in the
name of the Owner Trustee under the Federal
Aviation Act or under the law then
applicable to the registration of the
Airframe and that an airworthiness
certificate has been duly issued under the
Federal Aviation Act (or such other
applicable law) with respect to such
Replacement Airframe, and that such
registration and certificate is in full
force and effect, and that Lessee will have
the full right and authority to use such
Replacement Airframe;
(iv) the existence of the insurance required by
Section 11 of the Lease with respect to such
Replacement Airframe and the payment of all
premiums then due thereon;
(v) that the Replacement Airframe is of the same
or an improved model as the Airframe
requested to be released from this
Indenture;
(vi) the fair market value of the Replacement
Airframe as of the date of such certificate
(which in the judgment of Lessee shall be
not less than the then fair market value of
the Airframe requested to be released
(assuming such Airframe was in the condition
and repair required to be maintained under
the Lease));
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(vii) the fair market value of the Airframe
immediately prior to the date the Airframe
suffered an Event of Loss (assuming such
Airframe was in the condition and repair
required to be maintained under the Lease);
(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or
both, would become a Lease Event of Default,
has occurred which has not been remedied or
waived, and that Lessee will not be in
default, by the making and granting of the
request for release and the addition of a
Replacement Airframe, in the performance of
any of the terms and covenants of the Lease;
and
(ix) that the release of the Airframe so to be
released will not be in contravention of any
of the provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
(ii) a description of the Replacement Engine
(including the manufacturer's name and
serial number) as consideration for the
Engine to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be
the legal owner of such Replacement Engine
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that
such Replacement Engine will on such date be
in good working order and condition and that
such Replacement Engine is substantially the
same as the Engine to be released (or as
improved model);
(iv) the fair market value of the Replacement
Engine as of the date of such certificate
(which value shall not be less than the then
fair market value of the Engine to be
released (assuming such Engine was in the
condition and repair required to be
maintained under the Lease));
(v) the fair market value of the Engine to be
released (immediately prior to any Event of
Loss suffered by such Engine and assuming
that such Engine was in the condition and
repair required to be maintained under the
Lease);
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(vi) that each of the conditions specified in
Section 10(b) of the Lease with respect to
such Replacement Engine have been satisfied
and that Lessee will not be in default, by
the making and granting of the request for
release and the addition of the Replacement
Engine, in the performance of any of the
terms and covenants of the Lease;
(vii) that, with respect to the replacement of an
Engine pursuant to Section 9(d) of the
Lease, no Lease Event of Default and no
Lease Default has occurred which has not
been remedied or waived; and
(viii) that the release of the Engine so to be
released will not be in contravention of any
of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the
Owner Trustee title to the Replacement Airframe or Replacement Engine to be
received as consideration for the Airframe or Engine to be released and (ii)
assigning to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting
such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture Trustee
to protect the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be
an employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other
counsel satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other
instruments and/or property which have been
or are therewith delivered to and deposited
with the Indenture Trustee conform to the
requirements of this Trust Indenture and the
Lease and, upon the basis of such
application, the property so sold or
disposed of may be lawfully released from
the lien of this Trust Indenture and all
conditions precedent herein provided for
relating to such release have been complied
with; and
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(ii) the Replacement Airframe or Replacement
Engine has been validly subjected to the
lien of this Indenture and covered by the
Lease, the instruments subjecting such
Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Trust
Indenture, as the case may be, have been
duly filed for recordation pursuant to the
Federal Aviation Act or any other law then
applicable to the registration of the
Aircraft, and no further action, filing or
recording of any document is necessary or
advisable in order to establish and perfect
the right, title, estate and interest of the
Owner Trustee to and the lien of this Trust
Indenture on such Replacement Aircraft or
Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of
this Trust Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced,
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Trust Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the
Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of
the Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same
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using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Indenture Trustee's reasonable fees and expenses in making such investment,
shall be held and applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Indenture Trustee shall not be liable for any
loss resulting from any investment required to be made by it under this Trust
Indenture other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Indenture Trustee without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or inaction of the other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance
with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or
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filing, (ii) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not Lessee shall be in default with respect
thereto, (iii) to see to the payment or discharge of any lien or encumbrance of
any kind against any part of the Trust Estate or the Trust Indenture Estate,
(iv) to confirm, verify or inquire into the failure to receive any financial
statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain
or inquire as to the performance or observance of any of Lessee's covenants
under the Lease with respect to the Aircraft. The Owner Participant shall not
have any duty or responsibility hereunder, including, without limitation, any of
the duties mentioned in clauses (i) through (v) above; provided, that nothing
contained in this sentence shall limit any obligations of the Owner Participant
under the Participation Agreement or relieve the Owner Participant from any
restriction under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT
OR DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE
UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO
HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Owner Trustee made
in its individual capacity and the representations and warranties of the
Indenture Trustee, in each case expressly made in this Trust Indenture or in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the
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Refunding Agreement). The Loan Participants, the Certificate Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee
pursuant to any provision hereof and not then required to be distributed to the
Certificate Holders, Lessee or the Owner Trustee as provided in Article III
hereof need not be segregated in any manner except to the extent required by Law
or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Indenture Trustee shall not be liable for any interest thereon (except that the
Indenture Trustee shall invest all monies held as directed by Lessee so long as
no Lease Event of Default or Lease Default has occurred and is continuing (or in
the absence of such direction, by the Majority In Interest of Certificate
Holders) in Cash Equivalents; provided, however, that any payments received, or
applied hereunder, by the Indenture Trustee shall be accounted for by the
Indenture Trustee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall
incur any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good
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faith by them in accordance with the written advice or written opinion of any
such counsel, accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein
and in the Trust Agreement provided, and not in its individual capacity, except
as otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the reasonable
fees and expenses of counsel), for all services rendered hereunder and shall, on
and subsequent to an Event of Default hereunder, have a priority claim on the
Trust Indenture Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely
as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and
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nature whatsoever, which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also indemnified against by any other Person
under any other document) in any way relating to or arising out of this Trust
Indenture or any other Operative Document to which it is a party or the
enforcement of any of the terms of any thereof, or in any way relating to or
arising out of the manufacture, purchase, acceptance, non-acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of the Aircraft or any Engine (including, without
limitation, latent or other defects, whether or not discoverable, and any claim
for patent, trademark or copyright infringement), or in any way relating to or
arising out of the administration of the Trust Indenture Estate or the action or
inaction of the Indenture Trustee hereunder, to the extent not reimbursed by
Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior
to seeking indemnification from the Trust Indenture Estate, it will demand, and
take such action as it may in its discretion determine to be reasonable to
pursue, indemnification available to the Indenture Trustee under the Lease or
the Participation Agreement. Notwithstanding the foregoing, the Indenture
Trustee shall not be entitled to any indemnification for any Expenses to the
extent relating to or arising from the willful misconduct or gross negligence
(or negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in
the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms
of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's
indemnities under such Sections. In addition, if necessary, the Indenture
Trustee shall be entitled to indemnification from the Trust Indenture Estate for
any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner
Trustee pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
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(a) The Indenture Trustee or any successor thereto may resign
at any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having its principal place of business in the Borough
of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
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(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Indenture Trustee and the Indenture Trustee under this Trust Indenture without
further act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary
or desirable in order to conform to any law of any jurisdiction in which all or
any part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
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<PAGE> 63
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon the
Indenture Trustee in respect of the custody, investment and payment of monies
and all monies received by any such additional or separate trustee from or
constituting part of the Trust Indenture Estate or otherwise payable under any
Operative Document to the Indenture Trustee shall be promptly paid over by it to
the Indenture Trustee. All other rights, powers, duties and obligations
conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Indenture Trustee and such additional or separate trustee
jointly except to the extent that applicable Law of any jurisdiction in which
any particular act is to be performed renders the Indenture Trustee incompetent
or unqualified to perform such act, in which event such rights, powers, duties
and obligations (including the holding of title to all or part of the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed by
such additional or separate trustee. No additional or separate trustee shall
take any discretionary action except on the instructions of the Indenture
Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the
consequences of its lack of reasonable care in selecting, and Indenture
Trustee's own actions in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section 8.03 shall be
subject to, and shall have the benefit of Articles IV through VIII and Article X
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 8.03 shall not
in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no
longer necessary or desirable in order to conform to any such law or take any
such action or shall be advised by such counsel that it is no longer so
necessary or desirable in the interest of the Certificate Holders, or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Certificate Holders, the Indenture Trustee and,
upon the written request of the Indenture Trustee, the Owner Trustee, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Indenture Trustee may act on behalf of the Owner Trustee under this Section
8.03(c) when and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or
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<PAGE> 64
modification of, or consent under, the terms of the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Guarantee, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Indenture Trustee and a Majority in Interest of
Certificate Holders. Anything to the contrary contained herein notwithstanding,
without the necessity of the consent of any of the Certificate Holders or the
Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant
may be modified, amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may
enter into amendments of or additions to the Lease to modify Section 5 (except
to the extent that such amendment would affect the rights or exercise of
remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so
long as such amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments until after the payment in
full of all Secured Obligations or otherwise adversely affect the Certificate
Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with
the Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06
hereof, Section 14 (except to add an Event of Default) of the Lease, the
definitions of "Event of Default", "Default", "Lease Event of Default", "Lease
Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or
"Certificate Holder", or the percentage of Certificate Holders required to take
or approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Principal Amount, Make-Whole
Amount, if any, or interest with respect to any Secured Certificate, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the
Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend
any indemnities in favor of the Certificate Holders, (iv) consent to any change
in the Trust Indenture or the Lease which would permit redemption of Secured
Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the
purchase of the
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<PAGE> 65
Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify
any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or
supplement the Lease or consent to any assignment of the Lease, in either case
releasing Lessee from its obligations in respect of the payment of Interim Rent,
Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
altering the absolute and unconditional character of the obligations of Lessee
to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part thereof other
than Permitted Liens or deprive any Certificate Holder of the benefit of the
Lien of this Trust Indenture on the Trust Indenture Estate, except as provided
in connection with the exercise of remedies under Article IV hereof. So long as
no Lease Event of Default has occurred and is continuing, without the consent of
Lessee no amendment or supplement to this Trust Indenture or waiver or
modification of the terms hereof shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee
under the Trust Agreement or the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 9.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such document.
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<PAGE> 66
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 9.01 hereof,
the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR
TRUST AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal
Amount of, Make-Whole Amount, if any, and interest on and all other amounts due
under all Secured Certificates and provided that there shall then be no other
Secured Obligations due to the Certificate Holders and the Indenture Trustee
hereunder or under the Participation Agreement, the Owner Trustee shall direct
the Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to
any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or
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<PAGE> 67
other right, title and interest of any Certificate Holder in and to the Trust
Indenture Estate or hereunder shall operate to terminate this Trust Indenture or
entitle such holder or any successor or transferee of such holder to an
accounting or to the transfer to it of any legal title to any part of the Trust
Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS
BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or
any part thereof (including any part thereof or interest therein), by the
Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind
the Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied,
shall be construed to give any person other than the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders,
any legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (Telecopy No. (617) 664- 5371), (iii) if
to any Participant, Lessee or any Certificate Holder, addressed to such party at
such address as such party shall have furnished by notice to the Owner Trustee
and the Indenture Trustee, or, until an address is so furnished, addressed to
the address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Secured Certificate Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any Participant or the
Indenture Trustee or any Certificate Holder or Lessee to any of the other of
them, such notice shall be deemed given and such requirement satisfied when such
notice is received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
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<PAGE> 68
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and
in the table of contents hereto are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
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<PAGE> 69
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a
vote of a Majority in Interest of Certificate Holders, except as otherwise
provided herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture
or the Trust Agreement to the contrary, neither the Indenture Trustee nor the
Owner Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee, as Owner Trustee
By:________________________________________
Name:______________________________________
Title:_____________________________________
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By:________________________________________
Name:______________________________________
Title:_____________________________________
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<PAGE> 71
EXHIBIT A
TO
TRUST INDENTURE AND
MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1995 B]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 B],
dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under
that certain Trust Agreement [NW 1995 B] dated as of December 13, 1995 (the
"TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named
therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1995 B], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and
Engines described below, and a counterpart of the Trust Indenture is attached
hereto and made a part hereof and this Trust Indenture Supplement, together with
such counterpart of the Trust Indenture, is being filed for recordation on the
date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth
that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on
the Trust Indenture Estate covers all of Owner Trustee's right, title and
interest in and to the following described property:
EXHIBIT A-1
<PAGE> 72
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest
in and to all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above.
EXHIBIT A-2
<PAGE> 73
Notwithstanding any provision hereof, no Excluded Payment
shall constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Indenture Supplement is being delivered in the
State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Owner Trustee, Owner
Trustee
By:________________________________________
Name:
Title:
EXHIBIT A-3
<PAGE> 74
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
<S> <C> <C>
Series A ............................. $23,169,369 7.67%
Series B ............................. $ 7,400,345 8.07%
</TABLE>
<PAGE> 75
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N536US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
-------------------------------------- ----------------------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 2.02608453%
Jan 2, 2001 0.00000000%
Jul 2, 2001 2.15326969%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.15326969%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.15326969%
Jan 2, 2004 0.00000000%
Jul 2, 2004 2.15326969%
Jan 2, 2005 0.00000000%
Jul 2, 2005 2.15326969%
Jan 2, 2006 0.00000000%
Jul 2, 2006 1.75724682%
Jan 2, 2007 0.39602287%
Jul 2, 2007 1.24738399%
Jan 2, 2008 0.90588570%
Jul 2, 2008 7.98950114%
Jan 2, 2009 1.44318130%
Jul 2, 2009 13.40881144%
Jan 2, 2010 2.01275658%
Jul 2, 2010 14.00022590%
Jan 2, 2011 2.62685617%
Jul 2, 2011 14.63787382%
Jan 2, 2012 19.51528330%
Jul 2, 2012 7.26653799%
</TABLE>
<PAGE> 76
SERIES B
AIRCRAFT: N536US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
-------------------------------------- ----------------------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 0.00000000%
Jul 2, 1999 0.00000000%
Jan 2, 2000 0.00000000%
Jul 2, 2000 0.00000000%
Jan 2, 2001 0.00000000%
Jul 2, 2001 0.00000000%
Jan 2, 2002 0.00000000%
Jul 2, 2002 2.24717902%
Jan 2, 2003 0.00000000%
Jul 2, 2003 2.24717902%
Jan 2, 2004 0.00000000%
Jul 2, 2004 2.24717902%
Jan 2, 2005 0.00000000%
Jul 2, 2005 12.04872205%
Jan 2, 2006 0.00000000%
Jul 2, 2006 31.31805342%
Jan 2, 2007 0.00000000%
Jul 2, 2007 34.67135654%
Jan 2, 2008 0.00000000%
Jul 2, 2008 15.22033094%
</TABLE>
<PAGE> 77
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
Schedule II-1
<PAGE> 1
LEASE AGREEMENT
[NW 1995 B]
This LEASE AGREEMENT [NW 1995 B], dated as of December 13,
1995, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (as defined in Section 1 hereof) (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement [NW 1995 B] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Administrative Agent" means [______________], a
[_______] banking corporation, as administrative agent pursuant
to the Participation Agreement, and any successor acting as
administrative agent.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"After-Tax Basis" means, with respect to any amount
received or accrued by any Person (the "BASE AMOUNT"), the
base amount, supplemented by a further payment, if necessary,
to such Person such that, after reduction for all Taxes of any
nature whatsoever imposed on such Person as a result of the
receipt or accrual of the base amount and such further payment
(determined without regard to any exclusions contained in
Section 7(b)(ii) of the Participation Agreement and including,
without limitation, income taxes, and after giving effect to
all current deductions or credits, if any, actually utilized
by such Person arising from the event or circumstance giving
rise to the base amount), shall be equal to the base amount.
With respect to any amount received or accrued by any Person
other than the Owner Participant (or Lessee if it relates to a
payment from the Owner Participant), such calculations shall
be made, with respect to all Taxes, on the basis of the
amounts actually required to
<PAGE> 2
be paid by the recipient. With respect to any amount received
or accrued by the Owner Participant (or by Lessee with respect
to a payment received from the Owner Participant) such
calculations shall be made with respect to all Taxes, other
than income taxes, on the basis of the amounts actually
required to be paid by recipient and with respect to income
taxes, on the assumption that the recipient is subject to
Federal and state and local income taxation at the Highest
Marginal Rate.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the two Engines initially leased
hereunder (or any engine substituted for either of such
Engines pursuant to the terms hereof), whether or not any of
such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after
removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at
such time as an aircraft (except Engines or engines from time
to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
- 2 -
<PAGE> 3
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but subject always to the
provisions of Section 3(d)(v) hereof and, for any Renewal Term,
Basic Rent determined pursuant to Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on June 20, 2016, or such
earlier date as this Lease may be terminated in accordance
with the provisions hereof.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Bill of Sale, free
and clear of all liens, encumbrances and rights of others
except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston,
Massachusetts; Salt Lake City, Utah; San Francisco,
California; or Minneapolis, Minnesota and, in connection with
any payment of Rent and so long as any Secured Certificate is
a Eurodollar Loan (as defined in the Trust Indenture), such
day is also a day for trading by and between banks in the
interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the
United States holding a carrier operating certificate issued by
the Secretary of Transportation pursuant to Chapter 447 of
Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo.
"Citizen of the United States" has the meaning
specified in Section 40102(a)(15) of Title 49 of the United
States Code or any similar legislation of the United States of
America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil
Reserve Air Fleet Program currently administered by the United
States Air Force Air Mobility Command pursuant to Executive
Order No. 11490, as amended, or any substantially similar
program.
- 3 -
<PAGE> 4
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commencement Date" means June 20, 1996.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be, to
finance the Owner Trustee's payment of Lessor's Cost for the
Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1995 B], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated
as of November 2, 1995, among Lessee, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, [_____________], as documentation
agent, [_____________], as administrative agent, and
[______________], as syndication agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default.
"Delivery Date" means the date of the Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 2002.
"Documentation Agent" means [_______________], a bank
organized under the laws of [________________], as
documentation agent pursuant to the Participation Agreement,
and any successor acting as documentation agent.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the two Pratt & Whitney
Model PW2037 engines listed by manufacturer's serial number in
the initial Lease Supplement, whether or not from time to time
thereafter installed on the Airframe or installed on any other
airframe or on any other aircraft; and (ii) any engine which
may from time to time be substituted, pursuant to the terms
hereof, for either of such two engines, together in each case
with any and all Parts
- 4 -
<PAGE> 5
incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine; provided, however,
that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term
"Engines" means, as of any date of determination, all Engines
then leased hereunder.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder. Section references
to ERISA are to ERISA, as in effect at the date of the
Participation Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the Aircraft
which is a member of OECD, or any agency or instrumentality of
any thereof) which in the case of any event referred to in
this clause (iii) (other than a requisition of title) shall
have resulted in the loss of possession of such property by
Lessee for a period in excess of 180 consecutive days or, in
the case of a requisition of title, the requisition of title
shall not have been reversed within 60 days from the date of
such requisition of title; (iv) as a result of any law, rule,
regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of
registry of the Aircraft having jurisdiction, the use of such
property in the normal course of the business of air
transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of
such 180 day period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such property by Lessee,
but in any event if such use shall have been prohibited for a
period of two consecutive years, provided that no Event of
Loss shall be deemed to have occurred if such prohibition has
been applicable to Lessee's entire U.S. registered fleet of
Boeing Model 757-200 aircraft and Lessee, prior to the
expiration of such two-year period, shall have conformed at
least one
- 5 -
<PAGE> 6
such aircraft in its fleet to the requirements of any such
law, rule, regulation, order or other action and commenced
regular commercial use of the same in such jurisdiction and
shall be diligently carrying forward, in a manner which does
not discriminate against the Aircraft in so conforming the
Aircraft, all steps which are necessary or desirable to permit
the normal use of the Aircraft by Lessee, but in any event if
such use shall have been prohibited for a period of three
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft
which is a member of OECD or any instrumentality or agency of
any thereof, which shall have occurred during the Basic Term
(or the Interim Term or any Renewal Term) and shall have
continued for thirty (30) days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (v)
shall exist if Lessor shall have furnished to Lessee the
written notice specified in Section 10(d) hereof; and (vi) any
divestiture of title to or interest in an Engine treated as an
Event of Loss pursuant to Section 7(b) hereof. 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
Airframe.
"Expenses" has the meaning specified in Section
7(c) of the Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the
United States Code comprising those provisions formerly
referred to as the Federal Aviation Act of 1958, as amended,
or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency
or instrumentality of the United States government succeeding
to their functions.
"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,
Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those
required by, the Federal Aviation Administration, 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
Rijflauchtraatdienst of the Kingdom of the Netherlands, the
Ministry of Transportation of Japan or the Federal Ministry of
Transport of Canada (and
- 6 -
<PAGE> 7
any agency or instrumentality of the applicable government
succeeding to the functions of any of the foregoing entities).
"Funding Loss Amount" has the meaning assigned to
that term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1995 B], dated as
of the date hereof, made by the Guarantor in favor of the
Parties, as such Guarantee may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Highest Marginal Rate" has the meaning assigned to
that term in the Tax Indemnity Agreement.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of
their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which
arises as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by,
or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by said Section 7
pursuant to said Section 7, or (D) claims against the
Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft,
the Trust Estate, the Trust Indenture Estate or the Operative
Documents other than a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or Article IV or V of the
Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is
- 7 -
<PAGE> 8
continuing and prior to the time that the Indenture Trustee
has received all amounts due pursuant to the Trust Indenture.
"Interest Period" means Interest Period as defined in
the Trust Indenture.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1995 B] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date.
"Lease Period Date" means December 20, 1996 and each
succeeding June 20 and December 20, to and including the last
such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the Delivery Date for the
purpose of leasing the Aircraft under and pursuant to the
terms of this Lease Agreement, and any subsequent Lease
Supplement entered into in accordance with the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it relates to the Aircraft),
the FAA Bill of Sale, the Bill of Sale, the Purchase Agreement
Assignment and the Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
First Security Bank of Utah, National Association, in its
- 8 -
<PAGE> 9
individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii)
any act or omission of the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) claims
against the Owner Participant, Lessor, or First Security Bank
of Utah, National Association, in its individual capacity,
with respect to Taxes or Expenses against which Lessee is not
required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising
out of any transfer by Lessor or the Owner Participant of all
or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of
the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or a transfer of the
Aircraft pursuant to Section 9, 10 or 19 hereof or pursuant to
the exercise of the remedies set forth in Section 15 hereof,
provided, however, that any Lien which is attributable solely
to First Security Bank of Utah, National Association or the
Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the
use, possession, operation, or quiet enjoyment of the Aircraft
by Lessee (or any Sublessee), (3) the existence of such Lien
does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First
Security Bank of Utah, National Association or the Owner
Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a
material threat of interference with the payment of Rent
(other than Excluded Payments in favor of First Security Bank
of Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub-sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in
Section 10(a) hereof.
"Major Default" means any event which with the giving
of notice or the lapse of time or both would become an Event
of Default pursuant to Section 14(a), 14(b) or 14(e) hereof.
- 9 -
<PAGE> 10
"Majority in Interest of Certificate Holders" has the
meaning assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Net Economic Return" shall have the meaning ascribed
to such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net present
value, as of the Delivery Date, of Basic Rent set forth in
Exhibit B hereto, discounted at an annual interest rate of 7.70
percent on a semi-annual basis.
"OECD" means the Organization for Economic
Cooperation and Development.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the Participants
and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the
Aircraft, the Secured Certificates, the Bill of Sale, the FAA
Bill of Sale, the Purchase Agreement (insofar as it relates to
the Aircraft), the Guarantee, the Purchase Agreement Assignment
and the Consent and Agreement.
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust Agreement,
the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 8
of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
- 10 -
<PAGE> 11
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1995 B], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture
Trustee and the Participants.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum equal to 1% over the Base Rate.
"Permitted Lien" means any Lien referred to in
clauses (i) through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a
country listed in Exhibit F hereto.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA or any plan as defined in Section
4975(e)(1) of the Code.
- 11 -
<PAGE> 12
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1995 B], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Basic Rent and Supplemental Rent,
collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Secured Certificates" has the meaning assigned to
that term in the Trust Indenture.
"Special Purchase Price" shall mean the amount
denominated as such in Exhibit B to the Lease.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including June 20, 2016, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost for the
Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease
Period in which such Stipulated Loss Value Date occurs up to
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential.
"Stipulated Loss Value" as of any date after June 20, 2016
shall be the amount determined as provided in Section 19(a)
hereof.
"Stipulated Loss Value Date" means the twentieth
calendar day of each calendar month during the Interim Term,
Basic Term and any Renewal Term.
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<PAGE> 13
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Basic Rent) which Lessee assumes
or agrees to pay to Lessor or others hereunder, under the
Participation Agreement, under the Tax Indemnity Agreement or
under any of the other Operative Documents. The parties
acknowledge that Supplemental Rent is a general category and,
accordingly, agree that any provision of any Operative
Document which calls for the payment of Supplemental Rent and
also calls for the payment of specific items which are
includable in Supplemental Rent is not to be interpreted as
requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
the Loan Participants and each other Certificate Holder, and
each of their respective Affiliates, successors and permitted
assigns.
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1995 B], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, gross
receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings
of any nature whatsoever, together with any and all penalties,
fines, additions to tax and interest thereon (each,
individually a "Tax").
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
"Termination Value" with respect to the Aircraft as
of any date through and including June 20, 2016, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost for the
Aircraft by the percentage specified in Exhibit D hereto
opposite the Termination Date with respect to which the amount
is determined (as such
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<PAGE> 14
Exhibit D may be adjusted from time to time as provided in
Section 3(d) hereof and in Section 7 of the Tax Indemnity
Agreement). In the event that the Termination Date with
respect to which Termination Value is determined is a date on
which Basic Rent is payable in advance as indicated on Exhibit
B, to the extent that the actual amount of interest paid and
to be paid on the Secured Certificates during the Lease Period
ending on such Termination Date is greater or less than the
amount included in calculating the corresponding percentage
set forth in Exhibit D with respect to such Termination Date
on account of such interest, the corresponding percentage set
forth in Exhibit D shall be adjusted appropriately to
compensate for such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under
the Trust Agreement, such information to be furnished by the
Owner Trustee, (3) Shearman & Sterling, special counsel to the
Loan Participants, such information to be furnished by the
Documentation Agent, (4) Cadwalader, Wickersham & Taft,
special counsel to Lessee and Guarantor, such information to
be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special
counsel in Oklahoma City, Oklahoma, such information to be
furnished by Lessee, (ii) all fees, taxes and other charges
payable in connection with the recording or filing of
instruments and financing statements (but excluding any sales
or use tax which applies to the Aircraft), such information to
be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of the Owner Trustee under the Trust
Agreement, such information to be furnished by the Owner
Trustee, and the out-of-pocket expenses of the Owner
Participant, such information to be furnished by the Owner
Participant, (iv) the initial fee and reasonable and actual
disbursements of the Indenture Trustee under the Trust
Indenture, such information to be furnished by the Indenture
Trustee, (v) the fee of BK Associates, Inc. with respect to
the appraisals of the Aircraft pursuant to Sections 4(a)(xx)
and 4(a)(xxix) of the Participation Agreement, such
information to be furnished by the Owner Participant and
Lessee, (vi) the reasonable and actual fees, expenses and
disbursements of White & Case, special counsel to the Owner
Participant, such information to be furnished by the Owner
Participant, (vii) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation, such
information to be furnished by Lessee, and (viii) the fee
payable to the Loan Participants on the Delivery Date.
"Trust Agreement" means that certain Trust Agreement
[NW 1995 B], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National
Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without
limitation, supplementation thereof by
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<PAGE> 15
one or more Trust Supplements entered into pursuant to the
applicable provisions thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1995 B], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier
as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations
under the Federal Aviation Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee
(or any Sublessee) agrees to furnish the Airframe and Engines
or engines installed thereon to a third party pursuant to
which such Airframe and Engines or engines (i) shall be
operated solely by regular employees of Lessee (or any
Sublessee) possessing all current certificates and licenses
that would be required under the Federal Aviation Act or, if
the Aircraft is not registered in the United States, all
certificates and licenses required by the laws of the
jurisdiction of registry, for the performance by such
employees of similar functions within the United States of
America or such other jurisdiction of registry (it is
understood that cabin attendants need not be regular employees
of Lessee (or any Sublessee)) and (ii) shall be maintained by
Lessee (or any Sublessee) in accordance with its normal
maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees
(subject to satisfaction of the conditions set forth in Section 4(a) of the
Participation Agreement) to accept the transfer of title from and
simultaneously to lease to Lessee hereunder, and Lessee hereby agrees (subject
to satisfaction of the conditions set forth in Section 4(b) of the
Participation Agreement) to lease from Lessor hereunder, the Aircraft as
evidenced by the execution by Lessor and Lessee of a Lease Supplement leasing
the Aircraft hereunder. Lessee hereby agrees that such acceptance of the
Aircraft by Lessor shall, without further act, irrevocably constitute
acceptance by Lessee of such Aircraft for all purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic
Term. The Interim Term shall commence on the Delivery Date and end on and
include the day immediately preceding the Commencement Date unless earlier
terminated pursuant to the provisions hereof. The Basic Term shall commence on
the Commencement Date and end on
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<PAGE> 16
June 20, 2016, or such earlier date as this Lease may be terminated in
accordance with the provisions hereof.
(b) [Intentionally Omitted]
(c) Basic Rent. Lessee shall pay Basic Rent with respect
to each Lease Period during the Basic Term on the Commencement Date and on each
Lease Period Date during the Basic Term, in consecutive installments in the
amounts as provided in the next sentence, each such installment to cover the
Lease Period specified in Exhibit B. Each such installment of Basic Rent shall
be equal to Lessor's Cost multiplied by the percentage for the Commencement
Date or the applicable Lease Period Date specified in Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 7.70% per annum, computed on
the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST
RATE"), Lessor and Lessee recognize that the actual rate of interest on the
Secured Certificates may be a rate from time to time which may be greater or
less than the Assumed Interest Rate and that the related basis upon which
interest on the Secured Certificates will be computed will be as provided in
the Trust Indenture. Accordingly, each installment of Basic Rent shall be
increased or decreased (but not below zero), as the case may be, by the Rent
Differential Amount (as defined herein). For purposes hereof, "RENT
DIFFERENTIAL AMOUNT" shall mean, as of the Commencement Date or any Lease
Period Date with respect to the Basic Term, the difference between (i) the
aggregate amount of interest due and payable on the Commencement Date or such
Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of
interest on the Secured Certificates that would have been due and payable on
the Commencement Date or such Lease Period Date if such Secured Certificates
had borne interest at the Assumed Interest Rate, in each case for the period
from and including the Lease Period Date (or the Commencement Date in the case
of the first Lease Period) next preceding such Lease Period Date to but
excluding such Lease Period Date or, in the case of the Commencement Date, the
period from the Delivery Date to but excluding the Commencement Date. If, as
of the Commencement Date or any Lease Period Date, the amount determined in
accordance with clause (i) of the immediately preceding sentence shall be
greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Basic Rent payable on the Commencement Date or such
Lease Period Date shall be increased by the Rent Differential Amount. If, as
of the Commencement Date or any Lease Period Date, the amount determined in
accordance with such clause (ii) shall exceed the amount determined in
accordance with such clause (i), the amount of Basic Rent due on the
Commencement Date or such Lease Period Date shall be decreased (but not below
zero) by the Rent Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date
occurs other than on December 21, 1995, or (B) Transaction
Expenses paid by Lessor pursuant to Section 16(a) of the
Participation Agreement are determined to be other than
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<PAGE> 17
1.35% of Lessor's Cost, then in each case the Basic Rent
percentages set forth in Exhibit B, the Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value
percentages set forth in Exhibit D and the Special Purchase
Price shall be recalculated by the Owner Participant, on or
prior to April 15, 1996 using the same methods and assumptions
used to calculate original Basic Rent, Stipulated Loss Value
and Termination Value percentages and the Special Purchase
Price, in order to: (1) maintain the Owner Participant's Net
Economic Return and (2) minimize the Net Present Value of
Rents to Lessee to the extent possible consistent with clause
(1) hereof.
(ii) (A) In the event of a refinancing or a
refunding as contemplated by Section 17 of the Participation
Agreement, then the Basic Rent percentages set forth in
Exhibit B, the Stipulated Loss Value percentages set forth in
Exhibit C, the Termination Value percentages set forth in
Exhibit D and the Special Purchase Price shall be recalculated
(upwards or downwards) by the Owner Participant as
contemplated by such Section to (1) maintain the Owner
Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents to Lessee and (B) in the event that
Lessee elects to satisfy any indemnity obligation under the
Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the
Tax Indemnity Agreement which has been consented to by the
Owner Participant in its sole discretion, then the Basic Rent
percentages set forth in Exhibit B, the Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value
percentages set forth in Exhibit D and the Special Purchase
Price shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to
the extent such assumptions shall be varied to take into
account the Loss (as defined in the Tax Indemnity Agreement)
that is the subject of such indemnification and any prior or
contemporaneous Loss) used to calculate the Basic Rent
percentages, the Stipulated Loss Value percentages and the
Termination Value percentages and the Special Purchase Price
on the Delivery Date, in order to (1) maintain the Owner
Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents to Lessee.
(iii) Notwithstanding any other provision in any
Operative Document, the Special Purchase Price shall not be
decreased below the higher of (A) the estimated fair market
value of the Aircraft on December 20, 2011, determined as of
the Delivery Date and set forth in the opinion received by the
Owner Participant from BK Associates, Inc. pursuant to Section
4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and
(B) the sum of the present values, as of December 20, 2011, of
(1) Basic Rent payable with respect to the period from
December 20, 2011 to and including June 20, 2016 and (2) the
estimated fair market value of the Aircraft on June 20, 2016,
determined as of the Delivery Date and set forth in the
Appraisal utilizing the discount rate
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<PAGE> 18
utilized by the Owner Participant in determining the Special
Purchase Price as of the Delivery Date.
(iv) Any recalculation of Basic Rent and
Stipulated Loss Value and Termination Value percentages and
Special Purchase Price pursuant to this Section 3(d) shall be
determined by the Owner Participant and shall be subject to
the verification procedures set forth in Exhibit E hereto.
Such recalculated Basic Rent and Stipulated Loss Value and
Termination Value percentages and Special Purchase Price shall
be set forth in a Lease Supplement or an amendment to this
Lease.
(v) Anything contained in the Participation
Agreement or this Lease to the contrary notwithstanding, each
installment of Basic Rent payable hereunder, whether or not
adjusted in accordance with this Section 3(d), shall, and each
payment of Termination Value and Stipulated Loss Value,
whether or not adjusted in accordance with this Section 3(d),
shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in
any event, in an amount at least sufficient to pay in full, on
the date on which such amount of Rent is due, any payments
then required to be made on account of the principal of,
premium, if any, and interest on the Secured Certificates. It
is agreed that no installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased
or adjusted by reason of (i) any attachment or diversion of
Rent on account of (A) Lessor Liens or (B) any Loan
Participant Lien or other Lien on or against the Trust Estate,
any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to
the transactions contemplated by the Operative Documents, (ii)
any modification of the payment terms of the Secured
Certificates made without the prior written consent of Lessee
or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of
Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this
Section 3(d) shall be (A) in compliance with the tests of
Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28
and with Section 467 of the Internal Revenue Code of 1986, as
amended, and (B) subject to verification pursuant to
Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be
paid) promptly to Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent constituting Stipulated Loss Value or Termination Value
as the same shall become due and owing and all other amounts of Supplemental
Rent within five days after demand or within such other relevant period as may
be provided in any Operative Document, and in the event of any failure on the
part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights,
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<PAGE> 19
powers and remedies provided for herein or in any other Operative Document or
by law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee
shall pay as Supplemental Rent when due any amount of premium payable when due
under the Trust Indenture and shall pay amounts equal to the amounts payable
pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when
the same shall become due and payable. Lessee also will pay to Lessor, or to
whomsoever shall be entitled thereto, on demand, as Supplemental Rent, to the
extent permitted by applicable law, interest at the Past Due Rate on any part
of any installment of Basic Rent not paid when due for any period for which the
same shall be overdue and on any payment of Supplemental Rent not paid when due
for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be
made directly by Lessee (whether or not any Sublease shall be in effect) by
wire transfer of immediately available funds prior to 10:30 A.M., New York
time, on the date of payment, to Lessor at its account at First Security Bank
of Utah, National Association, 79 South Main Street, Salt Lake City, Utah
84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate
Trust Department, Credit Northwest/NW 1995 B (or such other account of Lessor
in the continental United States as Lessor shall direct in a notice to Lessee
at least 10 Business Days prior to the date such payment of Rent is due);
provided that so long as the Trust Indenture shall not have been fully
discharged, Lessor hereby directs and Lessee agrees, that, unless the Indenture
Trustee shall otherwise direct, all Rent payable to Lessor and assigned to the
Indenture Trustee pursuant to the Trust Indenture shall be paid prior to 10:30
A.M., New York time on the due date thereof in funds of the type specified in
this Section 3(f) directly to the Indenture Trustee at its account at State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust
Department, Reference: Northwest/NW 1995 B (or such other account of the
Indenture Trustee in the continental United States as the Indenture Trustee
shall direct in a notice to Lessee at least 10 Business Days prior to the date
such payment of Rent is due). All payments of Supplemental Rent owing to the
Indenture Trustee or to a Loan Participant or any other Certificate Holder
pursuant to the Participation Agreement shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date thereof at
the office of the Indenture Trustee or at such other office of such other
financial institution located in the continental United States as the party
entitled thereto may so direct at least 10 Business Days prior to the due date
thereof. All payments of Supplemental Rent payable to the Owner Participant,
to the extent that such amounts constitute Excluded Payments (as defined in the
Trust Indenture), shall be made in Dollars in immediately available funds prior
to 10:30 A.M., New York time, on the due date thereof, to the account of the
Owner Participant specified in Schedule I to the Participation Agreement (or to
such other account as may be specified in writing by the Owner Participant from
time to time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment
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<PAGE> 20
is made on such next succeeding Business Day) no interest shall accrue on the
amount of such payment from and after such scheduled date.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR
LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS."
NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that First Security Bank of Utah, National Association, in its individual
capacity, (i) represents and warrants that on the Delivery Date, Lessor shall
have received whatever title to the Aircraft was conveyed to it by Lessee, (ii)
represents and warrants that on the Delivery Date the Aircraft shall be free of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to it, (iii)
covenants that it will not, through its own actions or inactions, interfere in
Lessee's quiet enjoyment of the Aircraft during the Term, (iv) agrees that it
will not directly or indirectly create, incur, assume or suffer to exist any
Lessor Lien attributable to it on or with respect to the Airframe or any Engine
or any portion of the Trust Estate and (v) represents and warrants that it is a
Citizen of the United States without making use of a voting trust, voting
powers agreement or similar arrangement, and agrees that if at any time it
shall cease to be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement it will promptly resign
as Owner Trustee (if and so long as such citizenship is necessary under the
Federal Aviation Act as in effect at such time or, if it is not necessary, if
and so long as the Owner Trustee's citizenship would have any material adverse
effect on the Loan Participants, the Owner Participant or Lessee), effective
upon the appointment of a successor Owner Trustee in accordance with Section
9.01 of the Trust Agreement. None of the provisions of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Manufacturer, any subcontractor
or supplier of the Manufacturer with respect to the Airframe, the Engines or
any Parts, or to release the Manufacturer, or any such subcontractor or
supplier, from any such representation, warranty or obligation. Lessor agrees
that it will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to the Airframe or
any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return.
Unless purchased by Lessee pursuant to Section 19 hereof, upon the termination
of this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c) or 15, Lessee, at its
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<PAGE> 21
own expense, will return the Airframe to Lessor at a major airport in one of
the forty-eight contiguous states of the United States chosen by Lessee, and
Lessee will give Lessor at least ten (10) Business Days' prior written notice
of the place of such return; provided, however, that if Lessor shall have made
the request for storage pursuant to Section 5(d) hereof, Lessee shall return
the Airframe to Lessor at the site of the storage at the end of the storage
period. At the time of such return, Lessee will, unless otherwise requested by
Lessor at least ninety (90) days prior to the return hereunder, cause the
Aircraft, if it is not then so registered, to be registered under the laws of
the United States with the Federal Aviation Administration in the name of the
Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by
reason of the failure of Lessor or its designee to be eligible on such date to
own an aircraft registered with the Federal Aviation Administration or (ii)
such registration is otherwise prohibited by applicable law; the Airframe will
be fully equipped with the Engines (or other Pratt & Whitney Model PW2037
engines or two engines of the same or another manufacturer of not less than
equivalent utility, value and remaining useful life as the Engines, and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft (assuming for this purpose
that the Aircraft includes the Engines); provided that both engines shall be of
the same make and model) duly installed thereon. Also, at the time of such
return, such Airframe and Engines or engines (i) shall be certified (or, if not
then registered under the Federal Aviation Act, shall be eligible for
certification) as an airworthy aircraft by the Federal Aviation Administration,
(ii) shall be free and clear of all Liens (other than Lessor Liens, including
for this purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) and rights of third parties under pooling,
interchange, overhaul, repair or other similar agreements or arrangements,
(iii) shall be in as good an operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, or, in the case of any such engines
owned by Lessee, shall have a value, utility and remaining useful life at least
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit G.
During the last six (6) months of the Term (unless Lessee
shall have elected to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease), with reasonable notice, Lessee will cooperate,
and cause any Sublessee to cooperate, in all reasonable respects with the
efforts of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not
interfere with the operation or maintenance of the Aircraft by Lessee or any
Sublessee.
(b) Return of the Engines. In the event that any engine
not owned by Lessor shall be delivered with the returned Airframe as set forth
in paragraph (a) of this Section 5, Lessee, concurrently with such delivery,
will, at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to
the effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor
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<PAGE> 22
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), against receipt from Lessor of a
bill of sale or other instrument evidencing the transfer, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), by Lessor to Lessee or its designee of all of Lessor's right,
title and interest in and to any Engine constituting part of the Aircraft but
not installed on the Airframe at the time of the return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon
any termination of this Lease in accordance with paragraph (a) of this Section
5, (i) Lessor shall pay Lessee, as compensation for any fuel contained in the
fuel tanks of such Airframe, the value of such fuel at the price paid by Lessee
for such fuel, and (ii) Lessee shall deliver or cause to be delivered to Lessor
all logs, manuals and data and inspection, modification and overhaul records
required to be maintained with respect thereto under applicable rules and
regulations of each country under the laws of which the Aircraft has been
registered during the period of operation thereof, which logs, manuals, data
and records, if not maintained in English, shall be translated into English at
Lessee's expense.
(d) Storage Upon Return. If, at least sixty (60) days
prior to termination of this Lease at the end of the Basic Term or any Renewal
Term or pursuant to Section 9(c), Lessee receives from Lessor a written request
for storage of the Aircraft upon its return hereunder, Lessee will provide
Lessor, or cause Lessor to be provided, with (i) free parking facilities for
the Aircraft (maintenance costs and other out-of-pocket costs other than
parking fees to be for the account of Lessor) for a period not exceeding
forty-five (45) days commencing on the date of such termination and (ii)
parking facilities for the Aircraft (maintenance costs, other out-of-pocket
costs and parking fees to be for the account of Lessor) for a period not
exceeding an additional fifteen (15) days commencing at the end of such
forty-five (45) day period, in each case at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft; provided that Lessee shall have no obligation to move the Aircraft
from such location during the storage periods. Lessee will maintain insurance
for the Aircraft during such periods but not in excess of sixty (60) days and
be reimbursed by Lessor for the premiums thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, title thereto or any interest therein or in this Lease, except (i)
the respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any Sublessee) either not yet due or being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture,
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<PAGE> 23
(v) materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing
obligations that are not overdue for a period of more than forty-five (45) days
or are being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or any interest therein or, so long as any Secured
Certificates shall be outstanding, adversely affect the Lien of the Trust
Indenture, (vi) Liens arising out of any judgment or award against Lessee (or
any Sublessee), unless the judgment secured shall not, within sixty (60) days
after the entry thereof, have been discharged, vacated, reversed or execution
thereof stayed pending appeal or shall not have been discharged, vacated or
reversed within sixty (60) days after the expiration of such stay, (vii) any
other Lien with respect to which Lessee (or any Sublessee) shall have provided
a bond, cash collateral or other security adequate in the reasonable opinion of
Lessor, and (viii) Liens approved in writing by Lessor. Lessee will promptly,
at its own expense, take (or cause to be taken) such actions as may be
necessary duly to discharge any such Lien not excepted above if the same shall
arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION
AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance. Lessee, at its
own cost and expense, shall (or shall cause any Sublessee to): (i) forthwith
upon the delivery thereof hereunder, cause the Aircraft to be duly registered in
the name of Lessor, and, subject to the second paragraph of this Section 7(a)
and Section 8(f) of the Participation Agreement, to remain duly registered in
the name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and shall cause the
Trust Indenture to be duly recorded and maintained of record as a first mortgage
on the Aircraft; (ii) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) the Aircraft so as to keep the
Aircraft in as good an operating condition as delivered to Lessee hereunder,
ordinary wear and tear excepted, and as may be necessary to enable the
applicable airworthiness certification for the Aircraft to be maintained in good
standing at all times (other than temporary periods of storage in accordance
with applicable regulations or during maintenance or modification permitted
hereunder) under the Federal Aviation Act, except when all Boeing 757-200
aircraft powered by engines of the same type as those with which the Airframe
shall be equipped at the time of such grounding and registered in the United
States have been grounded by the FAA (although such certification need actually
be maintained only during such periods as the Aircraft is registered in the
United States), or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, utilizing, except during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by Lessee with respect to similar aircraft operated by
Lessee in similar circumstances and utilizing, during any period that a Sublease
is in effect, the same manner and standard of maintenance, service,
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<PAGE> 24
repair or overhaul used by the Sublessee with respect to similar aircraft
operated by the Sublessee in similar circumstances; provided, however, that in
all circumstances the Aircraft shall be maintained by Lessee (or any Sublessee)
in accordance with maintenance standards required by, or substantially
equivalent to those required by, the FAA or the central civil aviation
authority of Canada, France, Germany, Japan, the Netherlands or the United
Kingdom; (iii) maintain or cause to be maintained all records, logs and other
materials required to be maintained in respect of the Aircraft by the FAA or
the applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered; and (iv) promptly furnish or cause to be
furnished to Lessor and the Owner Participant such information as may be
required to enable Lessor to file any reports required to be filed by Lessor or
the Owner Participant with any governmental authority because of Lessor's
ownership of the Aircraft. (II) Operation. Lessee will not maintain, use,
service, repair, overhaul or operate the Aircraft (or permit any Sublessee to
maintain, use, service, repair, overhaul or operate the Aircraft) in violation
of any law or any rule, regulation, order or certificate of any government or
governmental authority (domestic or foreign) having jurisdiction, or in
violation of any airworthiness certificate, license or registration relating to
the Aircraft issued by any such authority, except to the extent Lessee (or, if
a Sublease is then in effect, any Sublessee) is contesting in good faith the
validity or application of any such law, rule, regulation or order in any
reasonable manner which does not materially adversely affect Lessor or, so long
as any Secured Certificates shall be outstanding, the first priority Lien of
the Trust Indenture and does not involve any material risk of sale, forfeiture
or loss of the Aircraft. Lessee will not operate the Aircraft, or permit any
Sublessee to operate the Aircraft, (a) in any area excluded from coverage by
any insurance required by the terms of Section 11 or (b) outside the United
States or Canada in any recognized area of hostilities unless covered by war
risk insurance or unless such operation is in accordance with a request,
contract, arrangement or understanding with the United States Government or any
agency or instrumentality thereof; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in
the ordinary course of the regular operations of Lessee (or any Sublessee) and
in each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation
Agreement, shall, at the request and sole expense of Lessee, cooperate with
Lessee to take all actions reasonably required to change the registration of
the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without
the prior written consent of Lessor, sublease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe or enter into any Wet Lease; provided that, so long as no Default of
the type referred to in Section 14(a), 14(e) or 14(f) or Event of Default shall
have occurred and be continuing at the time of such sublease, delivery,
transfer or relinquishment of
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<PAGE> 25
possession or installation or such Wet Lease, and so long as the action to be
taken shall not deprive the Indenture Trustee of the perfected first priority
lien of the Trust Indenture on the Airframe or (subject to the further proviso
(B) to clause (i) of this Section 7(b)) any Engine, and so long as Lessee (or
any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof,
Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or
engines then installed thereon to normal interchange
agreements or any Engine to normal pooling or similar
arrangements, in each case customary in the airline industry
and entered into by Lessee (or any Sublessee) in the ordinary
course of its business; provided that (A) no such agreement
or arrangement contemplates or requires the transfer of title
to the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Foreign Air Carrier;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof (or for delivery thereto)
or to any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work on the Airframe
or Engine or any part of any thereof or for alterations or
modifications in or additions to such Airframe or Engine to
the extent required or permitted by the terms of Section 8(c)
hereof;
(iii) install an Engine on an airframe owned by
Lessee (or any Sublessee) free and clear of all Liens,
except: (A) Permitted Liens and those which apply only to
the engines (other than Engines), appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but
not to the airframe as an entirety), (B) the rights of third
parties under interchange agreements which would be permitted
under clause (i) above, provided that Lessor's title to such
Engine and, if any Secured Certificates shall be outstanding,
the first priority Lien of the Trust Indenture shall not be
divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to
Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all Liens, except: (A) the rights of the parties to the
lease or conditional sale or other security agreement covering
such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and
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<PAGE> 26
(y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or
any Sublessee), leased to Lessee (or any Sublessee) or
purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b) hereof,
subject any appliances, Parts or other equipment owned by
Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program
and transfer (or permit any Sublessee to transfer) possession
of the Airframe or any Engine to the United States of America
or any instrumentality or agency thereof pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee (or any
Sublessee) shall (A) promptly notify Lessor upon subjecting
the Airframe or any Engine to the Civil Reserve Air Fleet
Program in any contract year and provide Lessor with the name
and address of the Contracting Office Representative for the
Air Mobility Command of the United States Air Force to whom
notice must be given pursuant to Section 15 hereof, and (B)
promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the
Term, enter into a Wet Lease for the Airframe and Engines or
engines then installed thereon with any third party; provided
that if Lessee (or any Sublessee) shall enter into any Wet
Lease for a period of more than one year (including renewal
options) Lessee shall provide Lessor written notice of such
Wet Lease (such notice to be given prior to entering into such
Wet Lease, if practicable, but in any event promptly after
entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the
Term, transfer possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency
thereof pursuant to a contract, a copy of which shall be
provided promptly to Lessor; or
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<PAGE> 27
(x) Lessee may, at any time, enter into any sublease with
(1) a U.S. Air Carrier, (2) any Person approved in writing by
the Owner Participant and the Indenture Trustee, which
approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any
such case, the Sublessee under such sublease is not subject to
a proceeding or final order under applicable bankruptcy,
insolvency or reorganization laws on the date such sublease is
entered into, (B) in the event that the Sublessee under such
sublease is a foreign air carrier (other than a foreign air
carrier principally based in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based at the time such
sublease is entered into (or, in the case of a sublease to a
proposed Sublessee principally based in Taiwan, maintains
diplomatic relations at least as good as those in effect on
the Delivery Date) and (C) in the event that the Sublessee
under such sublease is a foreign air carrier, Lessor and the
Indenture Trustee shall have received an opinion of counsel to
Lessee, in form and substance reasonably satisfactory to
Lessor and the Indenture Trustee, to the effect that (I) the
terms of the proposed sublease will be legal, valid, binding
and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Sublessee in the
country in which the Sublessee is principally based, (II)
there exist no possessory rights in favor of the Sublessee
under such Sublease under the laws of such Sublessee's country
of domicile that would, upon bankruptcy or insolvency of or
other default by Lessee, prevent the return or repossession of
the Aircraft in accordance with the terms of this Lease, (III)
the laws of such Sublessee's country of domicile require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use
of the Aircraft in the event of the requisition by such
government of such use, and (IV) the laws of such Sublessee's
country of domicile would give recognition to Lessor's title
to the Aircraft, to the registry of the Aircraft in the name
of the Lessor (or Lessee, as "lessee", or the proposed
Sublessee, as "sublessee", as appropriate) and to the Lien of
the Trustee Indenture, provided, however, that no sublease
entered into pursuant to this clause (x) shall extend beyond
the expiration of the Basic Term or any Renewal Term then in
effect unless Lessee shall have irrevocably committed to
purchase the Aircraft.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any Sublease permitted by this
paragraph (b) shall be expressly subject and subordinate to, all the terms of
this Lease and to the Lien of the Trust Indenture, including, without
limitation, the covenants contained in Section 7(a) hereof and Lessor's rights
to repossession pursuant to Section 15 hereof and to avoid such Sublease upon
such repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided
herein, the terms of any such Sublease shall not permit any Sublessee to take
any action not permitted to be taken by Lessee in this Lease with respect to
the Aircraft. No pooling agreement, sublease
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<PAGE> 28
or other relinquishment of possession of the Airframe or any Engine or Wet
Lease shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder or constitute a waiver of Lessor's rights or remedies
hereunder. Any sublease permitted under Section 7(b) shall expressly prohibit
any further sub-sublease by the Sublessee. Lessor agrees, for the benefit of
Lessee (and any Sublessee) and for the benefit of any mortgagee or other holder
of a security interest in any engine (other than an Engine) owned by Lessee (or
any Sublessee), any lessor of any engine (other than an Engine) leased to
Lessee (or any Sublessee) and any conditional vendor of any engine (other than
an Engine) purchased by Lessee (or any Sublessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that none of Lessor,
its successors or assigns will acquire or claim, as against Lessee (or any
Sublessee) or any such mortgagee, lessor or conditional vendor or other holder
of a security interest or any successor or assignee of any thereof, any right,
title or interest in such engine as the result of such engine being installed
on the Airframe; provided, however, that such agreement of Lessor shall not be
for the benefit of any lessor or secured party of any airframe (other than the
Airframe) leased to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security agreement or for the
benefit of any mortgagee of or any other holder of a security interest in an
airframe owned by Lessee (or any Sublessee), unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against Lessor, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Sublease
hereunder (such notice to be given not later than ten Business Days prior to
entering into any Sublessee with a foreign air carrier and, if practicable, not
later than five days prior to entering into any Sublease with any other
proposed Sublessee, but, in the case of a Sublease with a Sublessee other than
a foreign air carrier, in any event promptly after entering into any such
Sublease) and (ii) a copy of each Sublease which has a term of more than three
months.
(c) Insignia. On or prior to the Delivery Date, or as
soon as practicable thereafter, Lessee agrees to affix and maintain (or cause
to be affixed and maintained), at its expense, in the cockpit of the Airframe
adjacent to the airworthiness certificate therein and on each Engine a
nameplate bearing the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
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<PAGE> 29
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be placed on the Airframe or on any
Engine as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Lessee (or any Sublessee)
from placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee,
at its own cost and expense, will promptly replace or cause to be replaced all
Parts which may from time to time be incorporated or installed in or attached
to the Airframe or any Engine and which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever, except as
otherwise provided in paragraph (c) of this Section 8 or if the Airframe or an
Engine to which a Part relates has suffered an Event of Loss. In addition,
Lessee (or any Sublessee) may, at its own cost and expense, remove in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or any Sublessee), except as otherwise provided in paragraph (c) of
this Section 8, will, at its own cost and expense, replace such Parts as
promptly as practicable. All replacement Parts shall be free and clear of all
Liens (except for Permitted Liens and pooling arrangements to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis) and shall be
in as good operating condition as, and shall have a value and utility at least
equal to, the Parts replaced assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof. Except as otherwise
provided in paragraph (c) of this Section 8, all Parts at any time removed from
the Airframe or any Engine shall remain the property of Lessor, no matter where
located, until such time as such Parts shall be replaced by Parts which have
been incorporated or installed in or attached to the Airframe or such Engine
and which meet the requirements for replacement Parts specified above.
Immediately upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine as above provided, without further act
(subject only to Permitted Liens and any pooling arrangement to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis), (i) title to
such replacement Part shall thereupon vest in Lessor, (ii) such replacement
Part shall become subject to this Lease and be deemed part of the Airframe or
such Engine for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine, and
(iii) title to the replaced Part shall thereupon vest in Lessee (or, if a
Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
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<PAGE> 30
(b) Pooling of Parts. Any Part removed from the Airframe
or any Engine as provided in paragraph (a) of this Section 8 may be subjected
by Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part shall
be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or Engine a further replacement
Part owned by Lessee (or any Sublessee) free and clear of all Liens except
Permitted Liens (other than pooling arrangements) and by causing title to such
further replacement Part to vest in Lessor in accordance with such paragraph
(a).
(c) Alterations, Modifications and Additions. Lessee, at
its own expense, will make (or cause to be made) such alterations and
modifications in and additions to the Airframe and Engines as may be required
from time to time to meet the applicable standards of the FAA or any applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
adversely affect Lessor, or, so long as any Secured Certificates are
outstanding, the Indenture Trustee. In addition, Lessee (or any Sublessee), at
its own expense, may from time to time add further parts or accessories and
make such alterations and modifications in and additions to the Airframe or any
Engine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee (or
any Sublessee) has determined in its reasonable judgment to be obsolete or no
longer suitable or appropriate for use on the Airframe or such Engine (such
parts, "OBSOLETE PARTS"); provided that no such alteration, modification or
addition shall materially diminish the value, utility or remaining useful life
of the Airframe or such Engine below the value, utility or remaining useful
life thereof immediately prior to such alteration, modification or addition,
assuming the Airframe or such Engine was then in the condition required to be
maintained by the terms of this Lease, except that the value (but not the
utility or remaining useful life) of the Airframe or any Engine may be reduced
by the value of Obsolete Parts which shall have been removed so long as the
aggregate original cost of all Obsolete Parts which shall have been removed and
not replaced shall not exceed $500,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (the "ADDITIONAL PARTS") shall,
without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such
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<PAGE> 31
Additional Part (i) is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or attached
to the Airframe or any Engine at the time of delivery thereof hereunder or any
Part in replacement of, or substitution for, any such Part, (ii) is not
required to be incorporated or installed in or attached or added to the
Airframe or any Engine pursuant to the terms of Section 7 hereof or the first
sentence of this paragraph (c) and (iii) can be removed from the Airframe or
such Engine without diminishing or impairing the value, utility or remaining
useful life which the Airframe or such Engine would have had at the time of
removal had such alteration, modification or addition not occurred, assuming
that such Airframe or Engine was in the condition and repair required to be
maintained by the terms hereof. Upon the removal by Lessee (or Sublessee) of
any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed. Any Part not
removed by Lessee (or any Sublessee) as above provided prior to the return of
the Airframe or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease
on any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(3) Lessee shall give to Lessor at least one hundred twenty (120)
days' revocable advance written notice of Lessee's intention to so terminate
this Lease (any such notice, a "TERMINATION NOTICE") (i) specifying the Lease
Period Date on which Lessee intends to terminate this Lease in accordance with
this Section 9 (such specified date, a "TERMINATION DATE") and (ii) stating that
Lessee has determined in accordance with Section 9(a)(2) that the Aircraft is
obsolete or surplus to its needs. Any Termination Notice shall become
irrevocable fifteen (15) days prior to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that
Lessee shall have exercised its right to terminate this Lease under Section
9(a)(2), then during the period from the giving of the notice referred to in
Section 9(a)(3) until the proposed Termination Date (unless Lessee shall have
revoked the Termination Notice specifying such proposed Termination Date),
Lessee, as non-exclusive agent for Lessor and at no expense to Lessor, shall
use its best efforts to obtain bids in the worldwide market for the purchase of
the Aircraft and, in the event it receives any bid, Lessee shall, within five
Business Days after receipt thereof and at least ten Business Days prior to the
proposed Termination Date, certify to Lessor in writing the amount and terms of
such bid, and the name and address of the party or parties (who shall not be
Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such
Affiliate has an arrangement or understanding regarding the future use of the
Aircraft
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<PAGE> 32
by Lessee or any such Affiliate but who may be the Owner Participant, any
Affiliate thereof or any Person contacted by the Owner Participant) submitting
such bid. After Lessee shall have certified to Lessor all bids received, the
Owner Participant, any Affiliate thereof or any Person contacted by the Owner
Participant may submit a further bid or bids to Lessee not later than five
Business Days prior to the Termination Date proposed by Lessee (unless Lessee
shall have revoked the Termination Notice specifying such proposed Termination
Date). Subject to the next succeeding sentence, on or before the Termination
Date, subject to the release of all mortgage and security interests with
respect to the Aircraft under the Trust Indenture: (1) Lessee shall deliver
the Aircraft, or cause the Aircraft to be delivered, to the bidder(s), if any,
which shall have submitted the highest cash bid (net of any brokerage
commissions) therefor at least ten (or, in the case of the Owner Participant,
any Affiliate thereof, or Person contacted by the Owner Participant, five)
Business Days prior to such Termination Date, in the same manner and in the
same condition and otherwise in accordance with all the terms of this Lease as
if delivery were made to Lessor pursuant to Section 5, and shall duly transfer
to Lessor title to any engines not owned by Lessor all in accordance with the
terms of Section 5, (2) Lessor shall comply with the terms of the Trust
Indenture and shall, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), subject to prior or
concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total sales price (net of any
brokerage commissions) realized at such sale to be retained by Lessor, and (3)
Lessee shall simultaneously pay or cause to be paid to Lessor in funds of the
type specified in Section 3(f) hereof, an amount equal to the sum of (A) the
excess, if any, of (i) the Termination Value for the Aircraft, computed as of
the Termination Date, over (ii) the sale price of the Aircraft sold by Lessor
after deducting the reasonable expenses incurred by Lessor in connection with
such sale, (B) all unpaid Basic Rent with respect to the Aircraft due prior to
such Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent (including an amount equal to (x) the interest, if
any, payable on the Secured Certificates plus (y) interest at the Past Due Rate
specified in clause (ii) of the definition thereof on an amount equal to the
excess of (a) the Termination Value of the Aircraft as of the Termination Date
minus the amount of interest included in calculating the Termination Value of
the Aircraft as of the Termination Date over (b) the principal amount of
Secured Certificates outstanding on the Termination Date, in the case of
clauses (x) and (y) for the period from and including the Termination Date to
but excluding the third Business Day after the Termination Date) due on or
prior to the Termination Date with respect to the Aircraft, and (C) the premium
and Funding Loss Amount, if any, due on the Secured Certificates, and upon such
payment Lessor simultaneously will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft which were not sold with the Aircraft.
Notwithstanding the preceding sentence, Lessor may, if Lessee has not revoked
the Termination Notice, elect to retain title to the Aircraft. If Lessor so
elects, Lessor shall give to Lessee written notice of such election at least
five Business Days prior to the Termination Date accompanied by an irrevocable
undertaking by the Owner
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<PAGE> 33
Participant to make available to the Lessor for payment to the Indenture
Trustee on the Termination Date the amount required to pay in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination
Date plus interest accrued thereon through the Termination Date together with
the premium and Funding Loss Amount, if any, due on the Secured Certificates.
Upon receipt of notice of such an election by Lessor and the accompanying
undertaking by the Owner Participant, Lessee shall cease its efforts to obtain
bids as provided above and shall reject all bids theretofore or thereafter
received. On the Termination Date, Lessor shall pay in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination
Date plus interest accrued thereon through the Termination Date together with
all premium and Funding Loss Amount, if any, due on the Secured Certificates
and, so long as the Secured Certificates are paid as aforesaid, Lessee shall
deliver the Airframe and Engines or engines to Lessor in accordance with
Section 5 and shall pay all Basic Rent due prior to the Termination Date and,
if such Basic Rent is payable in arrears on such Termination Date as indicated
on Exhibit B, on such Termination Date, and all Supplemental Rent (other than
premium, Funding Loss Amount or Termination Value) due on or prior to the
Termination Date. If no sale shall have occurred on the Termination Date and
Lessor has not made the payment contemplated by the preceding sentence and
thereby caused this Lease to terminate, or if Lessee revokes its Termination
Notice, this Lease shall continue in full force and effect as to the Aircraft,
Lessee shall pay the reasonable costs and expenses incurred by the Owner
Participant and Lessor (unless such failure to terminate the Lease is a
consequence of the failure of Lessor or the Owner Participant without due cause
to make, or cause to be made, the payment referred to in the immediately
preceding sentence), if any, in connection with preparation for such sale and
Lessee may give one or more additional Termination Notices in accordance with
Section 9(a)(2), subject to the last sentence of this Section 9(c). In the
event of any such sale or such retention of the Aircraft by Lessor and upon
compliance by Lessee with the provisions of this paragraph, the obligation of
Lessee to pay Basic Rent or any other amounts hereunder shall cease to accrue
and this Lease shall terminate. Lessor may, but shall be under no duty to,
solicit bids, inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than to transfer (in
accordance with the foregoing provisions) to the purchaser named in the highest
bid certified by Lessee to Lessor all of Lessor's right, title and interest in
the Aircraft, against receipt of the payments provided herein. Lessee may
revoke a Termination Notice given pursuant to Section 9(a)(2) no more than two
times during the Term.
(d) Termination as to Engines. So long as no Event of
Default shall have occurred and be continuing, Lessee shall have the right at
its option at any time during the Term, on at least thirty (30) days' prior
written notice, to terminate this Lease with respect to any Engine. In such
event, and prior to the date of such termination, Lessee shall replace such
Engine hereunder by complying with the terms of Section 10(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine, and
Lessor shall transfer such right, title and interest as it may have to the
replaced Engine as provided in Section 5(b). No termination of this Lease with
respect to any Engine as contemplated by this Section 9(d) shall result in any
reduction of Basic Rent.
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SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of
Loss with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause
(i), in which event not later than the earlier of (x) the
Business Day next succeeding the 120th day following the
occurrence of such Event of Loss or (y) the third Business Day
following the receipt of insurance proceeds in respect of such
occurrence (but not earlier than thirty (30) days after such
occurrence) (the "LOSS PAYMENT DATE") Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in
Section 3(f) hereof, an amount equal to the Stipulated Loss
Value of the Aircraft corresponding to the Stipulated Loss
Value Date occurring on or immediately following the Loss
Payment Date; provided, however, that if a Lease Period Date
shall occur prior to the Loss Payment Date with respect to
which Stipulated Loss Value is determined, Lessee shall pay on
such Lease Period Date an amount equal to the Basic Rent that
would have been due on such Lease Period Date if such Event of
Loss had not occurred, or
(ii) substitute an aircraft, an airframe, or an
airframe and one or more engines, as the case may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor on the
Business Day next succeeding the 120th day following the occurrence of such
Event of Loss the amount specified in clause (i) above.
At such time as Lessor shall have received the amounts
specified in subparagraph (i) above, together with all other amounts that then
may be due hereunder (including, without limitation, all Basic Rent due before
the date of such payment and all Supplemental Rent), under the Participation
Agreement and under the Tax Indemnity Agreement, (1) the obligation of Lessee
to pay the installments of Basic Rent, Supplemental Rent, Stipulated Loss
Value, Termination Value or any other amount payable pursuant to this Lease
shall cease to accrue, provided that the obligations of Lessee under the other
Operative Documents which, by their express terms, are stated to survive shall
not be terminated, (2) this Lease shall terminate, (3) Lessor will comply with
the terms of the Trust Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest
in and to the Airframe and any Engines subject to such Event of Loss, as well
as any Engines not subject to such Event of Loss, and furnish to or at the
direction of Lessee a bill of sale in form and
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<PAGE> 35
substance consistent with Lessor's agreements contained in the Operative
Documents and reasonably satisfactory to Lessee (or any Sublessee), evidencing
such transfer, and (4) Lessee will be subrogated to all claims of Lessor, if
any, against third parties, for damage to or loss of the Airframe and any
Engines which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause
to be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or
an airframe or an airframe and one or more engines which, together with the
Engines constituting a part of the Aircraft but not installed thereon at the
time of such Event of Loss constitute the Aircraft) free and clear of all Liens
(other than Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Aircraft subject to such Event of Loss assuming that
the Aircraft had been maintained in accordance with this Lease; provided that
any aircraft, airframe or engine so substituted hereunder shall be of the same
or improved model as those initially leased hereunder and (B) prior to or at
the time of any such substitution, Lessee (or any Sublessee), at its own
expense, will (1) furnish Lessor with a full warranty bill of sale and a
Federal Aviation Administration bill of sale, in form and substance reasonably
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance consistent with Lessor's
agreements contained in the Operative Documents and reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an
opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not,
other counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor should be entitled to the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to the substitute aircraft, provided that
such opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture
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<PAGE> 36
Trustee as assignee of Lessor's rights under the Lease with respect to the
Aircraft, and (7) Lessee will be subrogated to all claims of Lessor, if any,
against third parties for damage to or loss of the Airframe and any Engine
which were subject to such Event of Loss to the extent of the then insured
value of the Aircraft. For all purposes hereof, the property so substituted
shall after such transfer be deemed part of the property leased hereunder and
shall be deemed an "Aircraft", "Airframe" and "Engine", as the case may be, as
defined herein. No Event of Loss with respect to the Airframe or the Airframe
and the Engines or engines then installed thereon for which substitution has
been elected pursuant to Section 10(a)(ii) hereof shall result in any reduction
in Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60)
days after the occurrence of such Event of Loss, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to which such Event of
Loss occurred, title to another Pratt & Whitney Model PW2037 engine (or engine
of the same or another manufacturer of the same, an equivalent or an improved
model and suitable for installation and use on the Airframe without impairing
the value, utility or remaining useful life of the Aircraft (assuming for this
purpose that the Aircraft includes the Engines); provided that both Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine,
(ii) cause a Lease Supplement and Trust Supplement to be duly executed by
Lessee and to be filed for recording pursuant to the Federal Aviation Act, or
the applicable laws, rules and regulations of any other jurisdiction in which
the Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a bill of sale in form and substance consistent
with Lessor's agreements contained in the Operative Documents and reasonably
satisfactory to Lessee, evidencing such transfer and (B) all claims, if any,
against third parties, for damage to or loss of the Engine subject to such
Event of Loss, and such Engine shall thereupon cease to be the Engine leased
hereunder. For all purposes hereof, each such replacement engine shall, after
such conveyance, be deemed part of the property leased hereunder, and shall be
deemed an "ENGINE". No Event of Loss with respect to an Engine
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<PAGE> 37
under the circumstances contemplated by the terms of this paragraph (b) shall
result in any reduction in Basic Rent.
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with
respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement)
for reasonable costs and expenses, so much of such payments
remaining as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a), shall
be applied in reduction of Lessee's obligation to pay
Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee
for its payment of Stipulated Loss Value, and following the
foregoing application, the balance, if any, of such payments
will be paid over to, or retained by Lessee, provided that
Lessor shall be entitled to so much of the excess, if any, of
such payment over the greater of (x) the Stipulated Loss Value
and (y) the fair market value of the Aircraft as is
attributable to compensation for loss of Lessor's interest in
the Aircraft as distinguished from the loss of use of the
Aircraft; or (B) if such property is replaced pursuant to the
last paragraph of Section 10(a), such payments shall be paid
over to, or retained by, Lessee; provided that Lessee shall
have fully performed or, concurrently therewith, will fully
perform the terms of the last paragraph of Section 10(a) with
respect to the Event of Loss for which such payments are made;
and
(ii) if such payments are received with respect to
an Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after reimbursement
of Lessor (as provided for in Section 7.01 of the Trust
Agreement) for reasonable costs and expenses shall be paid
over to, or retained by, Lessee, provided that Lessee shall
have fully performed, or concurrently therewith will perform,
the terms of Section 10(b) with respect to the Event of Loss
for which such payments are made.
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of the Aircraft which is a
Member of OECD. In the event of the requisition for use of the Airframe and
the Engines or engines installed on the Airframe during the Term by the United
States Government or any other government of registry of the Aircraft which is
a member of OECD or any instrumentality or agency of any thereof, Lessee shall
promptly notify Lessor of such requisition, and all of Lessee's obligations
under this Lease Agreement with respect to the Aircraft shall continue to the
same extent as if such requisition
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<PAGE> 38
had not occurred, provided that if such Airframe and Engines or engines
installed thereon are not returned by such government prior to the end of the
Term, Lessee shall be obligated to return the Airframe and such Engines or
engines to Lessor pursuant to, and in all other respects in compliance with the
provisions of, Section 5 promptly on the date of such return by such
government. If, in the event of any such requisition, Lessee shall fail to
return the Aircraft on or before the thirtieth day beyond the end of the Term,
such failure shall constitute an Event of Loss which shall be deemed to have
occurred on the last day of the Term and in such event Lessee shall make the
payment contemplated by Section 10(a)(i) in respect of such Event of Loss;
provided, however, that Lessor may notify Lessee in writing on or before the
twentieth day prior to the last day of the Term that, in the event Lessee shall
fail by reason of such requisition to return the Airframe and such Engines or
engines on or before the thirtieth day beyond the end of the Term, such failure
shall not be deemed an Event of Loss. Upon the giving of such notice and such
failure to return by the thirtieth day beyond the end of the Term, Lessee shall
be relieved of all of its obligations pursuant to the provisions of Section 5
(including Exhibit G) but not under any other Section, except that if any
engine not owned by Lessor shall then be installed on the Airframe, Lessee
will, at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance reasonably satisfactory to Lessor (together with an opinion of
counsel to the effect that such full warranty bill of sale has been duly
authorized and delivered and is enforceable in accordance with its terms and
that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) against receipt from Lessor of a
bill of sale evidencing the transfer, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), by Lessor
to Lessee or its designee of all of Lessor's right, title and interest in and
to any Engine constituting part of the Aircraft but not then installed on the
Airframe. All payments received by Lessor or Lessee from such government for
the use of such Airframe and Engines or engines during the Term shall be paid
over to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and
all payments received by Lessor or Lessee from such government for the use of
such Airframe and Engines or engines after the end of the Term shall be paid
over to, or retained by, Lessor unless Lessee shall have exercised its purchase
option hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft which is a Member of
OECD. In the event of the requisition for use of an Engine by the United
States Government or any other government of registry of the Aircraft which is
a member of OECD or any agency or instrumentality of any thereof (other than in
the circumstances contemplated by subsection (d)), Lessee shall replace such
Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any
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<PAGE> 39
Sublessee) shall not be paid to or retained by Lessee (or such Sublessee) if at
the time of such payment or retention an Event of Default or a Major Default
shall have occurred and be continuing, but shall be held by or paid over to
Lessor as security for the obligations of Lessee (or such Sublessee) under this
Lease and, if Lessor declares this Lease to be in default pursuant to Section
15 hereof, applied against Lessee's obligations hereunder as and when due. At
such time as there shall not be continuing any such Event of Default or Major
Default, such amount shall be paid to Lessee (or such Sublessee) to the extent
not previously applied in accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a),
Lessee will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by Lessee (or any Sublessee) with respect to
other aircraft owned or leased, and operated by Lessee (or such Sublessee) on
the same routes) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an
amount not less than the greater of (x) the amount of public liability and
property damage insurance from time to time applicable to aircraft owned or
operated by Lessee of the same type as the Aircraft and (y) such amount per
occurrence as may have been agreed to on the Delivery Date by the Owner
Participant and (ii) cargo liability insurance, in the case of both clause (i)
and clause (ii), (A) of the type and covering the same risks as from time to
time applicable to aircraft operated by Lessee of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name Lessor, in its individual
capacity and as owner trustee, the Indenture Trustee and the Owner Participant
(but without imposing on any such parties liability to pay the premiums for
such insurance) (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) as additional insureds as their
respective interests may appear, (B) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if any Sublease is then in effect, any
Sublessee) or any other Person and shall insure Lessor, the Indenture Trustee
and the Owner Participant (and, if any Sublease shall be in effect, Lessee in
its capacity as sublessor under the Sublease) regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by Lessee (or, if any Sublease is then in effect, any Sublessee), (C) may
provide for self-insurance to the extent permitted by Section 11(d) and (D)
shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of Lessor, the Indenture Trustee or the Owner Participant
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), or such insurance shall lapse for non-payment of premium,
such cancellation, lapse or change shall not be effective as to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty (30)
days (seven (7) days in the case of war risk and allied perils coverage) after
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issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (2) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, and (3) shall
waive any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
Lessor or the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) to
the extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft.
(I) Except as provided in clause (II) of this Section 11(b), Lessee shall
maintain or cause to be maintained in effect, at its or any Sublessee's
expense, with insurers of recognized responsibility, all-risk ground and
flight aircraft hull insurance covering the Aircraft and all-risk ground and
flight coverage of Engines and Parts while temporarily removed from the
Aircraft and not replaced by similar components (including, without limitation,
war risk and governmental confiscation and expropriation (other than by the
government of registry of the Aircraft) and hijacking insurance, if and to the
extent the same is maintained by Lessee (or, if a Sublease is then in effect,
any Sublessee) with respect to other aircraft owned or operated by Lessee (or
such Sublessee) on the same routes, except that Lessee (or such Sublessee)
shall maintain war risk and governmental confiscation and expropriation (other
than by the government of registry of the Aircraft) and hijacking insurance if
the Aircraft is operated on routes where the custom is for major international
air carriers flying comparable routes to carry such insurance) which is of the
type as from time to time applicable to aircraft owned by Lessee of the same
type as the Aircraft; provided that such insurance shall at all times while the
Aircraft is subject to this Lease be for an amount (subject to self-insurance
to the extent permitted by Section 11(d)) not less than the Stipulated Loss
Value for the Aircraft. Any policies carried in accordance with this paragraph
(b) covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Lessor, as owner trustee, the
Indenture
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<PAGE> 41
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds,
as their respective interests may appear (but without imposing on any such
party liability to pay premiums with respect to such insurance), (ii) may
provide for self-insurance to the extent permitted in Section 11(d), (iii)
shall provide that (A) in the event of a loss involving proceeds in excess of
$3,500,000 (or, if the Aircraft is then under a Sublease, in excess of
$2,000,000), the proceeds in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so long
as the Trust Indenture shall not have been discharged, the Indenture Trustee)
(except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be
held for the account of Lessor (or, so long as the Trust Indenture shall not
have been discharged, the Indenture Trustee) whether such payment is made to
Lessee (or any Sublessee) or any third party), it being understood and agreed
that in the case of any payment to Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, Lessor (or the Indenture Trustee) shall,
upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,500,000 (or, if the Aircraft is then under a Sublease, of $2,000,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by Lessor or the Indenture Trustee, (iv) shall provide that if
the insurers cancel such insurance for any reason whatever, or such insurance
lapses for non-payment of premium or if any material change is made in the
insurance which adversely affects the interest of Lessor, the Indenture Trustee
or the Owner Participant, such cancellation, lapse or change shall not be
effective as to Lessor, the Indenture Trustee or the Owner Participant (or, if
any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) for thirty (30) days (seven (7) days in the case of hull
war risk and allied perils coverage) after issuance to Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), respectively, of
written notice by such insurers of such cancellation, lapse or change,
provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable, (v) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if a Sublease is then in effect, any
Sublessee) or any other Person and shall insure the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), as
they appear, regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee), (vi) shall be primary without any right of contribution
from any other insurance which is carried by Lessor, the Owner Participant or
the Indenture Trustee (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor
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<PAGE> 42
under the Sublease), (vii) shall waive any right of
subrogation of the insurers against Lessor, the Owner Participant and the
Indenture Trustee (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor, the Indenture
Trustee, the Owner Participant or Lessee (or any Sublessee) to the extent of
any moneys due to Lessor, the Indenture Trustee or the Owner Participant. In
the case of a loss with respect to an engine (other than an Engine) installed
on the Airframe, Lessor shall hold any payment to it of any insurance proceeds
in respect of such loss for the account of Lessee or any other third party that
is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed
thereon), (i) unless such property is replaced pursuant to the last
paragraph of Section 10(a), so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the Trust
Agreement) for reasonable costs and expenses, as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant to
Section 10(a) hereof shall be applied in reduction of Lessee's
obligation to pay such Stipulated Loss Value, if not already paid by
Lessee, or, if already paid by Lessee, shall be applied to reimburse
Lessee for its payment of such Stipulated Loss Value, and the balance,
if any, of such payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee); or (ii)
if such property is replaced pursuant to the last paragraph of Section
10(a), such payments shall be paid over to, or retained by, Lessee (or
if directed by Lessee, any Sublessee), provided that Lessee shall have
fully performed or, concurrently therewith, will fully perform the
terms of the last paragraph of Section 10(a) with respect to the Event
of Loss for which such payments are made; and
(y) if such payments are received with respect to an
Engine under the circumstances contemplated by Section 10(b) hereof,
so much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable costs
and expenses, shall be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee), provided that Lessee shall have
fully performed or, concurrently therewith, will fully perform, the
terms of Section 10(b) with respect to the Event of Loss for which
such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any balance (or if already
paid for by Lessee (or any Sublessee), all such insurance proceeds)
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<PAGE> 43
remaining after compliance with such Sections with respect to such loss shall
be paid to Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft
owned by Lessee of the same type similarly on the ground and not in operation,
provided that Lessee shall maintain insurance against risk of loss or damage to
the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft
during such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants
or the Owner Participant to anyone except (A) to permitted transferees of
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's interest who agree to hold such information confidential, (B) to
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's counsel or independent certified public accountants or independent
insurance advisors who agree to hold such information confidential or (C) as
may be required by any statute, court or administrative order or decree or
governmental ruling or regulation. Lessee will cause such Insurance Brokers to
agree to advise Lessor, the Indenture Trustee and the Owner Participant in
writing of any default in the payment of any premium and of any other act or
omission on the part of Lessee of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate of insurance, substantially in the same form as delivered by Lessee
to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or
the Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or
the Indenture Trustee, as the case may be, without waiver of any other rights
Lessor or the Indenture Trustee may have; provided, however, that no
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<PAGE> 44
exercise by Lessor or the Indenture Trustee, as the case may be, of said option
shall affect the provisions of this Lease, including the provisions of Section
14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to
this Section 11 under a program applicable to all aircraft in Lessee's fleet,
but in no case shall the aggregate amount of self-insurance in regard to
Section 11(a) and Section 11(b) exceed during any policy year, with respect to
all of the aircraft in Lessee's fleet (including, without limitation, the
Aircraft), the lesser of (a) 50% of the largest replacement value of any single
aircraft in Lessee's fleet or (b) 1-1/2% of the average aggregate insurable
value (during the preceding policy year) of all aircraft (including, without
limitation, the Aircraft) on which Lessee carries insurance. In addition,
Lessee (and any Sublessee) may self-insure to the extent of any applicable
mandatory minimum per aircraft (or, if applicable, per annum or other period)
hull or liability insurance deductible imposed by the aircraft hull or
liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee
(and any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance with respect
to its interest in the Aircraft, provided that such insurance does not prevent
Lessee (or any Sublessee) from carrying the insurance required or permitted by
this Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written
consent of Lessor, other government of registry of the Aircraft or any agency
or instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) Application of Payments During Existence of an Event
of Default. Any amount referred to in paragraph (b) of this Section 11 which
is payable to or retainable by Lessee (or any Sublessee) shall not be paid to
or retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default or a Major Default shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or any Sublessee) under this Lease and, if Lessor
declares this Lease to be in default pursuant to Section 15 hereof, applied
against Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Major Default, such
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<PAGE> 45
amount shall be paid to Lessee (or such Sublessee) to the extent not previously
applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, Lessor, the
Owner Participant or the Indenture Trustee or their respective authorized
representatives may (not more than once every calendar year (unless an Event of
Default has occurred and is continuing when such inspection right shall not be
so limited and subject to the provisions of Section 5(a) hereof)) inspect the
Aircraft and inspect and make copies (at Lessor's, the Owner Participant's or
the Indenture Trustee's expense, as the case may be) of the books and records
of Lessee relating to the maintenance of the Aircraft; any such inspection of
the Aircraft shall be a visual, walk-around inspection and shall not include
opening any panels, bays or the like without the express consent of Lessee;
provided that no exercise of such inspection right shall interfere with the
operation or maintenance of the Aircraft by, or the business of, Lessee (or any
Sublessee). None of Lessor, the Owner Participant or the Indenture Trustee
shall have any duty to make any such inspection nor shall any of them incur any
liability or obligation by reason of not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein,
Lessee will not, without prior written consent of Lessor, assign in whole or in
part any of its rights or obligations hereunder. Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
(a) Lessee shall not have made a payment of Basic
Rent or Stipulated Loss Value within ten (10) days after the
same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for
ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax
Indemnity Agreement or any failure of Lessee to pay to Lessor
or the Owner Participant when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
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<PAGE> 46
(c) Lessee shall have failed to perform or
observe (or caused to be performed and observed) in any
material respect any covenant or agreement (except the
covenants set forth in the Tax Indemnity Agreement and in
clauses (i)(B) and (ii) of the first sentence of second
paragraph of Exhibit G) to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of thirty (30) days after receipt by
Lessee of written notice thereof from Lessor or the Indenture
Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause
(ii) or clause (iii) of the first sentence of Section 7(a), or
under the second sentence of Section 7(a) as it relates to
maintenance, service, repair or overhaul or under Section 8
and, notwithstanding the diligence of Lessee in attempting to
cure such failure, such failure is not cured within said
thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so
long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such
written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose and except the representations and warranties
in, or in connection with, the Credit Agreement) shall prove
to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the
interests of the Owner Participant, Lessor or the Certificate
Holders) within thirty (30) days after the receipt by Lessee
of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(e) the commencement of an involuntary case or
other proceeding in respect of Lessee in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its
property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of ninety
(90) consecutive days or an order, judgment or decree shall be
entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Lessee, a
receiver, trustee or liquidator of Lessee, or of any
substantial part of its property, or sequestering any
substantial part of the property of Lessee and any such order,
judgment or decree or appointment or
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<PAGE> 47
sequestration shall be final or shall remain in force
undismissed, unstayed or unvacated for a period of ninety (90)
days after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof; or
(h) the Guarantor shall have voluntarily
rescinded or repudiated the Guarantee.
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as
Lessee is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event
of Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one
or more of the following with respect to all or any part of the Airframe and
any or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then in effect; provided, however, that during any period
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 7(b) hereof and in possession of the United
States government or an agency or instrumentality of the United States, Lessor
shall not, on account of any Event of Default, be entitled to do any of the
following in such manner as to limit Lessee's control under this Lease (or any
Sublessee's control under any Sublease) of any Airframe or any Engines
installed thereon, unless at least sixty (60) days' (or such lesser period as
may then be applicable under the Air Mobility Command program of the United
States Government) written notice of default hereunder shall have been given by
Lessor by registered or certified mail to Lessee (and any Sublessee) with a
copy addressed to the Contracting Office Representative for the Air Mobility
Command of the United States Air Force under any contract with Lessee (or any
Sublessee) relating to the Aircraft:
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<PAGE> 48
(a) upon the written demand of Lessor and at
Lessee's expense, cause Lessee to return promptly, and Lessee
shall return promptly, the Airframe or any Engine as Lessor
may so demand to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of
the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or
otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all
without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public
or private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Lease
Period Date not earlier than ten days from the date of such
notice, may demand that the Lessee pay to Lessor, and Lessee
shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Basic Rent for the Aircraft
due for Lease Periods commencing on or after the Commencement
Date or the Lease Period Date specified as the payment date in
such notice), any unpaid Basic Rent due on Lease Period Dates
prior to the payment date so specified (including, without
limitation, any adjustments to Basic Rent payable pursuant to
Section 3(d)) plus whichever of the following amounts Lessor,
in its sole discretion, shall specify in such notice (together
with interest, if any, on such amount at the Past Due Rate
from such specified payment date until the date of actual
payment of such amount): (i) an amount equal to the excess,
if any, of the Stipulated Loss Value for the Aircraft,
computed as of the Lease Period Date specified as the payment
date in such notice, over the aggregate fair market rental
value (computed as hereafter in this Section 15 provided) of
such Aircraft for the remainder of the Term, after discounting
such aggregate fair market rental value to present value as of
the Lease Period Date specified as the payment date in such
notice at an annual rate equal to the Base Rate plus 1%; or
(ii) an amount equal to the excess, if any, of the Stipulated
Loss Value for such Aircraft, computed as of the Lease Period
Date specified as the payment date in such notice over the
fair market sales value of such Aircraft (computed as
hereafter in this Section provided) as of the Lease Period
Date specified as the payment date in such notice;
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<PAGE> 49
(d) in the event Lessor, pursuant to paragraph
(b) above, shall have sold the Airframe and/or any Engine,
Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the
installments of Basic Rent for the Aircraft due on or after
such date), any unpaid Basic Rent with respect to the Aircraft
due prior to such date (including, without limitation, any
adjustments to Basic Rent payable pursuant to Section 3(d))
plus the amount of any deficiency between the net proceeds of
such sale (after deduction of all reasonable costs of sale)
and the Stipulated Loss Value of such Aircraft, computed as of
the Stipulated Loss Value Date on or immediately following the
date of such sale together with interest, if any, on the
amount of such deficiency, at the Past Due Rate, from the date
of such sale to the date of actual payment of such amount;
and/or
(e) Lessor may rescind this Lease Agreement as to
the Aircraft, and/or may exercise any other right or remedy
which may be available to it under applicable law or proceed
by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser,
as the case may be, under no compulsion to lease or purchase, as the case may
be, and an informed and willing lessor or seller in possession under no
compulsion to sell, as the case may be, in each case based upon the actual
condition and location of the Aircraft, which value shall be determined by
mutual agreement or, in the absence of mutual written agreement, pursuant to an
appraisal prepared and delivered by a nationally recognized firm of independent
aircraft appraisers nominated by Lessor, and Lessor shall immediately notify
Lessee of such nomination. Unless Lessee shall have objected in writing within
ten days after its receipt of Lessor's notice, Lessor's nomination shall be
conclusive and binding. If Lessee shall object, however, Lessor and Lessee
shall endeavor, within ten days after such objection is made, to select a
mutually acceptable appraiser; provided that, if Lessee shall not so endeavor
to make such selection, Lessor's nomination referred to in the preceding
sentence hereof shall be conclusive and binding. If Lessor and Lessee fail to
reach agreement within the time period referred to in the immediately preceding
sentence (except for the reason referred to in the proviso in the preceding
sentence), or if any appraiser selected fails to act for any reason, then the
question shall be determined by an appraisal (applying the definitions of "fair
market rental value" and "fair market sales value" as set forth above based
upon the actual condition of the Aircraft) mutually agreed to by two recognized
independent aircraft appraisers, one of which appraisers shall be chosen by
Lessor and one by Lessee within five Business Days after Lessor or Lessee shall
have received written notice from the other party of a demand that such an
appraisal be made, which notice shall specify the appraiser chosen by the party
giving the notice or, if such appraisers cannot agree on the amount of such
appraisal within twenty Business Days after the end of such five-
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day period, each shall render its own appraisal and shall by mutual consent
choose another appraiser within five Business Days after the end of such
twenty-day period. If, within such five-day period, such two appraisers fail
to appoint a third appraiser, then either Lessor or Lessee, on behalf of both,
may request such appointment by the then President of the Association of the
Bar of the City of New York (or any successor organization thereto) or, in his
absence, failure, refusal or inability to act, then either Lessor or Lessee may
apply to the American Arbitration Association (or any successor organization
thereto) in New York, New York for the appointment of such third appraiser.
The decision of the third appraiser so appointed shall be given within twenty
Business Days after the appointment of such third appraiser. As soon as the
third appraiser has delivered his appraisal, that appraisal shall be compared
with the appraisals given by the other two appraisers. If the determination of
one appraiser is more disparate from the average of all three determinations
than each of the other two determinations, then the determination of such
appraiser shall be excluded, the remaining two determinations shall be averaged
and such average shall be final and binding upon the parties hereto. If no
determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. The cost of such appraisal or appointment
shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any
and all unpaid Rent due hereunder before, after or during the exercise of any
of the foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) or Lessee may bid for and purchase such property. Lessor
agrees to give Lessee at least fifteen (15) days' prior written notice of the
date fixed for any public sale of the Airframe or any Engine or of the date on
or after which will occur the execution of any contract providing for any
private sale and Lessee (and any Sublessee) shall have the right to bid at any
such sale. Except as otherwise expressly provided above, no remedy referred to
in this Section 15 is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity; and the exercise or beginning of exercise by Lessor
of any one or more of such remedies shall not preclude the simultaneous or
later exercise by Lessor of any or all of such other remedies. No waiver by
Lessor of any Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the
execution and delivery of any amendment to
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this Lease, to the Trust Indenture or to the Trust Agreement, Lessee will cause
such Lease Supplement, Trust Supplement (and, in the case of the initial Lease
Supplement and Trust Supplement, this Lease, the Trust Agreement and the Trust
Indenture as well) or amendment to be duly filed and recorded, and maintained
of record, in accordance with the applicable laws of the government of registry
of the Aircraft. In addition, Lessee will promptly and duly execute and
deliver to Lessor such further documents and take such further action as Lessor
or the Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor and the Indenture Trustee hereunder, including, without limitation,
if requested by Lessor or the Indenture Trustee, at the expense of Lessee, the
execution and delivery of supplements or amendments hereto or to the Trust
Indenture, each in recordable form, subjecting to this Lease and the Trust
Indenture, any airframe or engine substituted for the Airframe or any Engine
pursuant to the terms thereof and the recording or filing of counterparts
thereof, in accordance with the laws of such jurisdictions as Lessor or the
Indenture Trustee may from time to time deem advisable. Lessee agrees to
furnish to Lessor and the Indenture Trustee promptly after execution and
delivery of any supplement and amendment hereto and promptly after the
execution and delivery of any supplement and amendment to the Trust Indenture
(except for any such supplement or amendment which does not require or receive
the approval of Lessee pursuant to the Operative Documents and is not required
pursuant to the terms of the Operative Documents), an opinion of counsel
reasonably satisfactory to Lessor and the Indenture Trustee as to the due
recording or filing of such supplement or amendment. Commencing in 1996, on or
before April 30 of each year during the Term, Lessee will deliver to Lessor and
the Indenture Trustee a certificate of Lessee, signed by the President, a Vice
President or the Chief Financial Officer of Lessee to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and
the signer does not have actual knowledge of the existence, as of the date of
such certificate, of any condition or event which constitutes a Default or an
Event of Default. Lessee agrees that if the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer
of Lessee has actual knowledge of the existence of a Default, then Lessee shall
promptly give to Lessor, the Owner Participant and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor, the Owner
Participant or the Indenture Trustee may reasonably request. Lessee agrees
that if an officer of Lessee has knowledge of the existence of an Event of
Default, Lessee shall promptly give to Lessor and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor or the Indenture
Trustee may reasonably request. Lessee will deliver to Lessor, the Owner
Participant and the Indenture Trustee (i) within sixty (60) days after the end
of each of the first three quarterly periods of each fiscal year of the
Guarantor, the publicly filed Form 10-Q report of the Guarantor; and (ii)
within one hundred twenty (120) days after the close of such fiscal year, the
publicly filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by
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registered, first-class airmail, with postage prepaid, or by personal delivery
of written notice and any such notice shall become effective when received,
addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice President-Finance and
Treasurer (Telecopy No. (612) 726-0665), or to such other
address or telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address or
telecopy number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at
such address or telecopy number as such Loan Participant, the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at its address
or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. All Rent
shall be paid by Lessee to Lessor in funds of the type specified in Section
3(f). Lessee's obligation to pay all Rent payable hereunder shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which Lessee may have against Lessor, in its individual capacity or as
Owner Trustee under the Trust Agreement, the Indenture Trustee (in its
individual capacity or as Indenture Trustee), any Loan Participant, the Owner
Participant, or anyone else for any reason whatsoever (whether in connection
with the transactions contemplated hereby or any other transactions),
including, without limitation, any breach by Lessor or the Owner Participant of
their respective warranties, agreements or covenants contained in any of the
Operative Documents, (ii) any defect in the title, registration, airworthiness,
condition, design, operation, or fitness for use of, or any damage to or loss
or destruction of, the Aircraft, or any interruption or cessation in or
prohibition of the use or possession thereof by Lessee (or any Sublessee) for
any reason whatsoever, including, without limitation, any such interruption,
cessation or prohibition resulting from the act of any government authority,
(iii) any insolvency, bankruptcy, reorganization or similar case or proceedings
by or against Lessee (or any Sublessee) or any other person, or (iv) any other
circumstance, happening, or event whatsoever, whether or not unforeseen or
similar to any of the foregoing. 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 without limitation of
the other rights or remedies of Lessor hereunder to pay to Lessor an amount
equal to each Rent payment at the time such payment would have become due and
payable in accordance with the
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terms hereof had this Lease not been terminated in whole or in part. Lessee
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, cancel, quit or surrender this Lease
except in accordance with the express terms hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION. (a)
Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right to
renew this Lease for up to two consecutive one year renewal terms the first of
which shall commence only upon the expiration of the Basic Term (any such
renewal term, a "FIXED RENEWAL TERM") by delivery to Lessor at least one
hundred twenty (120) days before the end of the Basic Term or the first Fixed
Renewal Term, as the case may be, a written notice irrevocably electing to
renew this Lease for a Fixed Renewal Term. Basic Rent during any Fixed Renewal
Term shall be payable in an amount and at the times specified in Section
19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the
second Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have
the option to renew this Lease for a renewal term of one year for a Basic Rent
equal to the "fair market rental value" of the Aircraft for such period (any
such renewal term, a "FAIR MARKET RENEWAL TERM"). Each such option to renew
shall be exercised by Lessee delivering to Lessor, at least one hundred twenty
(120) days prior to the commencement of such Fair Market Renewal Term, a
written notice irrevocably electing to renew this Lease for a Fair Market
Renewal Term. Lessee shall not be entitled to renew this Lease pursuant to
this Section 19(a)(2) more than five times.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(a)(1) or 19(a)(2) on or before the day specified
therefor, Lessee shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Major Default or an Event of
Default and that all necessary governmental authorizations and approvals shall
have been received and that Basic Rent for the Renewal Term has already been
determined as above provided and a Lease Supplement evidencing such renewal has
been executed and filed for recordation with the Federal Aviation
Administration, this Lease shall continue in full force and effect during the
Renewal Term, except that (x) Lessee shall pay Lessor Basic Rent for the
Aircraft during the Renewal Term in an amount equal to the "fair market rental
value" thereof determined in accordance with Section 19(c), but not to exceed
in the case of a Fixed Renewal Term one-half of the average Basic Rent during
the Basic Term (such average being determined as the total of all payments of
Basic Rent during the Basic Term added together and divided by the number of
payments of Basic Rent during the Basic Term) and not to be less than fifteen
percent (15%) of such average in the case of a Fixed Renewal Term, which Basic
Rent shall be payable in semi-annual installments in arrears, each such
installment being due and payable on each Lease Period Date occurring during
the Renewal Term, commencing with the Lease Period Date immediately following
the commencement of the Renewal Term, and (y) the Stipulated Loss Values
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applicable during the Renewal Term shall be determined separately for each
Renewal Term by the Owner Participant in good faith to reflect Stipulated Loss
Values determined in accordance with the following sentence. Stipulated Loss
Values during a Renewal Term shall on the date on which such Renewal Term
begins be equal to the fair market sales value of the Aircraft as of such date,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof, and shall decline ratably on a monthly basis to the fair
market sales value of the Aircraft as of the last day of such Renewal Term,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. So long as no Event of Default
shall have occurred and be continuing on the date of Lessee's giving of notice
pursuant to this Section 19(b), Lessee shall have the option, upon at least one
hundred twenty (120) days' irrevocable prior written notice to Lessor, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the fair market sales value of the Aircraft;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the purchase price by Lessee will not constitute a
preference under Section 547 of the Bankruptcy Code, Lessee shall not be
entitled to purchase the Aircraft if there shall exist on such last Business
Day of the Basic Term or any Renewal Term, as the case may be, a Default of the
type referred to in Section 14(e) hereof. Upon payment to Lessor in
immediately available funds of the full amount of the purchase price and
payment of any other amounts then due hereunder (including all Rent and all
costs or expenses of the Owner Participant in connection with such purchase),
Lessor will transfer to Lessee, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), all of Lessor's
right, title and interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three
hundred sixty-five (365) days prior to the date on which Lessee may purchase
the Aircraft pursuant to Section 19(b) hereof or renew this Lease pursuant to
Section 19(a)(1) or Section 19(a)(2) hereof, Lessee may deliver to Lessor a
revocable notice of its intent to exercise its renewal option or purchase
option. For all purposes of this Section 19, including the appraisal referred
to in this Section 19(c), in determining "fair market rental value" or "fair
market sales value", the Aircraft shall be valued (i) as if in the condition
and otherwise in compliance with the terms of Section 5 upon a return of the
Aircraft to the United States and as if it had been maintained at all times as
required in accordance with Section 7(a)(I) during periods when no Sublease was
in effect, (ii) on the basis of the value which would obtain in an arm's-length
transaction between an informed and willing buyer-user or lessee (other than a
lessee or an Affiliate of a lessee currently in possession or a used equipment
scrap dealer) under no compulsion to buy or lease and an informed and willing
seller or lessor unaffiliated with such buyer-user or lessee and under no
compulsion to sell or lease and disregarding the purchase and renewal options
of the lessee provided in this Lease, and (iii) in the case of such valuation
for determining "fair
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market rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the
insurance required by Section 11 hereof and to make certain payments with
reference to Stipulated Loss Value during the applicable Fair Market Renewal
Term. Upon receipt of such notice Lessor and Lessee shall confer in good faith
with a view to reaching agreement on the "fair market rental value" or "fair
market sales value" of the Aircraft. If the parties have not so agreed by two
hundred seventy (270) days prior to the end of the Basic Term or the Renewal
Term in question, then the question shall be determined by an appraisal
mutually agreed to by two recognized independent aircraft appraisers, one of
which appraisers shall be chosen by Lessor and one by Lessee within five
Business Days after Lessor or Lessee shall have received written notice from
the other party of a demand that such an appraisal be made, which notice shall
specify the appraiser chosen by the party giving the notice or, if such
appraisers cannot agree on the amount of such appraisal within twenty Business
Days after the end of such five-day period, each shall render its own appraisal
and shall by mutual consent choose another appraiser within five Business Days
after the end of such twenty-day period. If, within such five-day period, such
two appraisers fail to appoint a third appraiser, then either Lessor or Lessee,
on behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall
be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. Lessee and
Lessor shall share equally all expenses relating to such appraisal procedure
provided if Lessee elects not to renew this Lease or purchase the Aircraft
following such appraisal, Lessee shall pay all expenses of such appraisal.
(d) Special Purchase Option. On December 20, 2011 (or,
if December 20, 2011 is not a Business Day, the Business Day immediately
preceding December 20, 2011), Lessee shall have the option, upon at least
ninety (90) days' irrevocable prior notice to Lessor and, if any Secured
Certificates are then outstanding, the Indenture Trustee, to purchase the
Aircraft on such date for a purchase price equal to the Special Purchase Price;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the Special Purchase Price by Lessee will not constitute a
preference under Section 547 of the Bankruptcy Code, Lessee shall not be
entitled to purchase the Aircraft if there shall exist on December 20, 2011
(or, if December 20, 2011 is not a Business Day, on the Business Day
immediately preceding December 20, 2011) a Default of the type referred to in
Section 14(e) hereof. In addition, if
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on such date there shall be any Secured Certificates outstanding, Lessee shall
have the option to assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.15 of the Trust Indenture, all of the obligations of
Lessor under the Trust Indenture. If such assumption is made, Lessee shall pay
Lessor a purchase price equal to (I) the Special Purchase Price minus (II) an
amount equal to principal of, and accrued but unpaid interest on, any Secured
Certificates that are outstanding on such date. Upon such payment in full and
payment of any other amounts then due hereunder (including costs or expenses of
the Owner Participant in connection with such purchase, any installments of
Basic Rent due prior to such date and, if Basic Rent is payable in arrears on
such date as indicated on Exhibit B, on such date (but not any installment of
Basic Rent due on such date if Basic Rent is payable in advance on such date),
and all unpaid Supplemental Rent due on or prior to such date), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft and under the Trust Indenture and,
unless there shall be any Secured Certificates outstanding after such payment,
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Trust Indenture.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF
SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this Lease, the Lease Supplements
and any amendments to this Lease and to mortgage its interest in the Aircraft
in favor of the Indenture Trustee, subject to the reservations and conditions
therein set forth. To the extent, if any, that this Lease, the Lease
Supplements and any amendments to this Lease constitute 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, the Lease Supplements and
any amendments to this Lease may be created through the transfer or possession
of any counterpart other than the original counterpart, which shall be
identified as the counterpart containing the receipt therefor executed by the
Indenture Trustee on the signature page thereof. Lessee hereby accepts and
consents to the assignment of all Lessor's right, title and interest in and to
this Lease pursuant to the terms of the Trust Indenture. Subject to Section
3(f) hereof, Lessee agrees to pay directly to the Indenture Trustee (or, after
receipt by Lessee of notice from the Indenture Trustee of the discharge of the
Trust Indenture, to Lessor), all amounts of Rent due or to become due hereunder
and assigned to the Indenture Trustee and Lessee agrees that the Indenture
Trustee's right to such payments hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
the circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
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Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon
demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor as
security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of ninety (90) days or less from date of purchase
thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings as of
its last report of condition of at least $500,000,000 and having a rating of Aa
or better by Moody's Investors Service, Inc. ("MOODY'S") or AA or better by
Standard & Poor's Corporation ("S&P") and having a final maturity of ninety
(90) days or less from date of purchase thereof; and (iii) commercial paper of
any holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America
or any state thereof having a rating assigned to such commercial paper of A1 by
S&P or P1 by Moody's and having a final maturity of ninety (90) days or less
from the date of purchase thereof; provided, however, that the aggregate amount
at any one time so invested in certificates of deposit issued by any one bank
shall not be in excess of 5% of such bank's capital and surplus. There shall
be promptly remitted to Lessee or its order (but no more frequently than
monthly) any gain (including interest received) realized as a result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) unless an Event of Default shall
have occurred and be continuing. Lessee shall be responsible for any net loss
realized as a result of any such investment and shall reimburse Lessor (or the
Indenture Trustee, as the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed
and understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under
the Trust Agreement, and the institution acting as Lessor shall not be liable
in its individual capacity for any breach thereof except for its gross
negligence or willful misconduct or for breach of its covenants,
representations and warranties contained herein, to the extent covenanted or
made in its individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the
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Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Lease, the subject
matter hereof or any of the transactions contemplated hereby brought by Lessor,
Lessee, the Indenture Trustee, the Loan Participants or the Owner Participant
or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision
of this Lease may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by Lessor, Lessee and any assignee of
Lessor's rights hereunder. This Lease shall constitute an agreement of lease,
and nothing contained herein shall be construed as conveying to Lessee any
right, title or interest in the Aircraft except as a lessee only. Neither
Lessee nor any affiliate of Lessee will file any tax returns in a manner
inconsistent with the foregoing fact or with Lessor's ownership of the
Aircraft. The section and paragraph headings in this Lease and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof and all references herein
to numbered sections, unless otherwise indicated, are to sections of this
Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case of
the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 10 of the Participation Agreement) and without in
any way altering the terms of this Lease or Lessee's obligations hereunder.
One such appointment and designation of a successor Owner Trustee shall not
exhaust the right to appoint and designate further successor Owner Trustees
pursuant to the Trust Agreement, but such right may be exercised repeatedly as
long as this Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default
by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations
- 58 -
<PAGE> 59
pursuant to the Overall Transaction during the Term of this Lease, and this
Lease shall not be terminated except as expressly provided herein.
- 59 -
<PAGE> 60
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein,
but solely as Owner Trustee, Lessor
BY:______________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:______________________________
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of December, 1995.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:______________________________
Title:
- Signature Page -
<PAGE> 61
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1995 B]
LEASE SUPPLEMENT NO.
[NW 1995 B]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement [NW 1995 B], dated as of
December 13, 1995, between [ ] as Owner Participant, and
such Owner Trustee (such Owner Trustee, in its capacity as such Owner Trustee,
being herein called "LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1995 B], dated as of December 13, 1995, relating to one
Boeing 757-251 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 from time to time of Lease Supplements 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.
1The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the Federal Aviation
Administration as one document.
1The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as
of the date hereof consists of the following components:
__________________________________
1 This language for other Lease Supplement No. 1.
2 This language for other Lease Supplements.
<PAGE> 62
(i) Airframe: FAA Registration No. ______;
manufacturer's serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037
engines bearing, respectively, manufacturer's serial nos.
P______ and P______ (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such
horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as
otherwise provided in the Lease, the Term for the Aircraft shall commence on
the Delivery Date and end on June 20, 2016.
3. Lessee hereby confirms its agreement to pay Lessor
Basic Rent for the Aircraft throughout the Term therefor in accordance with
Section 3 of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has
accepted the Aircraft for all purposes hereof and of the Lease as being
airworthy, in good working order and repair and without defect or inherent vice
in title, condition, design, operation or fitness for use; provided, however,
that nothing contained herein or in the Lease shall in any way diminish or
otherwise affect any right Lessee or Lessor may have with respect to the
Aircraft against The Boeing Company, or any subcontractor or supplier of The
Boeing Company, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the same extent as
if fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee
on the signature page hereof.
EXHIBIT A - PAGE 2
<PAGE> 63
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By __________________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By _________________________________________
Title:
3Receipt of this original counterpart of the foregoing Lease Supplement is
hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By _________________________________________
Title:
__________________________________
2 This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 64
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1995 B]
BASIC RENT, LESSOR'S COST AND
SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information. Basic Rent:
Basic Rent
Commencement (Percentage of
Date Lessor's Cost)
---------------------------- ----------------------------------
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
---------------------------- ----------------------------------
* Denotes payment in arrears from preceding Lease Period Date to
specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date (or
Commencement Date in the case of the first Lease Period) to succeeding Lease
Period Date.
<PAGE> 65
BASIC RENT, LESSOR'S COST AND
SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
---------------------------- ----------------------------------
* Denotes payment in arrears from preceding Lease Period Date to
specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date (or
Commencement Date in the case of the first Lease Period) to succeeding Lease
Period Date.
EXHIBIT B - PAGE 2
<PAGE> 66
Lessor's Cost for the Aircraft:
Special Purchase Price:
EXHIBIT B - PAGE 3
<PAGE> 67
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1995 B]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
---------------------------- ----------------------------------
<PAGE> 68
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1995 B]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
---------------------------- --------------------------------
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1995 B]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 B], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1995 B], dated as of December 13,
1995 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1995 B], dated as of December 13,
1995 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1995 B] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated December 21, 1995, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N536US; manufacturer's serial No. 26483; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727160 and P727161;
WHEREAS, Section 17 of the Participation Agreement [NW 1995
B], dated as of December 13, 1995 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants named
therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and
State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that
the Secured Certificates issued by the Owner Trustee under the Trust Indenture
and Security Agreement [NW 1995 B], dated as of December 13, 1995, between
Lessor (in its individual capacity as expressly provided therein and as trustee)
and the Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1995 B], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Basic
Rent, Stipulated Loss Value and Termination Value percentages and the Special
Purchase Price in order to reflect, among other things, the interest rate of the
refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Basic
Rent, Stipulated Loss Value and Termination Value percentages and the Special
Purchase Price, Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1995 B], dated as of December 13,
1995, and the Trust Agreement and Indenture Supplement [NW 1995 B], dated
December 21, 1995, was recorded by the Federal Aviation Administration (the
"FAA") on December 26, 1995, and assigned Conveyance No. P05092;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Basic Term", "Business Day",
"Certificated Air Carrier", "Commencement Date", "Delivery Date", "Indemnitee",
"Indenture Trustee's Liens", "Lease Period", "Lease Period Date", "Loan
Participant", "Net Present Value of Rents", "Operative Documents", "Rent",
"Stipulated Loss Value", "Stipulated Loss Value Date", "Supplemental Rent", "Tax
Indemnitee" and "Termination Value" in Section 1 of the Lease are hereby amended
applicable on and after the Closing Date to read as follows:
"BASIC TERM" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing
on the Commencement Date and ending on July 2, 2016, or such
earlier date as the Lease may be terminated in accordance
with the provisions hereof.
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York;
Boston, Massachusetts; Salt Lake City, Utah; San Francisco,
California; or Minneapolis, Minnesota.
"CERTIFICATED AIR CARRIER" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title
49, United States Code, for aircraft capable of carrying ten
or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required
to fall within the purview of 11 U.S.C. Section 1110 or any
analogous successor provision of the Bankruptcy Code.
"COMMENCEMENT DATE" means July 2, 1996.
"DELIVERY DATE" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
-2-
<PAGE> 3
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) the Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i)
through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the
respective directors, officers, employees, agents and
servants of each of the Persons described in clauses (i)
through (viii), inclusive, (xii) the successors and permitted
assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of
the Persons described in clauses (v), (vi), (vii) and (viii).
"INDENTURE TRUSTEE'S LIENS" means any Lien which arises
as a result of (A) claims against the Indenture Trustee not
related to its interest in the Aircraft or the administration
of the Trust Estate pursuant to the Trust Indenture, (B) acts
of the Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the
Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or
willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation
Agreement pursuant to said Section 7, or (D) claims against
the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in
the Aircraft, the Trust Estate, the Trust Indenture Estate or
the Operative Documents other than a transfer of the Aircraft
pursuant to Section 9, 10 or 19 of the Lease or Article IV or
V of the Trust Indenture, or a transfer of the Aircraft
pursuant to Section 15 of the Lease while an Event of Default
is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"LEASE PERIOD" means each of the consecutive periods
throughout the Basic Term and any Renewal Term and ending on
a Lease Period Date, the first such period commencing on and
including the Commencement Date.
"LEASE PERIOD DATE" means January 2, 1997 and each
succeeding January 2 and July 2, to and including the last
such date in the Term.
"LEASE SUPPLEMENT" means a Lease Supplement,
substantially in the form of Exhibit A hereto, entered into
between Lessor and Lessee on the Delivery Date for the
purpose of leasing the Aircraft under and pursuant to the
terms of this Lease Agreement, and any subsequent Lease
Supplement entered into in accordance with the terms hereof.
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after
-3-
<PAGE> 4
the Closing, the Purchasers and their successors and
registered assigns, including any Certificate Holder.
"NET PRESENT VALUE OF RENTS" means the net present
value, as of the Commencement Date, of Basic Rent set forth
in Exhibit B hereto, discounted at an annual interest rate of
7.70% on a semi-annual basis.
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of
the Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "OPERATIVE DOCUMENT"
shall mean each of the Operative Documents, individually.
"RENT" means Interim Rent, Basic Rent and Supplemental
Rent, collectively.
"STIPULATED LOSS VALUE" with respect to the Aircraft as
of any date through and including July 2, 2016, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount
is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any date after July 2, 2016 shall be the amount determined as
provided in Section 19(a) hereof.
"STIPULATED LOSS VALUE DATE" means, (a) during the
Interim Term through the Closing Date, the twentieth calendar
day of each calendar month, and (b) during the Interim Term
after the Closing Date, during the Basic Term and during any
Renewal Term, the second calendar day of each calendar month.
"SUPPLEMENTAL RENT" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than
Interim Rent and Basic Rent) which Lessee assumes or agrees
to pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to
clause (b) of the third paragraph of Section 2.02 of the
Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreements, and
(d) Lessor's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except
with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein,
"Lessor's pro rata share" means as of
-4-
<PAGE> 5
any time a fraction, the numerator of which is the principal
balance then outstanding of Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" (as such term is defined
in the Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee
under the Trust Agreement, the Trust Estate, the Indenture
Trustee, and (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as of
any date through and including July 2, 2016, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with respect to which the amount is
determined (as such Exhibit D may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable on and after the
Closing Date:
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing shall
occur.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"INTERIM RENT" means the rent payable for the Aircraft
for the Interim Term pursuant to Section 3(b) hereof.
"LIQUIDITY FACILITIES" means the two Revolving Credit
Agreements between the Subordination Agent, as borrower, and
the Liquidity Provider, and any replacement thereof, in each
case as the same may be amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale acting through its New York branch, as Class A
Liquidity Provider and Class B Liquidity Provider under the
Liquidity Facilities, or any successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
-5-
<PAGE> 6
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and
Security Agreement [NW 1995 B], dated as of December 13,
1995, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENTS" means the pass
through trust agreement and supplements pursuant to which
each of the Class C and Class D pass through certificates are
issued.
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the two separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as
trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as
successor trustee under any such Pass Through Trust
Agreement.
"PURCHASERS" means the Pass Through Trustees under each
Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Basic Rent, Stipulated Loss Value and Termination Value
percentages, and the proposed Amortization Schedules.
"REFINANCING DATE" means the proposed date on which the
outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
-6-
<PAGE> 7
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers
pursuant to the Trust Indenture Amendment and the Refunding
Agreement on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption
of the Secured Certificates issued on December 21, 1995 and
the concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1995 B], dated as of June 3, 1996, among
Lessor, Lessee, the Owner Participant, the Purchasers, the
Indenture Trustee, the Subordination Agent, and the
Guarantor, as the same may from time to time be supplemented
or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms
thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust
Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1995 B],
dated as of the Closing Date, between Lessor and State Street
Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", and "Rent Differential Amount" in Section 1 of the
Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTIONS 3(A), 3(B), 3(C), 3(D), 3(E)
AND 3(F) OF THE LEASE.
(a) The second sentence of Section 3(a) of the Lease is
hereby amended to read in its entirety on and after the Closing Date as follows:
The Basic Term shall commence on the Commencement Date
and end on July 2, 2016, or such earlier date as this Lease
may be terminated in accordance with the provisions hereof.
-7-
<PAGE> 8
(b) Section 3(b) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
Interim Rent. Lessee shall pay Interim Rent on the
Closing Date in an amount equal to Lessor's Cost
multiplied by the percentage specified in Exhibit B
hereto for Interim Rent on the Closing Date.
(c) Section 3(c) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
Lessee shall pay Basic Rent with respect to each
Lease Period during the Basic Term on the Commencement
Date and on each Lease Period Date during the Basic
Term, in consecutive installments in the amounts as
provided in the next sentence, each such installment to
cover the Lease Period specified in Exhibit B. Each such
installment of Basic Rent shall be equal to Lessor's
Cost multiplied by the percentage for the Commencement
Date or the applicable Lease Period Date specified in
Exhibit B hereto.
(d) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs
other than on June 12, 1996, or (B) Refinancing Expenses
paid by Lessor or the Owner Participant pursuant to
Section 11(a) of the Refunding Agreement are determined
to be other than 1.1394% of Lessor's Cost, then in each
case, the Basic Rent percentages set forth in Exhibit B,
the Stipulated Loss Value percentages set forth in
Exhibit C, the Termination Value percentages set forth
in Exhibit D and the Special Purchase Price shall be
recalculated by the Owner Participant, on or prior to
October 1, 1996 using the same methods and assumptions
used to calculate original Basic Rent and Stipulated
Loss Value and Termination Value percentages and the
Special Purchase Price, in order to: (1) maintain the
Owner Participant's Net Economic Return and (2) minimize
the Net Present Value of Rents to Lessee to the extent
possible consistent with clause (1) hereof. In such
recalculation there will be no change in the
amortization of the Secured Certificates.
(e) Section 3(d)(ii) of the Lease is hereby amended by
deleting on and after the Closing Date the words "or a refunding" in the first
line thereof.
(f) The second sentence of Section 3(e) of the Lease is
hereby amended to read in its entirety on and after the Closing Date as follows:
Lessee shall pay as Supplemental Rent the
Make-Whole Amount, if any, due pursuant to Section
2.10(b) or Section 2.11 of the Trust Indenture in
connection with a prepayment of the Secured Certificates
upon redemption of
-8-
<PAGE> 9
such Secured Certificates in accordance with such
Section 2.10(b) or Section 2.11.
(g) Section 3(f) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the numbers and punctuation "124-000-12"
in the first sentence thereof and substituting therefor the numbers and
punctuation "124-0000-12", and (ii) adding on and after the Closing Date the
word "irrevocably" after the word "hereby" in the proviso in the first sentence
thereof.
SECTION 3. AMENDMENT OF SECTION 7(B) OF THE LEASE. Section
7(b)(x)(2) of the Lease is hereby amended by deleting on and after the Closing
Date the words "the Owner Participant and the Indenture Trustee" and
substituting therefor the word "Lessor".
SECTION 4. AMENDMENT OF SECTION 9(C) OF THE LEASE. Section
9(c) of the Lease is hereby amended by deleting on and after the Closing Date
the word "premium" each time it appears therein and substituting therefor the
words "Make-Whole Amount" and by deleting on and after the Closing Date the
words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words
and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section
10(a) of the Lease is hereby amended by (i) deleting on and after the Closing
Date the words "the third Business Day following the receipt of insurance
proceeds in respect of such occurrence (but not earlier than thirty (30) days
after such occurrence)" in clause (i)(y) thereof and substituting therefor the
words "an earlier Business Day irrevocably specified fifteen days in advance by
notice from Lessee to Lessor and the Indenture Trustee", and (ii) deleting on
and after the Closing Date the word "should" and substituting therefor the word
"will" in Section (6) in the last paragraph thereof.
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section
14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date
the words and punctuation ", the Refunding Agreement" after the words
"Participation Agreement and (ii) adding on and after the Closing Date the words
"and except for representations or warranties contained in the Pass Through
Trust Agreement or the Underwriting Agreement (as defined in the Refunding
Agreement) or any document or instrument furnished pursuant to either thereof"
after the word "Agreement" at the end of the first parenthetical phrase therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17
of the Lease is hereby amended to read in its entirety on and after the Closing
Date as follows:
Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective
when received, addressed:
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<PAGE> 10
(i) if to Lessee, for U.S. Mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010),
Eagan, Minnesota 55121, Attention: Senior Vice President
- Finance and Treasurer, (Telecopy No. (612) 726-0665),
or to such other address, telex number or telecopy
number as Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate Trust
Department (Telecopy No. (801) 246-5053), or to such
other address or telecopy number as Lessor shall from
time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner
Participant at such address or telecopy number as such
Loan Participant, the Indenture Trustee or the Owner
Participant shall have furnished by notice to Lessor and
to Lessee, and, until an address is so furnished,
addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at its address or
telecopy number set forth on the signature pages of the
Refunding Agreement.
SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The first and second sentences of Section 19(d) of the Lease
are hereby amended to read in their entirety on and after the Closing Date as
follows:
On January 2, 2012 (or, if January 2, 2012 is not a Business
Day, the Business Day immediately succeeding January 2,
2012), Lessee shall have the option, upon at least ninety
(90) days' irrevocable prior notice to Lessor and, if any
Secured Certificates are then outstanding, the Indenture
Trustee, to purchase the Aircraft on such date for a purchase
price equal to the Special Purchase Price; provided that,
unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to
Lessor to the effect that the payment of the Special Purchase
Price by Lessee will not constitute a preference under
Section 547 of the Bankruptcy Code, Lessee shall not be
entitled to purchase the Aircraft if there shall exist on
January 2, 2012 (or if January 2, 2012 is not a Business Day,
on the Business Day immediately succeeding January 2, 2012) a
Default of the type referred to in Section 14(e) hereof). In
addition, if on such date there shall be any Secured
Certificates outstanding, Lessee shall have the option to
assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.13 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture.
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<PAGE> 11
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26
of the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
(b) The parties hereto agree that Exhibits B, C and D
attached hereto reflect the calculation of Interim Rent and the recalculation of
Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Special Purchase Price to take into account the interest rates borne by the
Secured Certificates as of the Closing Date and the actual amount of Transaction
Expenses.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to
the Lease set forth in Sections 1 through 10 hereof shall be effective as of the
date hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through
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<PAGE> 12
the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 13
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By:
---------------------------------------
Title:
NORTHWEST AIRLINES, INC.
Lessee
By:
---------------------------------------
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of ____________________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By:
---------------------------------------
Title
- ----------------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1995 B]
This GUARANTEE [NW 1995 B], dated as of December 13, 1995 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1995 B], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1995 B], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1995 B], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
<PAGE> 2
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is
fully aware of the terms and conditions of the Lease, the Participation
Agreement and the other Operative Documents and the transactions and the other
documents contemplated thereby, and does hereby irrevocably and fully and
unconditionally guarantee, as primary obligor and not as surety merely, to the
Parties, as their respective interests may appear, the payment by the Lessee of
all payment obligations when due under the Lease (including, without
limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the
Tax Indemnity Agreement and the other Operative Documents to which the Lessee
is a party (such obligations of the Lessee guaranteed hereby being hereafter
referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as
the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative
Documents, and the timely performance of all other obligations of the Lessee
thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the
"NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the
"OBLIGATIONS"). The Guarantor does hereby agree that in the event that the
Lessee fails to pay any Financial Obligation when due for any reason
(including, without limitation, the liquidation, dissolution, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceedings affecting the status, existence, assets or obligations of, the
Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such proceeding)
within five days after the date on which such Financial Obligation became due
and payable and the applicable grace period has expired, the Guarantor shall
pay or cause to be paid forthwith, upon the receipt of notice from any Party
(such notice to be sent to the Lessee (to the extent such Party is not stayed
or prevented from doing so by operation of law) and the Guarantor) stating that
such Financial Obligation was not paid when due and for five days after the
applicable grace period has expired, the amount of such Financial Obligation,
together with all other Financial Obligations of the Lessee which are then due
and unpaid. The Guarantor hereby agrees that in the event the Lessee fails to
perform any Nonfinancial Obligation for any reason (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Lessee, or the disaffirmance
with respect to the Lessee of the Lease or the Operative Documents to which the
Lessee is a party in any such proceeding) within 10 Business Days after the
date on which such Nonfinancial Obligation is required to be performed (for
avoidance of doubt, to include any applicable grace period), the Guarantor
shall cause such Nonfinancial Obligation to be performed within 10 Business
Days following the receipt of notice from any Party (such notice to be sent to
the Lessee (to the extent such Party is not stayed or prevented from doing so
by operation of law) and the Guarantor) stating that such Nonfinancial
Obligation was not performed when so required and that any applicable grace
period has expired.
(b) The obligations of the Guarantor hereunder shall not
be, to the fullest extent permitted by law, affected by: the genuineness,
validity, regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative
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<PAGE> 3
Document to which the Lessee is a party, any amendment, waiver or other
modification of the Lease or such other Operative Document (except that any
such amendment or other modification shall be given effect in determining the
obligations of the Guarantor hereunder), or by any substitution, release or
exchange of collateral for or other guaranty of any of the Obligations (except
to the extent that said Obligations have been satisfied by such substitution,
release or exchange in accordance with the terms of the other Operative
Documents) without the consent of the Guarantor, or by any priority or
preference to which any other obligations of the Lessee may be entitled over
the Lessee's obligations under the Lease and the other Operative Documents to
which the Lessee is a party, or by any other circumstance that might otherwise
constitute a legal or equitable defense to or discharge of the obligations of a
surety or guarantor including, without limitation, any defense arising out of
any laws of the United States of America or any State thereof which would
excuse, discharge, exempt, modify or delay the due or punctual payment and
performance of the obligations of the Guarantor hereunder. Without limiting
the generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not, to the fullest extent permitted by law, affect
the liability of the Guarantor hereunder: (a) the extension of the time for or
waiver of, at any time or from time to time, without notice to the Guarantor,
the Lessee's performance of or compliance with any of its obligations under the
Operative Documents (except that such extension or waiver shall be given effect
in determining the obligations of the Guarantor hereunder)), (b) any
assignment, transfer, sublease or other arrangement by which the Lessee
transfers possession or loses control of the use of the Aircraft, (c) any
defect in the title, condition, design, operation or fitness for use of, or
damage to or loss or destruction of, the Aircraft, whether or not due to the
fault of the Lessee, (d) any merger or consolidation of the Lessee or the
Guarantor into or with any other Person, or any sale, transfer, lease or
disposal of any of its assets or (e) any change in the ownership of any shares
of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any
unpaid amounts due or otherwise to enforce performance by the Lessee. The
Guarantor specifically agrees, to the fullest extent permitted by law, that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Party (i) file suit or proceed to obtain or
assert a claim for personal judgment against the Lessee for the Obligations, or
(ii) make any effort at collection of the Obligations from the Lessee, or (iii)
foreclose against or seek to realize upon any security now or hereafter
existing for the Obligations, including the Trust Estate or the Trust Indenture
Estate (as such term is defined in the Trust Indenture), or (iv) file suit or
proceed to obtain or assert a claim for personal judgment against any other
Person liable for the Obligations, or make any effort at collection of the
Obligations from any such other Person, or exercise or assert any other right
or remedy to which any Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, or (v) assert or file
any claim against the assets of the Lessee or any other guarantor or other
Person liable for the Obligations, or any part thereof, before or as a
condition of enforcing the liability of the Guarantor under this Guarantee or
requiring payment of said Obligations by the Guarantor hereunder, or at any
time thereafter.
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<PAGE> 4
(d) The Guarantor agrees, to the fullest extent permitted
by law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be
prevented by applicable law from exercising its remedies (or any of them) under
Section 15 of the Lease, the Lessor (or any assignee thereof, including,
without limitation, the Indenture Trustee) shall be, nevertheless, entitled to
receive hereunder from the Guarantor, upon demand therefor the sums that would
otherwise have been due from the Lessee under the Lease had such remedies been
able to be exercised. The Guarantor hereby unconditionally waives, to the
fullest extent permitted by law, any requirement that, as a condition precedent
to the enforcement of the obligations of the Guarantor hereunder, the Lessee or
all or any one or more of any other guarantors of any of the Obligations be
joined as parties to any proceedings for the enforcement of any provision of
this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee
shall not be deemed to create any right in any Person except a Party and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any other Person. Following the termination of the Trust Indenture
in accordance with its terms, none of the Persons listed on Schedule I hereto
under the caption "Lender Parties" shall be, or be deemed to be, Parties for
purposes of this Guarantee.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest
extent permitted by law, all other demands or notices whatsoever, other than
the request for payment hereunder and notice provided for in Section 1 hereof.
The obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect
of any claim against the Lessee arising from a payment by the Guarantor while
an Event of Default shall have occurred and be continuing.
4. AMENDMENTS, ETC. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless
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<PAGE> 5
evidenced by an instrument in writing signed by the Guarantor and each Party
against whom such amendment, supplement, waiver, modification or consent is to
be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent
provided in the Trust Indenture, the Lessor will assign, and create a security
interest in, certain of its rights hereunder to and for the benefit of the
Indenture Trustee. From and after the execution and delivery of the Trust
Indenture, and until receipt by the Guarantor of a written notice from the
Indenture Trustee to the effect that the Trust Indenture has been fully
satisfied and discharged, no remedy or election hereunder may be exercised by
the Lessor or consent given by the Lessor other than in respect of Excluded
Payments (as such term is defined in the Trust Indenture), except by or with
the prior written consent of the Indenture Trustee, and the Guarantor will make
payment of all amounts hereunder that are assigned to the Indenture Trustee
directly to the Indenture Trustee, and such payments shall discharge the
obligations of the Guarantor to the Lessor to the extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly
existing in good standing pursuant to the laws of the State of
Delaware. It has all requisite corporate power and authority to own
and operate its properties, to carry on its business as presently
conducted and to enter into and perform its obligations under this
Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to
authorize the execution, delivery and performance (other than as
contemplated by the Operative Documents in the case of the performance
of the Non-Financial Obligations) by it of this Guarantee, or for the
legality, validity, binding effect or enforceability hereof.
-5-
<PAGE> 6
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation of
the transactions contemplated hereby, will conflict with or result in
any breach of, or constitute a default under, or result in any
creation or imposition of any Lien upon any of its property or assets
under, any applicable laws or any indenture, mortgage, deed of trust
or other instrument or agreement to which it is a party or by which it
may be bound or to which any of its property or assets may be subject,
or its Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor
in New York City as from time to time may be designated by the Guarantor in
writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor shall inure
to the benefit of, and shall be enforceable by, each of the Parties to the
fullest extent permitted by applicable laws. The headings in this Guarantee
are for purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
-6-
<PAGE> 7
10. NOTICES. All requests, notices or other
communications hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth
in the Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other or
further exercise of such right or remedy or the exercise of any other right or
remedy.
12. SURVIVAL. All representations and warranties
contained herein or made in writing by the Guarantor in connection herewith
shall survive the execution and delivery of this Guarantee regardless of any
investigation made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or any provision in any other
Operative Document, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND
SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN
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<PAGE> 8
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to
any Party any and all reasonable costs and expenses (including reasonable legal
fees and expenses) incurred by such Party in enforcing, or collecting under,
this Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
--------------------------------
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
in its individual capacity
and as Owner Trustee
By: ________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY,
as Indenture Trustee
By: ________________________
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1995 B]
PARTIES
EQUITY PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
[Owner Participant]
LENDER PARTIES
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1995 B]
THIS PARTICIPATION AGREEMENT [NW 1995 B] dated as of December
13, 1995, among (i) Northwest Airlines, Inc., a corporation existing pursuant
to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the
institution listed on Schedule I hereto and identified therein as the "OWNER
PARTICIPANT" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below, (iii) the institutions listed on Schedule I and identified
therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (herein, in such latter capacity, together with any successor
owner trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other
things, certain Boeing 757-251 aircraft, including the Aircraft which has been
delivered by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a
Purchase Agreement Assignment [NW 1995 B], dated as of the date hereof
(herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee
assigns to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and
Agreement [NW 1995 B] (herein called the "CONSENT AND AGREEMENT"),
substantially in the form attached to the Purchase Agreement
Assignment (herein called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1995
B], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture and Security Agreement [NW 1995 B], dated as of the
date hereof (said Trust Indenture and Security Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
INDENTURE", such term to include, unless the context otherwise requires, the
Trust Supplement referred to below) pursuant to which the Owner Trustee issues
to each of the Loan Participants one or more secured certificates (herein
called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement
and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1995 B], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE
AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and
conditions of this Agreement, each Loan Participant agrees to finance, in part,
the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a
secured loan to the Owner Trustee (herein called a "LOAN") in the amount set
forth on Schedule II opposite the name of such Loan Participant. Each Loan
Participant shall make such Loan to the Owner Trustee on a date to be
designated pursuant to Section 2 hereof, but in no event later than December
29, 1995, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No.
- 2 -
<PAGE> 3
01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on
the Delivery Date in immediately available funds in Dollars, the amount set
forth opposite such Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the
Trust Indenture to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon. The Owner Trustee agrees to pay the
Secured Certificates in installments in the amounts and on the dates provided
in the Trust Indenture together with interest thereon and all other amounts
payable with respect thereto, all as more fully provided in the Trust
Indenture.
(b) Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than December
29, 1995, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later
than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite the Owner
Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation
of each of the Loan Participants and the Owner Participant to be made as
provided above in the payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "COMMITMENT" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee
agrees to give each Participant, the Owner Trustee and the Indenture Trustee at
least two Business Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in
the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The
Owner Participant agrees that its releasing the amount of its Commitment for
the Aircraft to the account of the Owner Trustee in accordance with the terms
of Section 1 shall constitute, subject to satisfaction or waiver of the
conditions set forth in Section 4(a), without further act, authorization and
direction by the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA
Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture;
and
(vi) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to
the Participations in the Aircraft. It is agreed that the obligations of each
of the Loan Participants and the Owner Participant to participate in the
payment of Lessor's Cost and to make available the amount of its respective
Commitment are subject to the satisfaction prior to or on the Delivery Date of
the following conditions precedent, except that paragraphs (iii), (v)(5), (x)
(insofar as it relates to representations and warranties only contained in the
Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan
Participants), (xxvi) and (xxvii) shall not be a condition precedent to the
obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it
relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a
condition precedent to the obligation of the Owner Participant:
- 4 -
<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant
to Section 2 hereof (or shall have waived such notice either in
writing or as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the
Documentation Agent and the Owner Participant and shall be in full
force and effect and executed counterparts shall have been delivered
to the Loan Participants and the Owner Participant, or their
respective counsel, provided that only each Loan Participant shall
receive an executed original of its respective Secured Certificate and
provided, further, that an excerpted copy of the Purchase Agreement
shall only be delivered to and retained by the Owner Trustee and the
Owner Participant (but the Indenture Trustee shall also retain an
excerpted copy of the Purchase Agreement which may be inspected by the
Documentation Agent and its counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant and their respective counsel
if and only if there shall occur and be continuing an Event of
Default), the chattel paper counterpart of the Lease and the Lease
Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement
shall only be delivered to Lessee and the Owner Participant and their
respective counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent, the
Owner Participant and Lessee (herein called the "ACCEPTANCE
CERTIFICATE") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement; and
(14) the Guarantee.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Documentation Agent shall have been executed and delivered by
Lessee or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified
- 6 -
<PAGE> 7
by a Vice President, the Secretary or an Assistant Secretary of
Lessee, duly authorizing the sale of the Aircraft and the lease
by Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the Bill
of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement
covering the Aircraft, the Purchase Agreement Assignment, the
Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on or before the Delivery Date
in accordance with the provisions hereof and thereof, and a
certified copy of the Certificate of Incorporation and By-Laws
of the Guarantor and a copy of resolutions of the Board of
Directors of the Guarantor, certified by a Vice President, the
Secretary or an Assistant Secretary of the Guarantor, duly
authorizing the execution, delivery and performance by the
Guarantor of the Guarantee;
(2) such other documents and evidence with
respect to Lessee, the Guarantor, the Manufacturer, the Owner
Trustee, the Owner Participant, the Indenture Trustee, and the
Loan Participants as the Loan Participants or the Owner
Participant, or the respective counsel for the Loan
Participants or the Owner Participant, may reasonably request
in order to establish the authority of such parties to
consummate the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection
therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall
be true, and the Documentation Agent and the Owner Participant shall
have received evidence satisfactory to it to the effect that:
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft
- 7 -
<PAGE> 8
on such Delivery Date, free and clear of Liens other than the
rights of Lessee under the Lease and Lease Supplement covering
the Aircraft, the mortgage and security interests created by
the Trust Indenture, the rights of the Owner Participant under
the Trust Agreement and the Trust Supplement, and Liens
permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft
in the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and
as of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, as to
New York and certain federal law matters, and Lessee's and the
Guarantor's in-house or other counsel, as to Minnesota and certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and perform
its obligations under the Lessee Documents. Lessee is a
Certificated Air Carrier. The Guarantor is a corporation duly
organized and validly existing
- 8 -
<PAGE> 9
pursuant to the laws of the State of Delaware and has the
corporate power and authority to enter into and perform its
obligations under the Guarantee;
(2) the execution, delivery and performance of
the Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel, any approval or consent of any trustee or
holders of any indebtedness or obligations of Lessee or the
Guarantor, as the case may be (or that any such approval or
consent as is required has been obtained), and neither the
execution and delivery of any thereof by Lessee or the
Guarantor, as the case may be, nor the performance by Lessee
or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel,
judgment or order applicable to or binding on Lessee or the
Guarantor, as the case may be, or (B) to the knowledge of such
counsel, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Permitted Liens) upon any property of
Lessee or the Guarantor, as the case may be, under, any
indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter, by-law
or permit issued by any Minnesota or United States
governmental authority to which Lessee or the Guarantor, as
the case may be, is a party or by which Lessee or the
Guarantor, as the case may be, or its properties may be bound
or affected;
(3) neither the execution and delivery by Lessee
of the Lessee Documents or by the Guarantor of the Guarantee
nor the performance by Lessee or the Guarantor of their
respective obligations thereunder requires the consent or
approval of, or the giving of notice to, or the registration
with, or the taking of any other action in respect of, any
Federal or state governmental authority in the United States,
except for (A) the registration of the Aircraft (including the
placement on board of the owner's copy of the application for
registration of the Aircraft and, if necessary, a flying time
wire), recordations and other actions referred to in paragraph
5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the
Lessee Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
- 9 -
<PAGE> 10
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft
with the Federal Aviation Administration in the name of the
Owner Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof, with
respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document
(including any financing statement with respect to the Lease
under Article 9 of the Uniform Commercial Code of Minnesota or
Utah), is necessary in any applicable jurisdiction within the
United States in order (x) to establish the Owner Trustee's
title to such portion of the Aircraft as against Lessee or any
third parties or (y) to create and perfect the Indenture
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee or any third parties. With respect
to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in
the Federal Aviation Act, except for the filing of financing
statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified
in such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and
when required, (x) under the federal laws of the United States
and the laws of the State of New York no filing or recording
of any document (including any financing statement) is
necessary under Article 9 of the Uniform Commercial Code in
order to establish the Owner Trustee's title to such portion
of the Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and the laws of
the State of New York no filing or recording of any document
(including any financing statement) is necessary or advisable
under Article 9 of the Uniform Commercial Code in order to
create or perfect the Indenture
- 10 -
<PAGE> 11
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee and any third parties in any
applicable jurisdiction within the United States; and
(6) to the best knowledge of such in-house
counsel, there are no legal or governmental proceedings
pending or threatened to which Lessee or any of its
subsidiaries is a party or to which any of the properties of
Lessee or any of its subsidiaries is subject other than those
proceedings summarized in the Guarantor's publicly filed
annual, quarterly and other reports filed with the Securities
and Exchange Commission, and proceedings which such in-house
counsel believes would not reasonably be expected to have a
material adverse effect on Lessee and its subsidiaries, taken
as a whole, or on the power or ability of Lessee to perform
its obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of
Ray, Quinney & Nebeker with respect to the opinion in paragraph (5)
above insofar as it relates to the laws of the State of Utah and (C)
upon the representations and warranties set forth herein, including,
without limitation, in Section 8 hereof, with respect to matters of
fact, and may state that no opinion is expressed as to laws other than
laws of the State of New York (in the case of such special counsel's
opinion), the State of Minnesota and the Delaware General Corporation
Law (in the case of Lessee's in-house or other counsel's opinion) and
the Federal laws of the United States. Such counsel may assume that,
except for the filings and recordations contemplated herein, there are
no filings or recordations with respect to the Aircraft, the Lease,
the Lease Supplement covering the Aircraft, the Trust Agreement, the
Trust Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be
identified in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the Manufacturer Documents and such other matters as such
parties may reasonably request.
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<PAGE> 12
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National
Association is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States, is a Citizen of the United States and has under
the laws of the State of Utah and federal banking law the
power, authority and legal right to execute, deliver and carry
out in its capacity as Owner Trustee or in its individual
capacity, as the case may be, the terms of the Owner Trustee
Documents, including the Secured Certificates;
(2) each of the Owner Trustee Documents has been
duly authorized, executed and delivered by First Security Bank
of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by
the Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to such counsel after due inquiry to which First
Security Bank of Utah, National Association in its individual
capacity or as the Owner Trustee is a party or by which it is
bound, or of any Federal or Utah law, governmental rule or
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<PAGE> 13
regulation applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the
Owner Trustee and, where appropriate, by First Security Bank
of Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal law governing
the banking and trust powers of First Security Bank of Utah,
National Association or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the
Trust Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated to a substantial degree in the State of New York
and that the closing of a substantial portion of the
transactions contemplated by the Operative Documents occurred
in the State of New York, the choice of New York law to govern
the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which
the Owner Trustee or First Security Bank
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<PAGE> 14
of Utah, National Association in its individual capacity, or
both, is a party is, under the laws of the State of Utah, a
valid choice of law and should, in a properly presented case,
be honored by the courts of the State of Utah;
(8) the Owner Trustee has received from Lessee
such title to the Aircraft as Lessee had immediately prior to
the conveyance to the Owner Trustee, subject to the rights of
the Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) to the knowledge of such counsel, there are
no pending or threatened proceedings against or affecting the
Owner Trustee before any court or administrative agency,
individually or in the aggregate, which, if determined
adversely to it, would materially adversely affect the power
or ability of the Owner Trustee to perform its obligations
under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such
other matters incident to the matters covered thereby as the
Documentation Agent, the Owner Participant, the Indenture Trustee or
Lessee may reasonably request. Such opinion may state that (A) no
opinion is expressed as to laws other than the laws of the State of
Utah, the Federal laws of the United States governing the banking and
trust powers of First Security Bank of Utah, National Association, and
the Federal Aviation Act as it relates to paragraph (1) and (B) no
opinion is expressed as to the priority of security interests or as to
title to any part of the Trust Estate. Such opinion may assume (M)
the due authentication of the Secured Certificates by the Indenture
Trustee, (N) that the Operative Documents (other than the Trust
Agreement) are legal, valid and binding under the laws of the State of
New York and (O) the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and of the other Operative
Documents by each of the parties thereto other than First Security
Bank of Utah, National Association in its individual capacity and as
the Owner Trustee.
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<PAGE> 15
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from White & Case, special counsel for the Owner
Participant as to New York and certain federal law matters, and the
Owner Participant's in-house counsel, as to California, certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) the Owner Participant is a duly incorporated
and validly existing corporation in good standing under the
laws of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents;
(2) the Owner Participant Documents have been
duly authorized, executed and delivered by the Owner
Participant and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute
legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with
their respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations;
(3) neither the execution and delivery by the
Owner Participant of the Owner Participant Documents nor the
consummation of any of the transactions by the Owner
Participant contemplated thereby requires the consent or
approval of, the giving of notice to, or the registration
with, or the taking of any other action with respect to, any
governmental authority or agency of the United States, the
State of Delaware or the State in which the principal office
of the Owner Participant is located (except as shall have been
duly obtained or given, specifying the same);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally;
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<PAGE> 16
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the Indenture
Trustee as aforesaid, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) assuming the due authorization, execution and
delivery by the Owner Trustee of the Secured Certificates
being issued and delivered on the Delivery Date, and the due
authentication thereof by the Indenture Trustee, such Secured
Certificates are legal, valid and binding obligations of the
Owner Trustee, enforceable against the Owner Trustee in
accordance with their terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(7) the execution, delivery and performance of
the Owner Participant Documents by the Owner Participant does
not require any approval of stockholders of the Owner
Participant, or, to the knowledge of such counsel, any
approval or consent of any trustee or holders of any
indebtedness or obligations of the Owner Participant (or that
any such approval or consent as is required has been
obtained), and neither the execution and delivery of the Owner
Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or
regulation or, to the knowledge of such counsel, judgment or
order applicable to or binding on the Owner Participant or (B)
to the knowledge of such counsel, contravenes or results in
any breach of, or constitutes any default under, or results in
the creation of any Lien (other than Liens provided for or
contemplated in the Operative Documents) upon any property of
the Owner Participant under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other material agreement or
instrument, corporate charter or by-law or material permit
issued by any Delaware or United States governmental authority
to which the Owner Participant is a party or by which it or
its properties may be bound or affected; and
(8) to the knowledge of such counsel, there are
no pending or threatened actions or proceedings against or
affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material adverse effect on the ability of the Owner
Participant to perform its obligations under the Owner
Participant Documents;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's obligations in
connection with this Agreement as the
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<PAGE> 17
Documentation Agent, the Indenture Trustee, the Owner Trustee or
Lessee may reasonably request. Such opinion may rely upon the
representations and warranties set forth herein, including, without
limitation, in Section 8 hereof, as to matters of fact. Such opinion
may state that (M) no opinion is expressed as to laws other than the
laws of the State of New York (in the case of such special counsel's
opinion), the laws of the State of California and the General
Corporation Law of the State of Delaware (in the case of the Owner
Participant's in-house or other counsel), and the Federal laws of the
United States, and (N) no opinion is expressed as to the priority of
security interests or as to title to any part of the Trust Estate.
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the
Lease Supplement covering the Aircraft, the Trust Indenture
and the Trust Supplement attached thereto and the Trust
Indenture with the Trust Supplement attached thereto are in
due form for recording by and have been duly filed for
recordation with the Federal Aviation Administration in
accordance with the provisions of Section 44107 of Title 49 of
the United States Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of
all Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in
the name of the Owner Trustee and will be duly registered in
due course in the name of the Owner Trustee pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(5) the Trust Indenture as supplemented by the
Trust Supplement creates a duly and validly perfected first
priority security interest in the Aircraft and a duly
perfected assignment of all the right, title and interest of
the Owner
- 17 -
<PAGE> 18
Trustee in, to and under the Lease as supplemented by the
Lease Supplement (insofar as such security interest affects an
interest covered by the recording system established by the
Federal Aviation Administration pursuant to Section 44107 of
Title 49 of the United States Code), subject only to the Lease
and to Liens permitted by the Lease and the Trust Indenture,
it being understood that no opinion need be expressed as to
the validity or enforceability of such security interest under
local law or as against third parties in respect of the
Aircraft when the same is outside the United States;
(6) none of the Trust Indenture, the Trust
Agreement, the Trust Supplement, the Lease or the Lease
Supplement is required to be filed or recorded in any other
place within the United States in order to perfect the
security interest in the Aircraft and the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), under
the applicable laws of any jurisdiction within the United
States; and
(7) no authorization, approval, consent, license
or order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States, and may assume that the
Aircraft is not registered in any other country. Said opinion may
also contain a statement to the effect that such opinion is limited to
the records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the
filing of notice thereof with the Federal Aviation Administration,
such as Federal tax liens, liens arising under Section 1368(a) of
Title 29 of the United States Code and possessory artisans' liens, and
is subject to the accuracy of FAA personnel in the filing, indexing
and recording of instruments filed with the FAA and in the search for
encumbrance cross-reference index cards for the Engines. Said opinion
may also rely on the opinion obtained by such counsel from counsel for
the Aeronautical Center of the FAA, satisfactory in form and scope to
such counsel, and on past practice of the FAA which is consistent with
such Aeronautical Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould, special counsel for the Indenture Trustee, to the effect that:
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<PAGE> 19
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power, authority
and legal right to enter into and perform its obligations
under the Indenture Trustee Documents and, in its capacity as
Indenture Trustee, to authenticate the Secured Certificates to
be delivered on the Delivery Date;
(2) the execution, delivery and performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby and compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with the terms thereof including,
without limitation, the authentication of the Secured
Certificates to be delivered on the Delivery Date, have been
duly authorized by all necessary corporate action on the part
of State Street Bank and Trust Company, and neither the
execution and delivery thereof nor the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby nor compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with any of the terms and
provisions thereof (i) does or will contravene any law or
governmental rule or regulation of the United States governing
the banking or trust powers of State Street Bank and Trust
Company or the Commonwealth of Massachusetts or any order or
judgment known to such counsel and applicable to or binding on
State Street Bank and Trust Company, or (ii) does or will
contravene or result in any breach of, or constitute any
default under, the charter documents or by-laws of State
Street Bank and Trust Company or the provisions of any
indenture, mortgage, contract or other agreement, in each case
known to such counsel, to which State Street Bank and Trust
Company is a party or by which it or any of its properties is
or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby requires or required
the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document
with, or the taking of any other action in respect of, any
Federal or Massachusetts governmental authority or agency
governing the banking or trust powers of State Street Bank and
Trust Company or under any Massachusetts law;
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<PAGE> 20
(4) each of the Indenture Trustee Documents has
been duly executed and delivered by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each such
agreement is the legal, valid and binding obligation of each
other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
(5) the Secured Certificates to be issued and
dated the Delivery Date have been duly authenticated and
delivered by the Indenture Trustee pursuant to the terms of
the Indenture Trustee Documents;
(6) to the knowledge of such counsel, there are
no pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration board or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other
governmental charges ("TAXES") payable under the laws of the
Commonwealth of Massachusetts with respect to the execution of
and delivery by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, of any of the Indenture Trustee Documents (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would not have been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts. Neither State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trust created by the Trust Agreement will, as
a result of the transactions contemplated thereby, be subject
to any taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would have not been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts, and there are no taxes under the
laws of the Commonwealth of Massachusetts or any political
subdivision thereof (except for taxes on any fees payable to
State Street Bank and Trust Company in its
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<PAGE> 21
individual capacity) upon or with respect to the Aircraft or
any Engine or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession,
presence, use, operation, condition, storage, maintenance,
modification, alteration, repair, sale, return, transfer or
other disposition of the Aircraft or any Engine which would
not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts
or did not perform its administrative duties under the
Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request.
Such opinion may state that no opinion is expressed as to laws other
than the internal substantive laws of the Commonwealth of
Massachusetts and the Federal laws of the United States. Such opinion
may further state that with respect to paragraph (4) in connection
with the opinion relating to legality, validity and binding effect of
the documents there referred to, such counsel has assumed that the
laws of the jurisdictions whose laws govern such documents are not
materially different from the internal substantive laws of the
Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from
Shearman & Sterling, special counsel for the Loan Participants, a
favorable opinion addressed to the Loan Participants and satisfactory
in substance and form to the Documentation Agent, as to such matters
incident to the transactions contemplated hereby as the Documentation
Agent may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive
Vice President, any Senior Vice President or any Vice President of
Lessee, dated the Delivery Date, addressed to the Loan Participants
and the Owner Participant and certifying as to the matters stated in
paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and
(xxii) of this Section 4(a). Copies of the orders, permits, waivers,
authorizations, exemptions and approvals referred to in Section
4(a)(viii) shall have been furnished to the Loan Participants and the
Owner Participant.
(xix) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b) of this Agreement, be deemed to
have reaffirmed the representations and warranties made by it in
Section 8 of this Agreement.
(xx) The Owner Participant shall have received an opinion,
in form and substance satisfactory to the Owner Participant, from BK
Associates, Inc., independent aircraft appraisers, or such other
recognized aircraft appraiser agreed upon by the Owner Participant and
Lessee.
(xxi) The Loan Participants and Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to the
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<PAGE> 22
Documentation Agent and the Owner Participant, as to the due
compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event
of Loss (or event which with the passage of time would become an Event
of Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from White
& Case, special counsel to the Owner Participant, a favorable opinion,
in form and substance satisfactory to the Owner Participant, with
respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions
of the Internal Revenue Code of 1986, as amended through the date
hereof, and the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States, all as in effect on the date hereof, the effect of which might
preclude the Owner Participant from obtaining any of the income tax
benefits and consequences assumed to be available to the Owner
Participant as set forth in Section 2 of the Tax Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant
shall have received a favorable opinion addressed to the Loan
Participants and the Owner Participant, and reasonably satisfactory as
to scope and substance to the Documentation Agent and the Owner
Participant, from Cadwalader, Wickersham & Taft, special counsel for
Lessee,
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<PAGE> 23
which opinion shall state (with customary assumptions and
qualifications) that the Owner Trustee, as lessor under the Lease, and
the Indenture Trustee, as assignee of the Owner Trustee's rights under
the Lease pursuant to the Trust Indenture, would be entitled to the
benefits of 11 U.S.C. Section 1110 with respect to the Aircraft.
(xxix) The Loan Participants shall have received an opinion,
in form and substance reasonably satisfactory to the Documentation
Agent, from BK Associates, Inc., independent aircraft appraisers, to
the effect that the fair market value of the Aircraft on the Delivery
Date is equal to Lessor's Cost.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner
Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such
Lease Supplement, such Trust Supplement, the Lease and the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee.
It is agreed that the obligations of Lessee (A) to sell the Aircraft to the
Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are
all subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on
or prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii),
4(a)(iii) and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall
have been duly authorized, executed and delivered by the respective
party or parties thereto (other than Lessee and the Guarantor) in the
manner specified in Section 4(a)(v), shall each be satisfactory in
form and substance to Lessee, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof (other than
the Secured Certificates) shall have been delivered to Lessee or its
special counsel.
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<PAGE> 24
(iv) Lessee shall have received a copy of the resolutions
or other instruments satisfactory to Lessee of the Board of Directors
of the Owner Participant, or other evidence of authority satisfactory
to Lessee, certified as of the Delivery Date by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing or
evidencing authority for the execution, delivery and performance by
the Owner Participant of all of the Owner Participant Documents, and a
copy of the general authorizing resolutions of the boards of directors
of the Indenture Trustee and the Owner Trustee, certified as of the
Delivery Date by the Secretary or an Assistant Secretary of the
Indenture Trustee and the Owner Trustee, respectively, which authorize
the execution, delivery and performance by the Indenture Trustee of
the Indenture Trustee Documents and the Secured Certificates and by
the Owner Trustee of the Owner Trustee Documents, together with such
other documents and evidence with respect to the Indenture Trustee,
the Owner Participant and the Owner Trustee as Lessee or its special
counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and Lessee shall have received a certificate signed by the
Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively, addressed to Lessee and certifying as to the foregoing
matters with respect to the Indenture Trustee, the Owner Participant
and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in
effect which, in the opinion of Lessee or
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<PAGE> 25
its special counsel, would make it a violation of law or regulations
or guidelines for Lessee to enter into any transaction contemplated by
the Operative Documents.
(ix) In the opinion of Lessee and its special counsel,
there shall have been, since the date hereof, no amendment,
modification, addition or change in or to the Internal Revenue Code of
1986, as amended through the date hereof, the regulations promulgated
under the Code (including temporary regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. CONFIDENTIALITY OF APPRAISAL, PARTICIPATION
AGREEMENT, LEASE AND GUARANTEE. The Owner Trustee, the Participants, the
Administrative Agent, the Documentation Agent, the Certificate Holders and the
Indenture Trustee shall keep the appraisal referred to in Section 4(a)(xx)
hereof, this Agreement, the Lease and the Guarantee confidential and shall not
disclose, or cause to be disclosed, the same to any Person, except (A) to
prospective and permitted transferees of Owner Trustee's, a Loan Participant's,
a Certificate Holder's, the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to the Owner
Trustee's, a Loan Participant's, a Certificate Holder's, the Owner
Participant's or the Indenture Trustee's counsel or special counsel,
independent insurance brokers or other agents who agree to hold such
information confidential, (C) as may be required by any statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having jurisdiction over them, (D) such other Persons as
reasonably deemed necessary by Owner Trustee, the Participants, the Certificate
Holders or the Indenture Trustee in order to protect the interests of any of
such parties or for the purposes of enforcing such documents by the Owner
Trustee or the Indenture Trustee or (E) to the extent that it is now, or in the
future through no fault of such Person becomes, part of the public domain;
provided, however, that any and all disclosures of all or any part of the
appraisal referred to in Section 4(a)(xx) hereof and this Agreement, the Lease
and the Guarantee which are permitted by (C) or (D) above shall be made only to
the extent necessary to meet the specific requirements or needs of the Persons
to whom such disclosures are hereby permitted; and provided further that this
Section 5 shall not apply to the Owner Participant with respect to the
appraisal referred to in Section 4(a)(xx) hereof.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS.
No Certificate Holder (as defined in the Trust Indenture) shall have any
further interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the principal of and
interest on all Secured Certificates held by such holder and all other sums
payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan
Participants and, by its acceptance of a Secured Certificate, each Certificate
Holder agrees that it will look solely to the income
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<PAGE> 26
and proceeds from the Trust Indenture Estate to the extent available for
distribution to such Certificate Holder as provided in Article III of the Trust
Indenture and that neither the Owner Participant nor the Owner Trustee shall be
personally liable to the Loan Participants or any Certificate Holder for any
amounts payable under the Secured Certificates, the Trust Indenture or
hereunder, except as expressly provided in the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND
INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to
each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and
the Owner Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse
effect on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises
which, if not obtained, would not have a material adverse effect on
the consolidated business assets, properties or condition (financial
or otherwise) of Lessee and its subsidiaries taken as a whole or on
the ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of
the Lessee Documents will, on the Delivery Date, have been duly
authorized by all necessary corporate action on the part of Lessee, do
not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of Lessee except
such as have been duly obtained or by the Delivery Date will have been
duly obtained, and none of such agreements contravenes any law,
judgment, government rule, regulation or order binding on Lessee or
the certificate of incorporation or by-laws of Lessee or contravenes
the provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other
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<PAGE> 27
action in respect of, any Federal, State or foreign government
authority or agency, except for (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee
required to be obtained on or prior to the Delivery Date, which
orders, permits, waivers, exemptions, authorizations and approvals
have been duly obtained and are, or will on the Delivery Date be in
full force and effect (other than a flying time wire, all steps to
obtain the issuance of which will have been, on the Delivery Date,
taken or caused to be taken by Lessee), (B) the registration of the
Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents,
approvals, notices, registrations and other actions required by the
terms of the Lessee Documents to the extent required to be given or
obtained only after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court
or administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Lease with the Lease Supplement covering
the Aircraft, the Trust Indenture and the Trust Supplement attached
thereto and made a part thereof, the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof and the FAA Bill
of Sale, (C) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security and
other interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified
in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D)
the taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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
Owner Trustee's title to and the Indenture Trustee's security interest
in the Aircraft as against Lessee and any third parties in any
applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving
of notice or the passage of time or both would constitute an Event of
Default under the Lease) which is presently continuing;
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<PAGE> 28
(viii) Lessee is solvent and will not be rendered insolvent
by the sale of the Aircraft; after the sale of the Aircraft the
capital of Lessee will not be unreasonably small for the conduct of
the business in which Lessee is engaged or is about to engage; Lessee
has no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1994 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated
subsidiaries for the year then ended, which have been audited by
independent certified public accountants, and (b) the consolidated
balance sheets of the Guarantor and its consolidated subsidiaries as
of September 30, 1995 and the related consolidated statements of
operations, cash flows and common stockholders' equity for the
nine-month period then ended, copies of which have been furnished to
the Owner Participant and each Loan Participant, fairly present the
consolidated financial condition of the Guarantor and its consolidated
subsidiaries as at such date and the results of operations and cash
flow of the Guarantor and its consolidated subsidiaries for the period
ended on such date, all in accordance with generally accepted
accounting principles consistently applied and since September 30,
1995 there has been no material adverse change in the consolidated
financial condition, cash flow or results of operations of the
Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive
good title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of
Lessee under the Lease and the Lease Supplement covering the Aircraft,
the Lien of the Trust Indenture and the beneficial interest of the
Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation G or U of the Board of Governors of
the Federal Reserve System;
(xii) Lessee is not in default in the performance of any
term or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due
and for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture
or loss of the Aircraft; and
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<PAGE> 29
(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease.
(b) General Tax Indemnity.
[Reserved]
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<PAGE> 30
withhold such Tax from such payment and pay the amount of the Tax
withheld to the relevant Taxing Authority when due. If such Tax is an
Indemnified Tax Lessee shall pay an additional amount such that the
net amount actually received by Lessor will, after such withholding,
equal the full amount of the payment then due, but Lessee shall have
no such obligation with respect any other Tax. If it is finally
determined that Lessee has failed to pay an additional amount with
respect to any Indemnified Tax which has been withheld from Basic
Rent, Lessee shall pay such amount to Owner Participant together with
interest from the date of such withholding until the date of payment
at Base Rate plus 1%.
(c) General Indemnity. [Reserved]
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<PAGE> 31
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than Taxes in the nature of sales, use, license or property
Taxes) (including, without limitation, capital gains taxes, minimum taxes,
income taxes collected by withholding and taxes on tax preference items), and
Taxes which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Owner Participant represents that it is acquiring its interest in the
Trust Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within
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<PAGE> 32
its control) and that neither it nor anyone acting on its behalf has directly
or indirectly offered any interest in the Trust Estate or any Secured
Certificates or any similar securities for sale to, or solicited any offer to
acquire any of the same from, anyone in a manner which would result in a
violation of the Securities Act of 1933, as amended.
(b) Lessee represents and warrants that neither Lessee
nor anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended.
(c) Each of the Owner Participant and First Security Bank
of Utah, National Association, in its individual capacity, represents and
warrants to the other parties to this Agreement that it is, and on the Delivery
Date will be, a Citizen of the United States without making use of any voting
trust, voting powers agreement or similar arrangement. The Owner Participant
agrees, solely for the benefit of Lessee and the Loan Participants, that if (i)
it shall cease to be, or believes itself likely to cease to be, a Citizen of
the United States and (ii) the Aircraft shall or would therefore become
ineligible for registration in the name of the Owner Trustee under the Federal
Aviation Act and regulations then applicable thereunder, then the Owner
Participant shall (at its own expense and without any reimbursement or
indemnification from Lessee) promptly effect a voting trust, voting powers
agreement or other similar arrangement or take any other action as may be
necessary to prevent any deregistration and to maintain the United States
registration of the Aircraft. It is agreed that: (A) the Owner Participant
shall be liable to pay on request to each of the other parties hereto and to
each holder of a Secured Certificate for any damages suffered by any such other
party or holder as the result of the representation and warranty of the Owner
Participant in the first sentence of this Section 8(c) proving to be untrue as
of the Delivery Date; and (B) the Owner Participant shall be liable to pay on
request to Lessee, any Sublessee and the Loan Participants for any damages
which may be incurred by Lessee, any Sublessee or the Loan Participants as a
result of the Owner Participant's failure to comply with its obligations
pursuant to the second sentence of this Section 8(c). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under
the provisions of the second sentence of this Section 8(c). First Security
Bank of Utah, National Association, in its individual capacity, agrees that if
at any time an officer or responsible employee of the Corporate Trust
Department of First Security Bank of Utah, National Association, shall obtain
actual knowledge that First Security Bank of Utah, National Association, has
ceased to be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement, it will promptly resign
as Owner Trustee (if and so long as such citizenship is necessary under the
Federal Aviation Act as in effect at such time or, if it is not necessary, if
and so long as the Owner Trustee's citizenship would have any material adverse
effect on the Loan Participants, Lessee or the Owner Participant), effective
upon the appointment of a successor Owner Trustee in accordance with Section
9.01 of the Trust Agreement. If the Owner Participant or First Security Bank
of Utah, National Association, in its individual capacity, does not comply with
the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee
and the Participants hereby agree that an Event of Default (or an event which
would constitute an
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<PAGE> 33
Event of Default but for lapse of time or the giving of notice or both) shall
not have occurred and be continuing under the Lease due to non- compliance by
Lessee with the registration requirements in the Lease.
(d) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that both the principal place
of business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of
Utah, National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and delivered, shall have been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such instruments
on behalf of the Owner Trustee. First Security Bank of Utah, National
Association, in its individual capacity, represents that it has not offered any
interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire the same from,
anyone, and that no officer or responsible employee of the Corporate Trust
Department of First Security Bank of Utah, National Association, has knowledge
of any such offer or solicitation except by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
for sale to, or solicited any offer to buy any Secured Certificate from, any
person or entity other than in a manner in compliance with, and which does not
require registration under, the Securities Act of 1933, as amended, or the
rules and regulations thereunder.
(f) The Owner Participant and each of the Loan
Participants agree that, at any time after the Depreciation Period, Lessee may
elect to effect a change in registration of the Aircraft, at Lessee's cost and
expense, so long as (a) the country of registry of the Aircraft is a country
listed on Exhibit A hereto (or such other country as the Owner Trustee
approves) and (b) the following conditions are met: (i) unless the country of
registry is Taiwan, the United States maintains normal diplomatic relations
with the country of registry of the Aircraft, and if the country of registry is
Taiwan, the United States maintains diplomatic relations at least as good as
those in effect on the Delivery Date; and (ii) the Owner Trustee and the
Indenture Trustee shall have received favorable opinions (subject to customary
exceptions) addressed to each such party, from counsel of recognized reputation
qualified in the laws of the relevant jurisdiction and reasonably acceptable to
the Owner Participant to the effect that:
(A) the Owner Trustee's ownership interest in the
Aircraft shall be recognized under the laws of such jurisdiction, (B)
the obligations of Lessee, and the
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<PAGE> 34
rights and remedies of the Owner Trustee, under the Lease shall remain
valid, binding and (subject to customary bankruptcy and equitable
remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction
(or the laws of the jurisdiction to which the laws of such
jurisdiction would refer as the applicable governing law), (C) after
giving effect to such change in registration, the Lien of the Trust
Indenture on the Owner Trustee's right, title and interest in and to
the Aircraft and the Lease shall continue as a valid and duly
perfected first priority security interest and all filing, recording
or other action necessary to protect the same shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is
not yet effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Owner Trustee and the
Indenture Trustee shall have received a certificate from Lessee that
all possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and
other action shall be accomplished and a supplemental opinion to that
effect shall be delivered to the Owner Trustee and the Indenture
Trustee on or prior to the effective date of such change in
registration), (D) it is not necessary, solely as a consequence of
such change in registration and without giving effect to any other
activity of the Owner Trustee, the Owner Participant or the Indenture
Trustee (or any Affiliate thereof), as the case may be, for the Owner
Trustee, the Owner Participant or the Indenture Trustee to qualify to
do business in such jurisdiction, (E) there is no tort liability of
the owner of an aircraft not in possession thereof under the laws of
such jurisdiction (it being agreed that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant is provided to cover such risk),
and (F) (unless Lessee shall have agreed to provide insurance covering
the risk of requisition of use of such Aircraft by the government of
such jurisdiction so long as such Aircraft is registered under the
laws of such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use.
In addition, as a condition precedent to any such change in registration, the
insurance required by Section 11 of the Lease shall be in full force and effect
at the time of such change in registration after giving effect to such change
in registration and the aircraft maintenance standards of the new country of
registry shall not be materially different from those of the United States,
France, Germany, Japan, the Netherlands or the United Kingdom, and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President, any Senior Vice
President or any Vice President of Lessee which certificate shall, as among the
parties hereto, be presumed to be correct as to the matters stated therein
absent conclusive evidence to the contrary. Lessee shall pay all costs,
expenses, fees, recording and registration taxes, including the reasonable fees
and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
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(g) The Owner Participant represents and warrants to
Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of organization, has the corporate power and authority to
carry on its business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations under the
Owner Participant Documents, and has a tangible net worth (exclusive
of goodwill) greater than $75,000,000;
(ii) the Owner Participant Documents have been duly
authorized by all necessary corporate action on the part of the Owner
Participant, do not require any approval not already obtained of
stockholders of the Owner Participant or any approval or consent not
already obtained of any trustee or holders of any indebtedness or
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and neither the execution and
delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by the Owner Participant with any
of the terms and provisions thereof will contravene any United States
Federal or state law (other than Section 406 of ERISA and/or Section
4975 of the Code), judgment, governmental rule, regulation or order
applicable to or binding on the Owner Participant (it being understood
that no representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for or otherwise
permitted in the Operative Documents) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter,
by-law or other agreement or instrument to which the Owner Participant
is a party or by which it or its properties may be bound or affected;
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with the terms
thereof (subject to the qualifications set forth in clause (2) of the
opinion of counsel to the Owner Participant in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the
Owner Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the ability of the Owner Participant to perform its
obligations under the Owner Participant Documents;
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<PAGE> 36
(v) upon the execution and delivery of the Trust
Indenture, the Trust Indenture Estate will be free and clear of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant; and
(vi) neither the execution and delivery by the Owner
Participant of the Owner Participant Documents nor the performance by
the Owner Participant of its obligations thereunder require the
consent or approval of, the giving of notice to, or the registration
with, or the taking of any other action in respect of any Federal,
state or foreign government authority or agency except for those
exceptions referred to in Section 7(a)(iii) which may be applicable to
the Owner Participant and the Owner Participant Documents.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants
and agrees that it shall not cause or permit to exist a Lessor Lien
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate. Each of First Security Bank of Utah, National Association, in
its individual capacity, and the Owner Participant agrees that it will
promptly, at its own expense, take such action as may be necessary duly to
discharge such Lessor Lien attributable to it. Each of First Security Bank of
Utah, National Association, in its individual capacity, and the Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof other than Taxes or
Expenses which (i) First Security Bank of Utah, National Association, is
required to discharge pursuant to this paragraph (h) (or any similar Taxes or
Expenses attributable to a successor Owner Trustee under the Trust Agreement in
its individual capacity), (ii) State Street Bank and Trust Company is required
to discharge pursuant to paragraph (i) of this Section (or any similar Taxes or
Expenses attributable to a successor Indenture Trustee under the Indenture in
its individual capacity) or (iii) are attributable to any act or omission to
act by, or any revenues or income of, any Loan Participant.
(i) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Lien, arising as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitutes gross negligence or willful misconduct,
(C) claims against the Indenture Trustee relating to Taxes or Expenses which
are excluded from the indemnification provided by Section 7 pursuant to said
Section 7, or (D) claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its interest in the
Aircraft, the
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<PAGE> 37
Trust Estate, the Trust Indenture Estate or the Operative Documents other than
a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or
Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9
hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while
an Event of Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants
and agrees as to itself: (i) that this Agreement has been duly authorized,
executed and delivered by such Loan Participant and this Agreement constitutes
a legal, valid and binding obligation of such Loan Participant enforceable
against such Loan Participant in accordance with its terms except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that
such Loan Participant is duly organized and validly existing under the laws of
its jurisdiction of organization; and (iii) that such Loan Participant has
full power, authority and legal right to execute, deliver and carry out the
terms of this Agreement.
(k) Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the Trust Indenture is
being acquired by it for investment and not with a view to resale or
distribution (it being understood that such Loan Participant may pledge or
assign as security its interest in each Secured Certificate issued to it),
provided that the disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may sell, transfer or
otherwise dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement.
(l) The Indenture Trustee, and by acceptance of the
Secured Certificates the Certificate Holders, hereby (i) agree that for
purposes of the application of Section 1111(b) of Title 11 of the United States
Code or any successor provision or any comparable provisions that the "debtor"
in any bankruptcy proceeding involving the assets held or administered pursuant
to the Trust Agreement shall be strictly limited to the Trust Estate (excluding
the Excluded Payments) and (ii) make (and hereby agree to make), with respect
to the Trust Indenture Estate, the election provided for in Section 1111(b)(2)
of Title 11 of the United States Code. It is hereby agreed by the Indenture
Trustee, and by the acceptance of the Secured Certificates the Certificate
Holders hereby agree, that if (i) all or any part of the Trust Estate becomes
the property of, or the Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision or any comparable proceeding, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Secured Certificates or to the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Owner Participant under
this Participation Agreement), to make payment on account of any amount payable
as principal or interest on the Secured Certificates and (iii) any holder(s) of
the Secured Certificates or the Indenture Trustee
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<PAGE> 38
actually receives any Excess Payment (as hereinafter defined) which reflects
any payment by the Owner Trustee (in its individual capacity) or the Owner
Participant on account of (ii) above, then such holder(s) or the Indenture
Trustee, as the case may be, shall promptly refund to the Owner Trustee or the
Owner Participant (whichever shall have made such payment) such Excess Payment.
For purposes of this Section 8(l), "EXCESS PAYMENT" means the amount by which
such payment exceeds the amount which would have been received by the holder(s)
of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in
its individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section 8(l) shall prevent the holder of a Secured Certificate or the Indenture
Trustee from enforcing any personal recourse obligation (and retaining the
proceeds thereof) of the Owner Trustee (in its individual capacity) or the
Owner Participant under this Agreement or the Trust Indenture (and any exhibits
or annexes thereto).
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making
use of any voting trust, voting powers trust agreement or other
similar arrangement, will notify promptly all parties to this
Agreement if in its reasonable opinion its status as a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement, is likely to change and
that it will resign as Indenture Trustee as provided in Section 8.02
of the Trust Indenture if it should cease to be a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate power
and authority to enter into and perform its obligations under the
Trust Indenture and this Agreement and to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the
authentication of the Secured Certificates to be delivered on the
Delivery Date have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor
its performance of any of the terms and provisions thereof will
violate any Federal or state law or governmental rule or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its charter or by-laws or
the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it or its properties may be bound
or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and
binding obligation of State Street Bank and Trust Company, in its
individual capacity
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<PAGE> 39
or as Indenture Trustee, as the case may be, enforceable against
State Street Bank and Trust Company, in its individual capacity or as
Indenture Trustee, as the case may be, in accordance with its terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights.
(n) The Owner Participant will not, directly or
indirectly, sell, assign, convey or otherwise transfer any of its right, title
or interest in and to this Agreement, the Trust Estate or the Trust Agreement
or any proceeds therefrom to any person or entity, unless (i) the proposed
transferee is a "Transferee" (as defined below), and (ii) the Owner Participant
sells, assigns, conveys or otherwise transfers all of its right, title and
interest in and to this Agreement, the Trust Estate, the Trust Agreement and
the proceeds therefrom to a single entity. A "TRANSFEREE" shall mean either
(A) a bank or other financial institution with a combined capital, surplus and
undivided profits of at least $75,000,000 or a corporation whose tangible net
worth is at least $75,000,000, exclusive of goodwill, in either case as of the
proposed date of such transfer, as determined in accordance with generally
accepted accounting principles and as evidenced by the most recently available
financial statements and a representation and warranty to such effect, or (B)
any subsidiary of such a bank, financial institution or corporation, provided
that such bank, financial institution or corporation furnishes to the Owner
Trustee, the Loan Participants, the Indenture Trustee and Lessee a guaranty
with respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Loan Participants,
the Indenture Trustee and Lessee, the Owner Participant's obligations
hereunder, including but not limited to, under Section 8(c) and Section 8(h)
hereof, in form and substance reasonably satisfactory to Lessee, the Owner
Trustee and the Majority in Interest of Certificate Holders; provided, however,
that any Transferee shall not be (A) an airline, a commercial air carrier, an
air freight forwarder, an entity engaged in the business of parcel transport by
air or other similar person or (B) a Person (other than an Affiliate of the
transferring Owner Participant) included in the consolidated group of companies
where the primary business of such group is that of an airline, a commercial
air carrier, an air freight forwarder, an entity engaged in the business of
parcel transport by air or other similar business. Each such transfer to a
Transferee shall be subject to the conditions that (M) upon giving effect to
such transfer, the Transferee is a Citizen of the United States (without making
use of a voting trust agreement, voting powers agreement or other similar
arrangement unless approved by Lessee), and has full power and authority to
enter into the transactions contemplated hereby, (N) the Transferee has the
requisite power and authority to enter into and carry out the transactions
contemplated hereby and such Transferee shall have delivered to Lessee, the
Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of
counsel in form and substance reasonably satisfactory to Lessee, the Owner
Trustee, the Indenture Trustee and a Majority in Interest of Certificate
Holders as to the due authorization, delivery, legal, valid and binding effect
and enforceability of the agreement or agreements referred to in the next
clause with respect to the Transferee and any guaranty provided pursuant to the
provisions of this Section 8(n) as to guarantor, (O) the Transferee enters into
an agreement or agreements, in form and substance reasonably satisfactory to
the Owner Trustee, the Majority in Interest of Certificate Holders, Lessee and
the Indenture Trustee, whereby the Transferee confirms that it shall be deemed
a party to this
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<PAGE> 40
Agreement and a party to the Trust Agreement and agrees to be bound by all the
terms of, and to undertake all of the obligations of the transferor Owner
Participant contained in, the Owner Participant Documents (to the extent of the
participation so transferred to it) and makes representations and warranties
substantially similar to the representations and warranties made by the Owner
Participant thereunder, (P) such transfer does not adversely affect
registration of the Aircraft under the Federal Aviation Act, or any rules or
regulations promulgated thereunder or create a relationship which would be in
violation thereof or violate any provision of the Securities Act of 1933, as
amended, or any other applicable Federal or state law, (Q) the transferor Owner
Participant pays, or causes to be paid, all of the reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred in connection with such transfer, including the reasonable
costs and expenses of the Owner Trustee, the Indenture Trustee, Lessee and the
Loan Participants in connection therewith, and (R) the terms of the Operative
Documents and the Overall Transaction shall not be altered except to the extent
necessary to evidence such transfer. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents arising after the date of
such transfer except to the extent fully attributable to or arising out of acts
or events occurring prior thereto and not assumed by the Transferee (in each
case, to the extent of the participation so transferred). If the Owner
Participant intends to transfer any of its interests hereunder, it shall give
30 days' prior written notice thereof to the Loan Participants, the Indenture
Trustee, the Owner Trustee and Lessee, specifying the name and address of the
proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x)
hereof, unless waived by the Loan Participants, Lessee shall not be entitled to
assume the Secured Certificates on the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease if on such date an Event of Default
shall have occurred and be continuing or any condition or event shall exist
which, with the passage of time or giving of notice or both, would become such
an Event of Default.
(p) First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its individual capacity,
agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any Plan. Each Loan
Participant agrees that it will not transfer any Secured Certificate (or any
part thereof) to any entity (except pursuant to Section 2.14 of the Trust
Indenture) unless such entity makes (or is deemed to have made) a
representation and warranty as of the date of transfer that either no part of
the funds to be used by it for the purchase of such Secured Certificate (or any
part thereof) constitutes assets of any Plan or that such transfer will not
result in a non-exempt prohibited transaction (as defined in Section 4975 of
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<PAGE> 41
the Code and ERISA). The Owner Participant agrees that it will not transfer
any of its right, title or interest in and to this Agreement, the Trust Estate
or the Trust Agreement or any proceeds therefrom to any entity unless such
entity makes (or is deemed to have made) a representation and warranty as of
the date of transfer that either no part of the funds to be used by it for the
purchase of such right, title and interest (or any part thereof) constitutes
assets of any Plan or that such transfer will not result in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code and ERISA).
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement, (ii) the initial purchase by the Loan
Participants of the Secured Certificates, and (iii) the initial acquisition by
the Owner Participant of its beneficial interest in the Trust Estate will
involve any non-exempt prohibited transaction within the meaning of Section
406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such
representation being made in reliance upon and subject to the accuracy of the
representations contained in subparagraph (A) of this Section 8(q)).
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, and (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to the Owner Trustee under the
Purchase Agreement Assignment and not specifically reserved to Lessee under
Section 1 thereof, to bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant
severally, not jointly, represent and warrant that none of the funds made
available by the Loan Participants pursuant to Section 1 hereof will be used
for the purpose of purchasing or carrying any "margin security" as defined in
Regulation G of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning of Regulation X of the Board of Governors of the
Federal Reserve System, assuming that the proceeds were and are applied as
contemplated by the provisions of this Agreement.
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<PAGE> 42
(t) Each Loan Participant covenants and agrees that it
shall not cause or permit to exist a Loan Participant Lien attributable to it
with respect to the Aircraft or any other portion of the Trust Estate. Each
Loan Participant agrees that it will promptly, at its own expense, take such
other action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificates of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the
date of payment of such principal amount. For purposes of this Section 8(t),
"AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has
asserted claims against the Owner Trustee or Lessee under or sought rights or
remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust
Indenture.
(u) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Indenture Trustee's Liens with respect to the Trust Indenture Estate
or the Trust Estate. State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense, take such action as
may be necessary duly to discharge such Indenture Trustee's Liens. State
Street Bank and Trust Company, in its individual capacity, agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Indenture Estate or the Trust Estate resulting from such Indenture
Trustee's Liens.
(v) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, each of the other Owner Trustee Documents has been duly
executed and delivered by one of its officers who is duly authorized
to execute and deliver such instruments on behalf of First Security
Bank of Utah, National Association or the Owner Trustee, as the case
may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First
Security Bank of Utah, National Association, in its individual
capacity, arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the Operative
Documents, including any such Lien resulting from the nonpayment by
First Security Bank of Utah, National Association, in its individual
capacity, of any Taxes imposed or measured by its net income;
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<PAGE> 43
(iii) there has not occurred any event which constitutes
(or to the best of its knowledge would, with the passage of time or
the giving of notice or both, constitute) an Event of Default as
defined in the Trust Indenture which has been caused by or relates to
First Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the
terms and provisions thereof will violate any Federal law governing
the banking and trust powers of First Security Bank of Utah, National
Association, or Utah law or regulation or contravene or result in any
breach of the provisions of its articles of association or By-laws or
any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with its respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association for services rendered in connection with the
transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if
(i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate
the Lease by causing the Aircraft to be
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<PAGE> 44
sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has,
pursuant to Section 9(c) of the Lease, given to Lessee written notice of
Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee
has failed to make, on or before the Termination Date, any payment required to
be made by the Owner Trustee pursuant to Section 9(c) in connection with its
retention of title to the Aircraft, the Owner Participant will indemnify Lessee
for any losses, damages, costs or expenses of any kind (including any
additional rents paid by Lessee and any fees and expenses of lawyers,
appraisers, brokers or accountants) incurred as a consequence of such failure
by the Owner Trustee. The Owner Participant further covenants and agrees to
pay those costs and expenses specified to be paid by the Owner Participant
pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to purchase the Aircraft pursuant to Section 19(b) of the
Lease or (b) to terminate the Lease and purchase the Aircraft pursuant to
Section 19(d) of the Lease, then each of the parties will execute and deliver
appropriate documentation transferring all right, title and interest in the
Aircraft to Lessee (including, without limitation, such bills of sale and other
instruments and documents as Lessee shall reasonably request in form consistent
with the agreements contained in the Operative Documents to evidence (on the
public record or otherwise) such transfer and the vesting of all right, title
and interest in and to the Aircraft in Lessee), and if Lessee, in connection
with such purchase, elects to assume the obligations of the Owner Trustee
pursuant to the Trust Indenture and the Secured Certificates each of the
parties will execute and deliver appropriate documentation permitting Lessee to
assume such obligations on the basis of full recourse to Lessee, maintaining
the security interest in the Aircraft created by the Trust Indenture, releasing
the Owner Participant and the Owner Trustee from all obligations in respect of
the Secured Certificates, the Trust Indenture and all other Operative Documents
(other than those which by the express terms of the Operative Documents are to
survive) and all such other actions as are reasonably necessary to permit such
assumption by Lessee.
(y) (A) Lessee will not consolidate with or merge into
any other corporation or convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
reasonably satisfactory to such Participant containing an assumption
by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
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<PAGE> 45
(iii) immediately after giving effect to such transaction,
no Default or Event of Default under the Lease shall have occurred and
be continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned
in clause (ii) above comply with this subparagraph (A) of Section 8(y)
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Lessee under
this Agreement with the same effect as if such successor corporation or Person
had been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its
corporate existence except as permitted by subparagraph (A) of this Section
8(y).
(z) Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing, re-recording and
refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture, the Trust Supplement and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the interest of the Owner Trustee in the Aircraft or
will furnish to the Owner Trustee and the Indenture Trustee timely notice of
the necessity of such action, together with such instruments, in execution
form, and such other information as may be required to enable them to take such
action. Lessee will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief executive office
(as such term is used in Article 9 of the Uniform Commercial Code) promptly
after making such change or in any event within the period of time necessary
under applicable law to prevent the lapse of perfection (absent refiling) of
financing statements filed under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations
of Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination
Value, and the Owner Participant hereby agrees to
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make such recalculations as and when contemplated by the Lease and subject to
all the terms and conditions of the Lease and promptly to take such further
actions as may be necessary or desirable to give effect to and to cause the
Owner Trustee to give effect to the provisions of Section 3 of the Lease.
(bb) [___________] agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the
Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the
actual interest expected to accrue on the Secured Certificates during each
Interest Period promptly after the commencement of such Interest Period and
after the occurrence of any event that would cause such actual interest
expected to accrue during such Interest Period to change from the amount
previously notified. The Administrative Agent further agrees to perform all of
the functions that are required to be performed by the Administrative Agent
pursuant to the terms of the Trust Indenture.
(cc) The Owner Participant hereby agrees with Lessee that
it will pay, or cause to be paid, all costs and expenses that are for the
account of the Owner Trustee pursuant to Section 5(d) of the Lease.
(dd) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate
unless and until the transferee agrees in writing (copies of which shall be
provided by the Indenture Trustee to Lessee, the Owner Trustee and the Owner
Participant) to make the representations contemplated to be made by a Loan
Participant in this Agreement and to be bound by the terms of this Agreement
and the Trust Indenture (including, without limitation, the representations and
covenants set forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t)
hereof and this Section 8(dd) and Sections 2.03, 2.14 and 4.03 of the Trust
Indenture).
(ee) [ ] agrees to act as Documentation
Agent hereunder and to perform all of the functions that are required to be
performed by the Documentation Agent hereunder.
(ff) [ ], [ ] and
[ ] each agrees to furnish to the Administrative Agent timely
information for the purpose of determining each Eurodollar Rate (as defined in
the Trust Indenture).
(gg) Lessee, each Loan Participant, the Indenture Trustee
and the Owner Trustee hereby covenant and agree, upon the written request of
the Owner Participant, to amend the Operative Documents to permit the Owner
Participant to (A) provide additional security for the Secured Certificates by
transferring such additional property to the Indenture Trustee for the security
and benefit of the Loan Participants as the Owner Participant shall determine
in its sole discretion (the "ADDITIONAL COLLATERAL"), or (B) guarantee the
payment of principal and interest on the Secured Certificates, or any portion
of such principal and interest, as the Owner Participant shall determine in its
sole discretion (the "OWNER PARTICIPANT GUARANTEE"); provided that Lessee shall
have no obligation to amend the Operative Documents if, in Lessee's sole
judgment, such amendment would increase any liability of
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<PAGE> 47
Lessee under the Operative Documents. The Owner Participant agrees to pay all
of the reasonable costs and expenses (including, without limitation, reasonable
fees and expenses of counsel) incurred in connection with any such amendment,
including the reasonable costs and expenses of Lessee, the Loan Participants,
the Indenture Trustee and the Owner Trustee incurred in connection therewith.
Notwithstanding any other provision in any Operative Document to the contrary:
(A) the Indenture Trustee and each Loan Participant
hereby irrevocably agree (1) to exercise all remedies
available to any of them under the Operative Documents or
otherwise available to any of them at law or in equity prior
to the exercise of any remedies against the Additional
Collateral or the Owner Participant Guarantee and (2) to
return such Additional Collateral to the Owner Participant,
and to release the Owner Participant from the Owner
Participant Guarantee, promptly upon the written request of
the Owner Participant to do so, such request to be delivered
to the Indenture Trustee and each Loan Participant; provided
that the Indenture Trustee and the Loan Participants shall not
be obligated to return such Additional Collateral or to
release the Owner Participant from the Owner Participant
Guarantee if an Event of Default or Major Default has occurred
and is continuing; and
(B) the provision of the Additional Collateral and the
Owner Participant Guarantee will be in the sole discretion of
the Owner Participant.
(hh) Lessee hereby agrees with the Owner Participant that,
in the event that Lessee shall elect to substitute an aircraft (or an airframe
or an airframe and one or more engines, as the case may be) pursuant to the
provisions of Section 10(a) of the Lease, Lessee shall not effect any such
substitution unless the Owner Participant has received an opinion of counsel
mutually agreed upon by the Owner Participant and Lessee to the effect that a
Reasonable Basis exists to support the conclusion that such substitution will
not result in any loss of Interest Deductions or MACRS Deductions or an
Inclusion Event (as defined in the Tax Indemnity Agreement) for which Lessee
has not reimbursed the Owner Participant at the time of such substitution.
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT,
LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the
event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the
Owner Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized representative of the Owner Participant (the
"REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of
debt amortization and Basic Rent, Special Purchase Price, Stipulated Loss Value
and Termination Value percentages. Within forty-five days of its receipt of
the Reoptimization Certificate, Lessee may demand a verification, pursuant to
Exhibit E of the Lease, of the information set forth in the Reoptimization
Certificate. Upon
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<PAGE> 48
the acceptance by Lessee of the accuracy of the information set forth in the
Reoptimization Certificate or the determination pursuant to such verification
procedures of such information, the Owner Participant will cause the Owner
Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic
Rent, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages, and (N) to exchange new Secured Certificates containing
reoptimized amortization schedules for the Secured Certificates outstanding
immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of
Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each
Loan Participant will allow changes in the amortization schedule of the Secured
Certificates, and (N) each Loan Participant will exchange the Secured
Certificates held by it immediately prior to such reoptimization for new
Secured Certificates containing reoptimized amortization schedules; provided
that such changes do not (X) change the final maturity of any Secured
Certificates to beyond twenty years from December 11, 1995 or, without the
consent of the Owner Participant, to a date which is more than six (6) months
longer than the original maturity of the Secured Certificates or (Y) increase
the weighted average lives of the Secured Certificates as of December 11, 1995
(based on an assumption that the Secured Certificates were issued on December
11, 1995) to more than 15 years or, without the consent of the Owner
Participant, increase the weighted average lives of the Secured Certificates by
more than six (6) months.
SECTION 10. OTHER DOCUMENTS. Each of the Owner
Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan
Participants to comply with all of the terms of the Trust Agreement (as the
same may hereafter be amended or supplemented from time to time in accordance
with the terms thereof) applicable to it; (B) agrees with Lessee, the Loan
Participants and the Indenture Trustee not to amend, supplement or otherwise
modify any provision of the Trust Agreement in a manner adversely affecting
such party without the prior written consent of such party; and (C) agrees with
Lessee and the Loan Participants not to revoke the Trust Agreement without the
prior written consent of Lessee and the Loan Participants. Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture Trustee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (i) amend or modify Article III or IX of the
Trust Indenture, (ii) make any amendment which will affect the stated principal
amount or interest on the Secured Certificates or (iii) amend or modify the
provisions of Sections 2.05 or 10.05 of the Trust Indenture. The Indenture
Trustee and the Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative Documents
to which Lessee is not a party. Notwithstanding anything to the contrary
contained herein, in the Trust Agreement or in any other Operative Document,
the Owner Participant will not consent to or direct a change in the situs of
the Trust Estate without the prior written consent of Lessee. Each Loan
Participant agrees that it will not take any action in respect of the Trust
Indenture Estate except through the Indenture Trustee pursuant to the Trust
Indenture or as otherwise permitted by the Trust Indenture.
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<PAGE> 49
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee
covenants and agrees with each of the Loan Participants, the Owner Participant,
the Indenture Trustee and the Owner Trustee, in its capacity as such and in its
individual capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as
the Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements,
all amendments to the Lease, the Trust Indenture, all supplements and
amendments to the Trust Indenture and this Agreement 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. Upon the execution
and delivery of the FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Bill of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached, and third, the Trust Indenture, with the Trust Supplement attached.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed
among Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft to
be delivered under the Lease and Lessee will be the lessee thereof, and each
party hereto agrees to characterize the Lease as a lease for Federal income tax
purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set
forth in the Trust Indenture. The term "REASONABLE BASIS" means a basis in law
and fact that is reasonable within the meaning of Formal Opinion 85-352 of the
American Bar Association. Unless the context otherwise requires, any reference
herein to any of the Operative Documents refers to such document as it may be
amended from time to time.
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<PAGE> 50
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this
Section 13(b). Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 13(b), 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 telecopier numbers) as follows: (A) if to Lessee, the Owner
Trustee, the Loan Participants, the Administrative Agent, the Documentation
Agent, the Indenture Trustee or the Owner Participant, to the respective
addresses set forth below the signatures of such parties at the foot of this
Agreement, or (B) if to a subsequent Owner Participant, addressed to such
subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of
any thereof or any of the transactions contemplated hereby or thereby may not
be enforced in or by such courts. Lessee hereby generally consents to service
of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New
York 10038, Attention: Managing Attorney, or such office of Lessee in New York
City as from time to time may be designated by Lessee in writing to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if,
as a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is then
located, the situs of the trust may be moved with the written consent of the
Owner Participant (which consent shall not be unreasonably withheld) and the
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification as the
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<PAGE> 51
Owner Participant and the Loan Participants may reasonably request, (B) the
rights and obligations under the Operative Documents of the Owner Participant
and the Loan Participants shall not be altered as a result of the taking of
such action, (C) the lien of the Trust Indenture on the Trust Indenture Estate
shall not be adversely affected by such action, and (D) the Owner Participant
and the Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner
Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to the Loan Participants and to the Owner
Participant covering the matters described in Section 4(a)(xiii) hereof and
such other matters as the Loan Participants and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner
Participant, the Indenture Trustee and the Loan Participants on an After-Tax
Basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred by the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Loan Participants in connection with such change of
situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan
Participants and the Owner Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner
Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which
by its terms is not to be unreasonably withheld by the Owner Trustee, as
Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's,
the Documentation Agent's and the Owner Participant's obligations under any and
all thereof, shall survive the making available of the respective Commitments
by the Loan Participants and the Owner Participant, the delivery or return of
the Aircraft, the transfer of any interest of the Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Loan Participant in any Secured Certificate or the
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<PAGE> 52
Trust Indenture Estate and the expiration or other termination of this
Agreement or any other Operative Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, Lessee and its successors and
assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, the Administrative Agent
and the Documentation Agent. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Agreement or such
other agreements of rights and remedies against the Trust Estate. The
foregoing provisions of this Section 15(d) shall survive the termination of
this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the
Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as
assignee of such Owner Trustee's rights under
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the Lease pursuant to the Trust Indenture, will be entitled to the benefits of
11 U.S.C. Section 1110 in the event of any reorganization of Lessee under such
Section.
SECTION 16. EXPENSES. (a) Invoices and Payment. Each
of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and
the Loan Participants shall promptly submit to the Owner Participant and Lessee
for their prompt approval (which shall not be unreasonably withheld) copies of
invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than February 15, 1996). The Owner Participant agrees to pay all
invoices of Transaction Expenses that have been approved by it and Lessee
promptly upon receipt thereof but in any event no later than March 1, 1996.
Notwithstanding the foregoing, to the extent that Transaction Expenses exceed
1.35% of Lessor's Cost, Lessee at its sole option shall have the right to pay
directly any or all Transaction Expenses which are in excess of 1.35% of
Lessor's Cost.
(b) Payment of Other Expenses. In the event that the
transaction contemplated by this Participation Agreement fails to close as a
result of the Owner Participant's failure to negotiate in good faith or to
comply with the terms and conditions upon which its participation in the
transaction was predicated, the Owner Participant will be responsible for all
of its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the appraiser referred to
in Section 4(a)(xx). In the event that the transaction fails to close for
reasons other than those described in the immediately preceding sentence,
Lessee shall be responsible for all Transaction Expenses.
SECTION 17. REFINANCINGS.
(a) Lessee shall have the right, subject to compliance
with the terms of this Section 17, to refinance all (but not less than all) of
the Secured Certificates no more than three times by giving written notice to
the Owner Participant and the Owner Trustee that there be effected a voluntary
redemption of the Secured Certificates by the Owner Trustee, whereupon the
Owner Participant agrees to negotiate promptly in good faith to conclude an
agreement with Lessee as to the terms of such refinancing (including the terms
of any debt to be issued in connection with such refinancing); provided that no
such refinancing shall require an increase in the amount of the Owner
Participant's investment in the beneficial ownership of the Aircraft.
Upon such agreement:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth (i) the proposed date on which the outstanding
Secured Certificates will be redeemed, any new debt will be issued and the
other aspects of such refinancing will be consummated (such date, the
"REFINANCING DATE") and (ii) the following information calculated pursuant to
the provisions of paragraph (6) of this
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<PAGE> 54
Section 17(a): (A) subject to the limitations set forth in this Section 17,
the proposed adjusted debt/equity ratio, (B) the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date, (C) the amount, if any, by
which the Owner Participant's aggregate investment in the beneficial interest
in the Aircraft is to be decreased and (D) the proposed revised schedules of
Basic Rent percentages, debt amortization, Stipulated Loss Value percentages,
Termination Value percentages and Special Purchase Price. The Refinancing
Certificate shall not provide for a debt/equity ratio of more than 4:1. Within
fourteen days of its receipt of the Refinancing Certificate, Lessee may demand
a verification pursuant to Exhibit E to the Lease of the information set forth
in the Refinancing Certificate. Upon the acceptance by Lessee of the accuracy
of the information set forth in the Refinancing Certificate (or the
determination pursuant to such verification procedures), as to the debt/equity
ratio, the principal amount of debt to be issued by the Owner Trustee on the
Refinancing Date and the revised Basic Rent percentages, debt amortization,
Stipulated Loss Value percentages, Termination Value percentages and Special
Purchase Price (such information, whether as set forth or as so determined, the
"REFINANCING INFORMATION") the appropriate parties will take the actions
specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate
and/or the Aircraft and its resale to the Owner Trustee) with the institution
or institutions to be named therein (the agreements to which they will be a
party to be in form and substance reasonably satisfactory to the Owner
Participant, the Owner Trustee and Lessee) providing for (i) the issuance and
sale by the Owner Trustee to such institution or institutions on the
Refinancing Date of debt securities in an aggregate principal amount specified
in the Refinancing Information which amount shall be equal to the aggregate
principal amount of all Secured Certificates outstanding on the Refinancing
Date (such debt securities, the "NEW DEBT") except that the principal amount of
New Debt may exceed the principal amount of all outstanding Secured
Certificates in connection with the first refinancing under this Section 17,
(ii) the application of the proceeds of the sale of the New Debt to the
redemption of all such Secured Certificates on the Refinancing Date and (iii)
the payment of the excess, if any, of such proceeds over the amounts necessary
to effect such redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value, Termination Value and Special Purchase Price from and after the
Refinancing Date shall be as provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to
provide for the securing thereunder of the New Debt in like manner as the
Secured Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
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(5) unless otherwise agreed by the Owner Participant,
Lessee shall pay all of the expenses of such refinancing (including, but not
limited to, the reasonable fees, expenses and disbursements of counsel and any
placement or underwriting fees);
(6) when calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the Lease
or such assumptions are the subject of the recalculations being conducted by
the Owner Participant), and (B) minimizes the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (A). All adjustments to
Basic Rent shall also be in compliance with the tests of Section Section
4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 and no such adjustment shall
cause the Lease to constitute a "disqualified leaseback or long-term agreement"
within the meaning of Section 467 of the Code;
(7) the appropriate parties will execute and deliver
appropriate closing documents in form and substance satisfactory to the Owner
Participant, Indenture Trustee, Lessee and the holders of the New Debt, execute
and deliver appropriate closing certificates and deliver appropriate opinions
of counsel; and
(8) notwithstanding the foregoing, the Owner Participant
shall have no obligation to proceed with any refinancing transaction as
contemplated by this Section 17:
(i) if the rights and obligations of the Owner
Participant under the trust indenture to be executed
in connection with such refinancing would when taken
as a whole be materially adverse to Owner
Participant, as determined in Owner Participant's
reasonable judgment; or
(ii) unless (A) the Owner Participant has received an
opinion of tax counsel mutually agreed upon by the
Owner Participant and Lessee to the effect that there
are no adverse tax consequences to it as a result of
such refinancing or (B) Lessee has indemnified the
Owner Participant in a manner satisfactory to it with
respect to the tax consequences of such refinancing
and the Owner Participant has received an opinion of
tax counsel mutually agreed upon by the Owner
Participant and Lessee to the effect that a
Reasonable Basis exists to support the conclusion
that such refinancing transaction will not result in
the loss of Interest Deductions or MACRS Deductions
or an Inclusion Event (as defined in the Tax
Indemnity Agreement) for which Lessee has not
reimbursed the Owner Participant at the time of the
refinancing.
(b) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
- 55 -
<PAGE> 56
(c) If a refinancing of Secured Certificates under this
Section 17 involves an offering of securities registered under the Securities
Act of 1933, as amended, or pursuant to Rule 144A thereof (or a successor rule
thereto), (i) the provisions of Section 8(k), Section 8(q)(A) and the first
three sentences of Section 8(t) shall not apply to any Loan Participant so long
as such securities are outstanding if at the time of such refinancing the Lease
is amended to delete the reference to Loan Participant Liens contained in
clause (iii) of Section 6 of the Lease and (ii) so long as the appropriate
underwriter's exemption is available, there will not be a prohibition on the
purchase of such securities by an employee benefit plan and in the event it is
not available, the parties hereto intend to agree upon appropriate limitations,
if any, to such purchase.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes
each of the Administrative Agent and the Documentation Agent (each, an "AGENT")
to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Operative Documents as are
delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. Each Agent shall
have no duties or responsibilities except those expressly set forth in the
Operative Documents. As to any matters not expressly provided for hereby or by
the Trust Indenture, each Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority in Interest of Certificate Holders (as
defined in the Trust Indenture), and such instructions shall be binding upon
all Loan Participants and all Certificate Holders; provided, however, that such
Agent shall not be required to take any action that exposes such Agent to
personal liability or that is contrary to the Operative Documents or applicable
law. Each Agent agrees to give to each Loan Participant prompt notice of each
notice given to it by the Owner Trustee, the Owner Participant or Lessee
pursuant to the terms of the Operative Documents.
(b) No Agent nor such Agent's directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the Trust Indenture,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (i) may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Loan Participant and
shall not be responsible to any Loan Participant for any statements, warranties
or representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Operative Documents on the part of any party thereto or to
inspect the property (including the books and records) of any such party; (iv)
shall not be responsible to any Loan Participant for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created
- 56 -
<PAGE> 57
under or in connection with, the Operative Documents or any other instrument or
document furnished pursuant thereto; and (v) shall incur no liability under or
in respect of the Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
(c) With respect to their Loans and any Secured
Certificates issued to them, [____________] and [____________] shall have the
same rights and powers under the Operative Documents as any other Loan
Participant and may exercise the same as though they were not Agents and the
term "Loan Participant" or "Certificate Holder" shall, unless otherwise
expressly indicated, include [____________] and [____________] in their
individual capacity. [____________] and its Affiliates and [____________] and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, the Owner Trustee, the Owner Participant, Lessee,
any of Lessee's Subsidiaries and any Person who may do business with or own
securities of any of such Persons, all as if [____________] and [____________]
were not Agents and without any duty to account therefor to the Loan
Participants.
(d) Each Loan Participant acknowledges that it has,
independently and without reliance upon the Agents or any other Loan
Participant and based on the financial statements referred to in Section
7(a)(ix) of this Agreement and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Loan Participant also acknowledges that it will,
independently and without reliance upon the Agents or any other Loan
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a
successor agent as provided below, any Agent may resign at any time by giving
written notice thereof to the Loan Participants, the Owner Trustee and Lessee
and may be removed at any time with or without cause by the Majority in
Interest of Certificate Holders (as defined in the Trust Indenture). Upon any
such resignation or removal, the Majority in Interest of Certificate Holders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority in Interest of Certificate Holders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Trust Indenture. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 18 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent
- 57 -
<PAGE> 58
under this Agreement and the Trust Indenture. Notwithstanding anything
contrary herein, the Administrative Agent and the Documentation Agent hereunder
and under the Trust Indenture shall be the same institution, respectively, as
the Administrative Agent and the Documentation Agent under (and as defined in)
the Credit Agreement.
- 58 -
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-------------------------------------------
Title:
Address: U.S. Mail
---------
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
-----------------
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[___________________],
Owner Participant
By:
----------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 60
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
-------------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
-------------------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 61
[INSERT BRIDGE LENDERS]
- Signature Page -
<PAGE> 62
SCHEDULE I
NAMES AND ADDRESSES
<TABLE>
<S> <C>
Lessee: Northwest Airlines, Inc.
U.S. Mail
---------
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
-----------------
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
-------------
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant:
</TABLE>
<PAGE> 63
<TABLE>
<S> <C>
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
-------------
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1995 B
Owner Trustee: First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as provided in Section 3(f) of
the Lease shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1995 B
</TABLE>
SCHEDULE I - PAGE 2
<PAGE> 64
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ----------------- -------------
<S> <C>
</TABLE>
<PAGE> 65
<TABLE>
<CAPTION>
Owner Participant:
- -----------------
<S> <C>
-------------
Total Commitments: 100.000000%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 66
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1995 B]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
<TABLE>
<S> <C>
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
</TABLE>
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1995 B]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 B], dated
as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "LESSEE"), (ii) [ ], a [ ]
corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the
Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each
of the two separate Pass Through Trust Agreements (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as subordination agent and trustee (in such
capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as
defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original
Indenture and the Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used herein
in capitalized form shall have the meanings attributed thereto in the Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[ ], as the loan participants (collectively, the "ORIGINAL
LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1995 B], dated as of December 13, 1995 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1995 B], dated as of
December 13, 1995, as supplemented by Trust Agreement and Indenture Supplement
[NW 1995 B], dated December
<PAGE> 2
21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner
Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13,
1995, as supplemented by Lease Supplement No. 1 [NW 1995 B] dated December 21,
1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set
forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to
lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1995 B], dated as of December 13, 1995 (the
"TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1995 B] relating to the Aircraft, dated as of December
13, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1995 B] dated as of December 13, 1995 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and the Owner Trustee pursuant to such Section 17 of
its desire to implement such a refinancing operation;
WHEREAS, prior to the execution and delivery of this Amendment,
Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner
Participant, the Indenture Trustee and the Subordination Agent have entered into
the Refunding Agreement [NW 1995 B], dated as of June 3, 1996 (the "REFUNDING
AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1995 B], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue
-2-
<PAGE> 3
new secured certificates substantially in the form set forth in Section 2.01
thereof (the "REFINANCING SECURED CERTIFICATES") in two series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1995 B], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1995 B] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule I hereto (collectively,
the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in
Section 1 of the Refunding Agreement), two separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
at the Closing to purchase from the Owner Trustee, on behalf of each Pass
Through Trust, all of the Refinancing Secured Certificates bearing the same
interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into two revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date hereof (the
"INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree that the Original Participation Agreement is
amended as follows:
-3-
<PAGE> 4
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 1(d) of the Original Participation Agreement and all
references thereto in the Original Participation Agreement are hereby deleted.
SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION
AGREEMENT . Section 5 of the Original Participation Agreement is hereby amended
by (i) deleting the words and punctuation "the Participants" from the first line
thereof, (ii) deleting the words and punctuation ", this Agreement, the Lease
and the Guarantee" both times they appear therein, and (iii) deleting the words
"which are permitted" in the first proviso thereof and substituting therefor the
words "which is permitted".
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1), (3), and (10) thereof, (ii) deleting clauses (2)
and (4) thereof in their entirety and by substituting therefor "Intentionally
Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof
and substituting therefor the words "the Indenture Trustee or the Trust
Indenture Estate", (iv) deleting the words "any Loan Participant or any
Certificate Holder" from clause (9) thereof and substituting therefor the words
"the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (C)
from clause (11) thereof and deleting "(D)" from such clause and substituting
therefor "(C)", and (vi) deleting the parenthetical clause in clause (13)
thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by deleting the second sentence of the last
paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement
is hereby amended by (I) deleting the second and third sentences thereof and
(ii) deleting the words "other than a Loan Participant" in the first sentence
thereof.
SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION
AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby
amended by (i) deleting the word "and" between the words "expenses" and
"Transaction Expenses" in the second parenthetical phrase of the first paragraph
thereof and substituting a comma therefor, (ii) inserting after the phrase "to
Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) adding the words and punctuation "and, only in the case of an Indemnitee
who is the Subordination Agent, the Intercreditor Agreement and the Liquidity
Facilities" after the words "in respect thereof" in the first clause (A)
thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement,
the Liquidity Facilities or the Pass Through Trust Agreements" after the words
"Operative Documents" in the second clause (B) thereof.
SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby
amended by
-4-
<PAGE> 5
deleting the words "each of the Loan Participants" and substituting therefor the
words "the Indenture Trustee" in the first line thereof.
SECTION 8. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby
amended by (i) deleting the words and punctuation "the Loan Participants," each
time they appear in the second sentence thereof, (ii) deleting the words "the
Majority in Interest of the Certificate Holders" from the first proviso of the
second sentence thereof and substituting therefor the words "Indenture Trustee",
(iii) deleting the "," between the words "Owner Trustee" and "the Indenture
Trustee" in clauses (N) and (O) of the third sentence thereof and substituting
therefor "and", (iv) deleting the words "and the Loan Participants" each time
they appear in the third sentence thereof other than in clause (Q) thereof, (v)
deleting the words and punctuation "the Majority in Interest of the Certificate
Holders," from clauses (N) and (O) of the third sentence thereof, and (vi)
deleting the words and punctuation "to the Loan Participants," from the fifth
sentence thereof.
SECTION 9. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the word "Each" in the first sentence thereof
and substituting therefor the words "The Owner", and (ii) adding a new sentence
to the end thereof to read as follows: "The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of
the initial supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust
Agreement without the prior written consent of the Owner Participant.".
SECTION 10. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby
amended by deleting the fourth and fifth sentences thereof.
SECTION 11. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby
amended by (i) deleting the words "each Loan Participant" therefrom and (ii)
adding a new second paragraph thereto at the end thereof:
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of the Owner Trustee in respect of the
Secured Certificates unless Lessee causes to be delivered to the
Indenture Trustee an opinion of counsel to the effect that (i) the
Lien of the Trust Indenture continues to be a valid and duly
perfected first priority security interest in and to the Aircraft
and (ii) the Indenture Trustee should be entitled to the benefits of
11 U.S.C. Section1110; provided that the opinion required by
subclause (ii) need only be given if immediately prior to such
assumption the Owner Trustee should have been entitled to the
benefits of 11 U.S.C. Section 1110.
SECTION 12. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement
is hereby amended by (i)
-5-
<PAGE> 6
deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Owner", (ii) deleting the words "such" the
first time it appears in Section 8(y)(A)(ii) and substituting therefor the words
"the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii)
after the words "Purchase Agreement Assignment", the words and punctuation ",
the Refunding Agreement", (iv) deleting the word "each" the first time it
appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner",
and (v) deleting the word "Participants" the first time it appears in Section
8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the
Owner Participant".
SECTION 13. AMENDMENT OF SECTION 8(bb) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(bb) of the Original Participation Agreement and all
references thereto in the Original Participation Agreement are hereby deleted.
SECTION 14. AMENDMENT OF SECTION 8(ee) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(ee) of the Original Participation Agreement and all
references thereto in the Original Participation Agreement are hereby deleted.
SECTION 15. AMENDMENT OF SECTION 8(ff) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(ff) of the Original Participation Agreement and all
references thereto in the Original Participation Agreement are hereby deleted.
SECTION 16. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 9 of the Original Participation Agreement and all references
thereto in the Original Participation Agreement are hereby deleted.
SECTION 17. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended
by (i) deleting the words and punctuation ", the Loan Participants" from clause
(B) thereof, (ii) deleting the words "Loan Participants" the second time they
appear in clause (C) thereof and substituting therefor with the words "Indenture
Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the
second sentence thereof.
SECTION 18. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby
amended by deleting the words "at the foot of this Agreement" in clause (A) of
the second sentence thereof and substituting therefor the words "on the
signature pages to the Refunding Agreement".
SECTION 19. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended
by (i) deleting the words "Loan Participants" each time they appear in clauses
(A), (B), and (D) thereof and substituting therefor the words "Indenture
Trustee", (ii) deleting the "," both times it appears between the words "Owner
Participant" and "the Indenture Trustee" in clause (E) thereof and substituting
therefor "and", and (iii) deleting the words "and the Loan Participants" both
times they appear in clause (E) thereof.
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<PAGE> 7
SECTION 20. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby
amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant covenants
and agrees that it shall not unreasonably withhold its consent to
any consent requested of the Owner Trustee, as Lessor, under the
terms of the Lease which by its terms is not to be unreasonably
withheld by the Owner Trustee, as Lessor.
SECTION 21. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 18 of the Original Participation Agreement and all references
thereto in the Original Participation Agreement are hereby deleted.
SECTION 22. RATIFICATION. Except as hereby modified, the Original
Participation Agreement shall continue in full force and effect as originally
executed. From and after the date of this Amendment, each and every reference in
the Participation Agreement, as amended hereby, to "this Agreement", "herein",
"hereof" or similar words or phrases referring to the Participation Agreement or
any word or phrase referring to a section or provision of the Participation
Agreement is deemed for all purposes to be a reference to the Participation
Agreement or such section or provision as amended pursuant to this Amendment.
SECTION 23. MISCELLANEOUS. (a) Each of the parties hereto agrees
that the transactions contemplated hereby shall constitute one of the three
refinancing operations permitted in Section 17 of the Participation Agreement.
(b) Each party hereto acknowledges and agrees that the Purchaser is
a Loan Participant under the Participation Agreement, the Lease and the other
Operative Documents, and is entitled to the benefits of the covenants and other
provisions therein running in favor of the Loan Participants, and to the
security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement (except to the extent such representations and warranties
therein relate to a date prior to the Closing Date), and (iii) the Purchaser has
no liability or obligation under any covenant in any of such agreements for any
period prior to the Closing.
(c) This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner
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<PAGE> 8
Trustee. The terms of this Amendment shall be binding upon, and inure to the
benefit of, Lessee and its successors and assigns, each Loan Participant and its
successors and assigns, the Owner Participant and its successors and assigns,
each Certificate Holder and its successors and registered assigns, the Indenture
Trustee and its successors as Indenture Trustee under the Trust Indenture and
the Owner Trustee and its successors as Owner Trustee under the Trust Agreement.
THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW
YORK.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: _________________________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By: ________________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
By: ________________________________________
Name:
Title:
[ ],
as Owner Participant
By: ________________________________________
Name:
Title:
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<PAGE> 10
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
By: ________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY,
in its individual capacity and as
Indenture Trustee
By: ________________________________
Name:
Title
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<PAGE> 11
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as
of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as
of June 12, 1996.
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<PAGE> 1
REFUNDING AGREEMENT
[NW 1995 B]
This REFUNDING AGREEMENT [NW 1995 B], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[__________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv)
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
[Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1995 B], dated as of December 13, 1995 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
<PAGE> 2
Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, as
supplemented by Trust Agreement and Indenture Supplement [NW 1995 B], dated
December 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which
the Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995,
as supplemented by Lease Supplement No. 1 [NW 1995 B] dated December 21, 1995
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1995 B], dated as of December 13, 1995 (the "TRUST
AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to
hold the Trust Estate defined in Section 1.01 thereof for the benefit of the
Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995
(the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 B]
dated as of December 13, 1995 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1995 B], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in two series;
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1995 B], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1995 B], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1995 B] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, two separate grantor
trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS
THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
two revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
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<PAGE> 4
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Lessee shall pay to
the Owner Trustee, as a payment of Interim Rent under the Lease, an
amount equal to the unpaid interest on the Original Secured
Certificates accrued up to but not including the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, if any, described in clause (iii)
above, owing to them on the Refinancing Date with respect to the
Original Secured Certificates as a prepayment of the Original Secured
Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture;
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the maturity and aggregate principal amount, bearing
the interest rate and for the purchase price set forth on Schedule II
hereto opposite the name of such Pass Through Trust; and
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<PAGE> 5
(viii) the Owner Trustee shall disburse to the Owner Participant
the excess of the amounts received by it pursuant to clauses (i) and
(ii) above over the amount paid by it pursuant to clause (iii) above.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
any amount in respect of the prepayment of the Original Secured Certificates,
the Original Secured Certificates shall remain outstanding and in full force and
effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall
not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, the date
hereof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such Pass Through Trust on Schedule II hereto, which Refinancing
Secured Certificates in the aggregate shall be in the principal amounts set
forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through
Trust Agreements and of the other Operative Documents, all such
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<PAGE> 6
Refinancing Secured Certificates shall be dated and authenticated as of the
Refinancing Date and shall bear interest therefrom, shall be registered in such
names as shall be specified by the Subordination Agent and shall be paid in the
manner and at such places as are set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through
Trustee to make the payments described in Section l(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. 1;
(5) each of the Pass Through Trust Agreements;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A and Class B
Trusts.
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA
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<PAGE> 7
Amendment No. 1 and any other documents to be executed on behalf of
the Lessee or the Guarantor (as the case may be) in connection with
the transactions contemplated hereby and the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Trust Agreement
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
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<PAGE> 8
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d)) relate solely to an earlier date (in
which case such representations and warranties were correct on and
as of such earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1 and any other documents to be executed on
behalf
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<PAGE> 9
of the Owner Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal
department, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
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<PAGE> 10
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from White & Case, special counsel for the
Owner Participant, and an opinion addressed to it from corporate counsel to the
Owner Participant, in each case in form and substance satisfactory to each of
them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in-house German counsel
for the Liquidity Provider, in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
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SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to
the receipt by the Lessee and the Guarantor of (i) each opinion referred to in
subsections (j) through (n) of Section 3, addressed to the Lessee and the
Guarantor or accompanied by a letter from counsel rendering such opinion
authorizing the Lessee and the Guarantor to rely on such opinion as if it were
addressed to the Lessee and the Guarantor, (ii) each certificate referred to in
subsections (e) through (g) of Section 3, (iii) executed counterparts or
conformed copies of the TIA Amendment No. 1, and (iv) such other documents and
evidence with respect to each other party hereto as the Lessee, the Guarantor or
their counsel may reasonably request in order to establish the due consummation
of the transactions contemplated by this Agreement, the taking of all necessary
corporate action in connection therewith and compliance with the conditions
herein set forth.
(b) The respective obligations of each of the Lessee, the Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee to
participate in the transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Refinancing Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The Lessee and the Guarantor, by execution
and delivery hereof, consent to such execution and delivery of the Indenture.
The Indenture shall be effective as of the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE.. Subject to the
satisfaction or waiver of the conditions precedent set forth herein, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant, by
execution and delivery hereof, consent to the amendment to the Original Lease
effected by, and request and instruct the Owner Trustee to execute and deliver,
the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by
execution and delivery hereof, to execute and deliver the Lease Amendment No. 1.
The Lease Amendment No. 1 shall be effective as provided therein.
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SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the
Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree
to execute and deliver the PA Amendment No. 1. Upon the execution and delivery
of the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the
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Guarantor (as the case may be) is a party, have been duly authorized by
all necessary corporate action on the part of the Lessee or the
Guarantor, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or
material obligations of the Lessee or the Guarantor, except such as
have been duly obtained and are in full force and effect, and do not
contravene any law, governmental rule, regulation or order binding on
the Lessee or the Guarantor (as the case may be) or the certificate of
incorporation or by-laws of the Lessee or the Guarantor (as the case
may be), or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien (other than Permitted
Liens) upon the property of the Lessee or the Guarantor (as the case
may be) under, any indenture, mortgage, contract or other agreement to
which the Lessee or the Guarantor (as the case may be) is a party or by
which it may be bound or affected which contravention, default or Lien,
individually or in the aggregate, would be reasonably likely to have a
material adverse effect on the condition (financial or otherwise),
business or properties of the Guarantor and its subsidiaries considered
as one enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse
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effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise;
(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease and the Lease Amendment No. 1 (to
the extent the Lease constitutes chattel paper) and the filing of
continuation statements at periodic intervals with respect to the
Uniform Commercial Code financing statements in effect on the
Refinancing Date covering the security interests created by the
Original Indenture or describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
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<PAGE> 15
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
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Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Trust Agreement, has the corporate
power and authority to carry out the terms of the Trust Agreement, and
has, or had on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust Agreement by the
Owner Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the corporate
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1 and each other Operative Document
(other than the Trust Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered
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into, and the Lease, when the Lease Amendment No. 1 shall have been
entered into, will constitute, a legal, valid and binding obligation of
the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, enforceable against it in its individual capacity or
as Owner Trustee, as the case may be, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Trust Agreement, the Original Indenture, the Indenture, the
Original Lease, the Lease Amendment No. 1, the Refinancing Secured
Certificates or any other Operative Document to which it is a party,
nor the consummation by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, 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 it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any provision
of, or constitutes or will constitute a default under, or results or
will result in any breach of, or results or will result in the creation
of any Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any
law, governmental rule or regulation of the United States of America or
the State of Utah governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal
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governmental authority or agency regulating the trust powers of the
Owner Trustee in its individual capacity is required for the execution
and delivery of, or the carrying out by, the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust Agreement, the
Participation Agreement, the Indenture, the Lease, the Refinancing
Secured Certificates, or any other Operative Document to which it is a
party or by which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor
Liens) attributable to the Owner Trustee, in its individual capacity,
other than any Lessor Liens (including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor
Liens) (A) the existence of which poses no material risk of the sale,
forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings, and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings, and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the
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case may be, of any of the instruments referred to in clauses (1), (2),
(3) and (4) above, that, in each case, would not have been imposed if
the Trust Estate were not located in the State of Utah and First
Security Bank of Utah, National Association had not (a) had its
principal place of business in, (b) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the
Operative Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in, the State
of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of [ ] and has the corporate
power and authority to carry on its present business and operations and
to own or lease its properties, has, or had on the respective dates of
execution thereof, as the case may be, the corporate power and
authority to enter into and to perform its obligations under this
Agreement, the Original Participation Agreement, the Tax Indemnity
Agreement, the PA Amendment No. 1, the TIA Amendment No.
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1; this Agreement has been duly authorized, executed and delivered by
it; and this Agreement constitutes, and the Participation Agreement
when the PA Amendment No. 1 shall have been entered into, and the Tax
Indemnity Agreement when the TIA Amendment No. 1 shall have been
entered into, will constitute, the legal, valid and binding obligations
of the Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1 or any other Operative Document to which it is a party
nor (B) compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Owner Participant
(it being understood that no representation or warranty is made with
respect to laws, rules or regulations relating to aviation or to the
nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by it of this Agreement, the TIA
Amendment No. 1 and the PA Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Participant before any court or
administrative agency or arbitrator which, if determined adversely to
the Owner Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this Agreement,
the PA Amendment No. 1, or the TIA Amendment No. 1;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing
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Secured Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person; the
Owner Participant's interest in the Trust Estate and the Trust
Agreement was acquired for its own account and was purchased for
investment and not with a view to any resale or distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings, and
(E) the existence of which does not result in actual interruption in
the receipt and distribution by the Indenture Trustee in accordance
with the Indenture of Rent assigned to the Indenture Trustee for the
benefit of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the full corporate power, authority and legal
right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 and this Agreement and
to perform its obligations under this Agreement, the Pass Through Trust
Agreements, the Intercreditor Agreement and the Participation
Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and
delivery of the PA Amendment No. 1), the Participation Agreement, will
constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it
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<PAGE> 22
in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming
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<PAGE> 23
that the trusts created by the Pass Through Trust Agreements will not
be taxable as corporations, but, rather, each will be characterized as
a grantor trust under subpart E, Part I of Subchapter J of the Code,
such trusts will not be subject to any Taxes imposed by the
Commonwealth of Massachusetts or any political subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and
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<PAGE> 24
(upon execution and delivery by the Subordination Agent of the PA
Amendment No. 1) the Participation Agreement, will constitute, the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in
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<PAGE> 25
connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States mail, with proper postage for first-class registered or
certified mail prepaid, or when delivered personally or, if promptly confirmed
by mail as provided above, when dispatched by facsimile or other written
telecommunication, addressed, if to the Lessee, the Guarantor, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, at their respective addresses or facsimile
numbers set forth below the signatures of such parties at the foot of this
Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the
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<PAGE> 26
Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma
City, Oklahoma, (D) Shearman & Sterling, special counsel for the
Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special
counsel for the Original Loan Participants;
(2) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that Refinancing Expenses are in excess of 1.1394%
of Lessor's Cost, the Lessee shall pay directly any and all Refinancing Expenses
which are in excess of 1.1394% of Lessor's Cost. In the event that the
transactions contemplated by this Section 11 and the agreements referred to
herein are not consummated, the Lessee shall bear and pay all costs, expenses
and fees referred to in this Section 11.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each
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<PAGE> 27
counterpart of this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this Agreement, but all
of such counterparts together shall constitute one instrument. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
party against which the enforcement of the termination, amendment, supplement,
waiver or modification is sought; and no such termination, amendment,
supplement, waiver or modification shall be effective unless a signed copy
thereof shall have been delivered to each party hereto. The index preceding this
Agreement and the headings of the various Sections of this Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the Lessee and, subject to the terms of
the Participation Agreement, its successors and permitted assigns, the
Guarantor, the Pass Through Trustee and its successors as Pass Through Trustee
(and any additional trustee appointed) under any of the Pass Through Trust
Agreements, the Indenture Trustee and its successors as Indenture Trustee (and
any additional Indenture Trustee appointed) under the Indenture, the
Subordination Agent and its successors as Subordination Agent under the
Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee
under the Trust Agreement, and the Owner Participant, and, subject to the
provisions of the Participation Agreement, its successors and permitted assigns.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 29
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 30
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By: __________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 31
[ ]
Owner Participant
By: __________________________________________________
Title:
Address:
Attn:
Facsimile:
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<PAGE> 32
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as Pass
Through Trustee,
Pass Through Trustee
By: _____________________________________________
Title:
Address: Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 33
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By: _____________________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Indenture Trustee,
Indenture Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 35
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
<PAGE> 36
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- -------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 A]
This TRUST AGREEMENT [NW 1996 A] dated as of February 27, 1996
between [____________________________], a [_____________] corporation (the
"ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association (in its individual capacity, "FSBU")
and otherwise not in its individual capacity but solely as trustee hereunder
(herein in such capacity with its permitted successors and assigns called the
"OWNER TRUSTEE");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 A], to be dated
as of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
<PAGE> 2
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant,
the percentage of its undivided beneficial interest in the Trust Estate created
by this Trust Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such term in
the Lease.
"Replacement Airframe" has the meaning ascribed to such term in the
Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
"Subsequent Owner Participant" means any corporation to which the
Original Owner Participant or any transferee from the Original Owner Participant
or any Subsequent Owner Participant shall have transferred at any time after the
Delivery Date all of the undivided right, title and interest originally held by
the Original Owner Participant in this Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.01 of this Trust
Agreement and Section 8 of the Participation Agreement, provided that any such
transfer: (i) shall be effected by a written agreement, in form and substance
reasonably satisfactory to the Owner Trustee in its individual capacity, among
such transferee, its transferor and the Owner Trustee, which shall provide that
such transferee thereby becomes a party to, and beneficiary of, this Trust
Agreement and an Owner Participant for all purposes hereof and that such
transferee assumes all of the obligations of its transferor under this Trust
Agreement; and (ii) so long as the Lease shall be in effect or any Secured
Certificates remain unpaid, such transferee and its transferor shall have
complied with all of the terms of Section 8(n) of the Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its
individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in
the Trust Indenture.
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<PAGE> 3
"Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and deliver the
Operative Documents and any other agreements, instruments or documents to which
the Owner Trustee is a party in the respective forms thereof in which delivered
from time to time by the Owner Participant to the Owner Trustee for execution
and delivery and, subject to the terms hereof, to perform its duties and, upon
instructions from the Owner Participant, exercise its rights under said
Operative Documents in accordance with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participant, subject, however, to the
provisions of and the Lien created by the Trust Indenture and to the provisions
of the Lease.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees
for the benefit of the Owner Participant that it will, on the Delivery Date,
subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
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<PAGE> 4
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering the
Aircraft;
(d) execute and deliver the Trust Supplement covering the Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the Participation
Agreement;
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of the Owner
Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of
Sale; (ii) an application for registration of the Aircraft in the name of
the Owner Trustee (including without limitation an affidavit from the
Owner Trustee in compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement.
SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule II of the Participation Agreement
available to the Owner Trustee, in immediately available funds, in
accordance with Section 1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the Original Owner Participant
and the Owner Trustee.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE
AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified to
be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and
upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in
accordance with the provisions of such Section 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR
REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, in the event of a Replacement Airframe and Replacement
Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a
Replacement Engine being substituted pursuant to
-4-
<PAGE> 5
Section 10(b) of the Lease, subject to due compliance with the terms of Section
10(a) or 10(b) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees of Lessee) to accept
delivery of the Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement Airframe
and Replacement Engines, if any, or the Replacement Engine a bill of sale
or bills of sale (if tendered), and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 10(a) or (b) of the
Lease;
(c) in the case of a Replacement Airframe, make application to the
Federal Aviation Administration for the registration in the name of the
Owner Trustee of the Aircraft of which such Replacement Airframe is a
part;
(d) execute and deliver a Lease Supplement and a Trust Supplement
covering (i) the Aircraft of which such Replacement Airframe is part or
(ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe and
Engines or engines (if any) or the Engine or engine being replaced from
the lien created under the Trust Indenture and release the Purchase
Agreement and the Purchase Agreement Assignment (solely with respect to
such replaced Airframe and Engines, if any, or Engine) from the assignment
and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take such further
action as may be contemplated by clauses (A) and (B) of the third
paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of
Section 10(b) of the Lease, as the case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe or engine as the Airframe or Engine being replaced but for the
Event of Loss with respect to such Airframe or Engine.
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SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such engine
contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to an Engine to Lessee as contemplated by such Section 5(b);
and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement and the Purchase
Agreement Assignment (solely with respect to such Engine) from the
assignment and pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof, any
payment of the type referred to in Section 4.01(a) hereof (other than Excluded
Payments) received by the Owner Trustee, any payments received from the
Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents
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shall be applied and distributed in accordance with the terms of the Lease or
such other Operative Document; and third, the balance, if any, shall be paid to
the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be
distributed by the Owner Trustee to the Owner Participant in accordance with the
provisions of Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of the Owner Participant as the Owner
Participant may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will, if so requested by the
Owner Participant in writing, pay any or all amounts payable to the Owner
Participant pursuant to this Article IV either (i) by crediting such amount or
amounts to an account or accounts maintained by the Owner Participant with the
Owner Trustee in its individual capacity in immediately available funds, (ii) by
payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to the Owner Participant at such address as the Owner
Participant shall have designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall
have knowledge of a Lease Event of Default or Indenture Event of Default (or an
event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the Owner Participant prompt telephonic or telecopy notice
thereof followed by prompt confirmation thereof by certified mail, postage
prepaid, provided that (i) in the case of an event which with the passage of
time would constitute an Indenture Event of Default referred to in paragraph (c)
of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten (10) days after the Owner Trustee shall first have
knowledge of such event and (ii) in the case of a misrepresentation by the Owner
Trustee which with the passage of time would constitute an Indenture Event of
Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture,
such notice shall in no event be furnished later than ten (10) days after the
Owner Trustee shall first have knowledge of such event. Subject to the terms of
Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain
from taking such action, not
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inconsistent with the provisions of the Trust Indenture, with respect to such
Lease Event of Default, Indenture Event of Default or other event as the Owner
Trustee shall be directed in writing by the Owner Participant. If the Owner
Trustee shall not have received instructions as above provided within twenty
(20) days after the mailing of such notice to the Owner Participant, the Owner
Trustee until instructed otherwise in accordance with the preceding sentence
may, but shall be under no duty to, take or refrain from taking such action with
respect to such Lease Event of Default, Indenture Event of Default or other
event, not inconsistent with the provisions of the Trust Indenture, as it shall
deem advisable in the best interests of the Owner Participant. For all purposes
of this Trust Agreement, the Lease and the other Operative Documents, in the
absence of actual knowledge by an officer of FSBU in the Corporate Trust
Department, the Owner Trustee shall not be deemed to have knowledge of a Lease
Event of Default, Indenture Event of Default or other event referred to in this
Section 5.01 unless notified in writing by the Indenture Trustee, the Owner
Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of
Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of the Owner Participant, the Owner Trustee will take such of
the following actions, not inconsistent with the provisions of the Trust
Indenture, as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder or under any of the
Operative Documents to which the Owner Trustee is a party or in respect of all
or any part of the Trust Estate as shall be specified in such instructions
(including entering into agreements referred to in clause (i) of the definition
of "Subsequent Owner Participant"); (ii) take such action to preserve or protect
the Trust Estate (including the discharge of Liens) as may be specified in such
instructions; (iii) approve as satisfactory to it all matters required by the
terms of the Lease or the other Operative Documents to be satisfactory to the
Owner Trustee, it being understood that without written instructions of the
Owner Participant, the Owner Trustee shall not approve any such matter as
satisfactory to it (it being understood that the provisions of Sections 3.03,
3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for
the Owner Trustee to approve of or consent to the matters to be approved of or
consented to by the Owner Trustee in the sections of the Lease referred to in
Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee
under the Operative Documents, after the expiration or earlier termination of
the Lease, deliver the Aircraft to the Owner Participant in accordance with such
instructions, convey all of the Owner Trustee's right, title and interest in and
to the Aircraft for such amount, on such terms and to such purchaser or
purchasers as shall be designated in such instructions, or net lease the
Aircraft on such terms and to such lessee or lessees as shall be designated in
such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be
required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participant, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish
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such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
fees and disbursements of counsel or agents employed by the Owner Trustee in
connection therewith. The Owner Trustee shall not be required to take any action
under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is contrary
to the terms of any of the Operative Documents to which the Owner Trustee is a
party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with any of the Operative Documents to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Documents to which the Owner Trustee is a party, or (to the extent not
inconsistent with the provisions of the Trust Indenture) as expressly provided
by the terms hereof or in written instructions from the Owner Participant
received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or
obligations shall be read into this Trust Agreement against the Owner Trustee.
FSBU agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof) promptly take such action as may be necessary
to duly discharge and satisfy in full all Lessor Liens which it is required to
discharge pursuant to Section 8(h) of the Participation Agreement and otherwise
comply with the terms of said Section binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein
to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
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ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the
trusts hereby created and agrees to perform the same but only upon the terms
hereof applicable to it. The Owner Trustee also agrees to receive and disburse
all monies received by it constituting part of the Trust Estate upon the terms
hereof. FSBU shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof, (c) for
its or the Owner Trustee's failure to use ordinary care to disburse funds and
(d) for liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease
or in Section 8(c), 8(d) and 8(v) of the Participation Agreement.
SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and the
last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU
shall have any duty (i) to see to any recording or filing of any Operative
Document or of any supplement to any thereof or to see to the maintenance of any
such recording or filing or any other filing of reports with the Federal
Aviation Administration or other governmental agencies, except that FSBU, in its
individual capacity, shall comply with the reporting requirements set forth in
14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall,
to the extent that information for that purpose is supplied by Lessee pursuant
to any of the Operative Documents, complete and timely submit (and furnish the
Owner Participant with a copy of) any and all reports relating to the Aircraft
which may from time to time be required by the Federal Aviation Administration
or any government or governmental authority having jurisdiction, (ii) to see to
any insurance on the Aircraft or to effect or maintain any such insurance,
whether or not Lessee shall be in default with respect thereto, other than to
forward to the Owner Participant copies of all reports and other written
information which the Owner Trustee receives from Lessee pursuant to Section
11(c) of the Lease, (iii) to see to the payment or discharge of any tax,
assessment or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee under the Lease
or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN
MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, CONDITION, DESIGN, OPERATION,
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MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except
that FSBU in its individual capacity warrants that on the Delivery Date the
Owner Trustee shall have received whatever title was conveyed to it by Lessee
and that the Aircraft shall during the Term be free of Lessor Liens attributable
to it, or (b) any representation or warranty as to the validity, legality or
enforceability of this Trust Agreement or any Operative Document to which the
Owner Trustee is a party, or any other document or instrument, or as to the
correctness of any statement contained in any thereof except to the extent that
any such statement is expressly made herein or therein as a representation by
FSBU in its individual capacity or by the Owner Trustee and except that FSBU in
its individual capacity hereby represents and warrants that this Trust Agreement
has been, and (assuming due authorization, execution and delivery by the
Original Owner Participant of this Trust Agreement) the Operative Documents to
which it or the Owner Trustee is a party have been (or at the time of execution
and delivery of any such instrument by it or the Owner Trustee hereunder or
pursuant to the terms of the Participation Agreement that such an instrument
will be) duly executed and delivered by one of its officers who is or will be,
as the case may be, duly authorized to execute and deliver such instruments on
behalf of itself or the Owner Trustee, as the case may be.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except
as provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant or
Lessee mentioned herein or in any of the Operative Documents to which the Owner
Trustee is a party shall be sufficiently evidenced by written instruments signed
by a person purporting to be the chairman of the board, the president, any
executive vice president, any senior vice president or any vice president or a
managing director and in the name of the Owner Participant or Lessee, as the
case may be. The Owner Trustee may accept a copy of a resolution of the Board of
Directors or Executive Committee of Lessee, certified by the secretary or any
assistant secretary of Lessee as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president or
a managing director of Lessee, as to such fact or matter, and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it
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in good faith in reliance thereon. In the administration of trusts hereunder,
the Owner Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Trust Estate, consult with counsel, accountants and other
skilled persons to be selected and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons and the Owner Trustee shall not be liable for the negligence of
any such agent, attorney, counsel, accountant or other skilled person appointed
by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons, other
than the Owner Participant, as provided herein, having any claim against the
Owner Trustee by reason of the transactions contemplated hereby shall look only
to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03
or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not paid
by Lessee as contemplated by the last paragraph of Section 7(c) of the
Participation Agreement.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Participant shall be responsible for causing to
be prepared and filed all income tax returns required to be filed by the Owner
Participant. The Owner Trustee shall be responsible for causing to be prepared,
at the request and expense of the Owner Participant, all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns. The Owner Participant or the Owner Trustee, as the case
may be, upon request, will furnish the Owner Trustee or the Owner Participant,
as the case may be, with all such information as may be reasonably required from
the Owner Participant or the Owner Trustee, as the case may be, in connection
with the preparation of such income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The
Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnify, protect, save and keep harmless FSBU in its individual capacity and
its successors, assigns, legal representatives,
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agents and servants, from and against any and all liabilities, obligations,
losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its
individual capacity on or measured by any compensation received by FSBU in its
individual capacity for its services hereunder or in connection with the
transactions contemplated by the Operative Documents), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and
including without limitation any liability of an owner, any strict liability and
any liability without fault) of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against FSBU in its individual capacity
(whether or not also indemnified against by Lessee under the Lease or under the
Participation Agreement or also indemnified against by any other person but only
to the extent not otherwise paid or reimbursed by Lessee or such other person)
in any way relating to or arising out of this Trust Agreement or any of the
Operative Documents or the enforcement of any of the terms of any thereof, or in
any way relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust Estate
or the action or inaction of the Owner Trustee or FSBU in its individual
capacity hereunder, except (a) in the case of willful misconduct or gross
negligence on the part of the Owner Trustee or FSBU in its individual capacity
in the performance or non-performance of its duties hereunder or (b) those
resulting from the inaccuracy of any representation or warranty of FSBU in its
individual capacity (or from the failure of FSBU in its individual capacity to
perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its individual
capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in
the case of the failure to use ordinary care on the part of the Owner Trustee or
FSBU in its individual capacity in the disbursement of funds. The indemnities
contained in this Section 7.01 extend to FSBU only in its individual capacity
and shall not be construed as indemnities of the Trust Indenture Estate or the
Trust Estate (except to the extent, if any, that FSBU in its individual capacity
has been reimbursed by the Trust Indenture Estate or the Trust Estate for
amounts covered by the indemnities contained in this Section 7.01). The
indemnities contained in this Section 7.01 shall survive the termination of this
Trust Agreement. In addition, if necessary, FSBU in its individual capacity
shall be entitled to indemnification from the Trust Estate, subject to the Lien
of the Trust Indenture, for any liability, obligation, loss, damage, penalty,
tax, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same FSBU in its individual
capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust
Indenture, which shall be prior to any interest therein of the Owner
Participant. The payor of any indemnity under this Article VII shall be
subrogated to any right of the person indemnified in respect of the matter as to
which such indemnity was paid.
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ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n)
of the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to the Owner Participant, the
Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such resignation to
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b) hereof. In addition, the Owner Participant may at any time
remove the Owner Trustee without cause by a notice in writing delivered to the
Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture
has not been fully discharged) and Lessee (so long as the Lease is in effect),
such removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or
removal of the Owner Trustee, the Owner Participant may appoint a successor
Owner Trustee by an instrument signed by the Owner Participant. If a successor
Owner Trustee shall not have been appointed within thirty (30) days after such
notice of resignation or removal, the Owner Trustee, the Owner Participant,
Lessee or the Indenture Trustee may apply to any court of competent jurisdiction
to appoint a successor Owner Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Owner Participant an instrument accepting such appointment, and
thereupon such successor Owner Trustee, without further act, shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named the Owner Trustee herein; but nevertheless, upon the written
request of such successor Owner Trustee, such
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predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee will execute such documents as are provided to it by such successor
Owner Trustee and will take such further actions as are requested of it by such
successor Owner Trustee as are reasonably required to cause registration of the
Aircraft included in the Trust Estate to be transferred upon the records of the
Federal Aviation Administration, or other governmental authority having
jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without
further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee
shall have been directed to do so by the Owner Participant, the Owner Trustee
and the Owner Participant shall execute and deliver an agreement supplemental
hereto and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons (any and all of
which shall be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement) approved by the Owner
Trustee and the Owner Participant, either to act as co-trustee, jointly with the
Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or
separate trustee being herein sometimes referred to as an "ADDITIONAL trustee").
In the event an Indenture Event of Default not arising from a Lease Event of
Default shall occur and be continuing, the Owner Trustee may act under the
foregoing provisions of this Section 9.02 without the concurrence of the Owner
Participant; and the Owner Participant hereby appoints the Owner Trustee its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
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(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee unless such additional trustee was
appointed by the Owner Trustee without the concurrence of the Owner
Participant during the occurrence of an Indenture Event of Default not
arising from a Lease Event of Default, in which case the Owner Trustee
shall have the power to remove any such additional trustee without the
concurrence of the Owner Participant, and the Owner Participant hereby
appoints the Owner Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of, the Trust Indenture or affect the interests of
the Indenture Trustee or the holders of the Secured Certificates in the
Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Owner Participant. Subject to Section 10.02 hereof and the first sentence of
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other
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modification of this Trust Agreement or of any other Operative Document to which
the Owner Trustee is a party which it is requested to execute by the Owner
Participant, except that the Owner Trustee shall not execute any such amendment,
supplement or other modification which, by the express provisions of any of the
above documents, requires the consent of any other party unless such consent
shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A
signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each
holder of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid,
a conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST
SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01
hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and
Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement
and the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or
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proceeds constituting part of the Trust Estate in accordance with Article IV
hereof, provided that at such time Lessee shall have fully complied with all of
the terms of the Lease and the Participation Agreement or (b) twenty-one years
less one day after the death of the last survivor of all of the descendants of
the grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto; otherwise this Trust
Agreement and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE.
The Owner Participant shall not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY.
Except for the terms of Section 8(n) of the Participation Agreement incorporated
in Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing herein, whether expressed or implied, shall be construed to give
any Person other than the Owner Trustee and the Owner Participant any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement;
but this Trust Agreement shall be held to be for the sole and exclusive benefit
of the Owner Trustee and the Owner Participant.
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) 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
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this Section
11.05(a). Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section 11.05(a), notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee,
the Loan Participants, the Indenture Trustee or the Owner Participant, to the
respective addresses set forth below the signatures of such parties on the
signature page of the Participation Agreement, or (B) if to a Subsequent Owner
Participant, addressed to such Subsequent Owner Participant at such address as
such
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Subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the secured certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that the Participation Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of any
thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
SECTION 11.08. COUNTERPARTS. This Trust 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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII hereof, its assigns. Any
request, notice, direction, consent, waiver or other instrument or action by the
Owner Participant shall bind its successors and assigns. Any Owner Participant
which shall cease to have any Ownership Interest shall thereupon cease to be a
party hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
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SECTION 11.10. HEADINGS; REFERENCES. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
BY ___________________________________
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
BY ___________________________________
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 A]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW
1996 A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY
BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 A] dated as of
February 27, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered
into the Trust Agreement and Indenture Supplement [NW 1996 A] (the "SUPPLEMENT")
dated February 29, 1996 to the Original Indenture, (iii) the Original Indenture
and the Supplement were recorded by the Federal Aviation Administration on March
1, 1996 and were assigned Conveyance No. P05935 and (iv) the Lease Agreement [NW
1996 A] dated as of even date with the Original Indenture between the Owner
Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 A] were recorded by
the Federal Aviation Administration on March 1, 1996 and were assigned
Conveyance No. P05934 and (v) pursuant to the Original Indenture, the Owner
Trustee issued and sold to the Loan Participants Secured Certificates (as
defined in the Original Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participant pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
<PAGE> 2
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines and
all replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire title as provided herein and in the Lease), all
as more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the lien of this
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable
by Lessee to the Owner Trustee under the Participation Agreement and all rights
of the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture
Estate all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee delivered to the Indenture Trustee the original executed
counterpart of the Lease and the Lease Supplement No. 1 (to each of which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, and the Purchase Agreement Assignment with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, and its successors and assigns, in trust for the
benefit and security of the Certificate Holders, except as provided in Section
2.15 and Article III hereof without any preference, distinction or priority of
any one Secured Certificate over any other by reason of priority of time of
issue, sale, negotiation, date of maturity thereof or otherwise for any reason
whatsoever, and for the uses and purposes and in all cases and as to all
property specified in paragraphs (1) through (8) inclusive above, subject to the
terms and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to any of the Indenture Agreements to which
it is a party, or, except as herein expressly provided, to make any payment, or
to make any inquiry as to the nature or sufficiency of any payment received by
it, or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
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The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, granted for good
and valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement any amounts distributed to it by the Indenture Trustee under this
Trust Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any
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<PAGE> 6
recording, filing, refiling or re-recording of any documents or instruments in
regard to maintaining the perfection of the security interests created
hereunder, in the Trust Indenture Estate or any security interest that may be
claimed to have been created by the Lease or the ownership interest of the Owner
Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants and agrees that it will not assign
or pledge, so long as the assignment hereunder shall remain in effect, and the
Lien hereof shall not have been released pursuant to Section 10.01 hereof, any
of its right, title or interest hereby assigned, to anyone other than the
Indenture Trustee and its predecessor(s) in this transaction, and that it will
not, except as otherwise provided in this Trust Indenture and except with
respect to Excluded Payments to which it is entitled, (i) accept any payment
from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any
payment of Rent (other than Excluded Payments),
including Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease prior to
the date for the payment thereof provided for by the
Lease or assign, transfer or hypothecate (other than
to the Indenture Trustee hereunder) any payment of
Rent, including Interim Rent, Basic Rent, Stipulated
Loss Value, Termination Value or any other payment to
be made pursuant to Section 9 or 10 of the Lease, then
due or to accrue in the future under the Lease in
respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor owner
trustee, sell, mortgage, transfer, assign or
hypothecate (other than to the Indenture Trustee
hereunder) its interest in the Airframe and Engines or
any part thereof or in any amount to be received by it
from the use or disposition of the Airframe and
Engines, other than amounts distributed to it pursuant
to Article III hereof.
It is hereby further agreed that any and all property described
or referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the
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Indenture Trustee, become and be subject to the Lien herein granted as fully and
completely as though specifically described herein, but nothing contained in
this paragraph shall be deemed to modify or change the obligations of the Owner
Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and
does hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number
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of days from and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid principal
amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in
Section 22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of
one or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of the Owner Trustee located at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or
such other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest Rate" in
Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments).
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
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"Event of Default" shall have the meaning specified in Section
4.02 hereof.
"Excess Amount" shall have the meaning specified in Section
2.03(b) hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease plus
all reasonable expenses incurred by the Owner Trustee and the Owner Participant
in connection with such assumption, as applicable, (vii) any payment of the
foregoing under the Guarantee, (viii) interest accrued on any of the above, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b) of
the Trust Indenture or (ii) the Indenture Trustee has taken action or notified
Owner Trustee that it intends to take action to
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foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy under the Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 A],
dated as of February 27, 1996, entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of the Original Trust Indenture, as
said Lease Agreement has been, or may from time to time be, supplemented or
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of this Indenture. The term "Lease" shall also
include each Lease Supplement from time to time entered into pursuant to the
terms of the Lease.
"Lease Default" shall mean a "Default" as defined in the Lease.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation Agreement,
the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than a majority
in aggregate unpaid Principal Amount of all Secured Certificates outstanding as
of such date (excluding any Secured Certificates held by the Owner Trustee or
the Owner Participant or any interests of the Owner Participant therein by
reason of subrogation pursuant to Section 4.03 hereof (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment banker
selected by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of such
Secured Certificate computed by discounting each such payment on a semiannual
basis from its respective Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield (plus, in the case of
Series C Secured Certificates, 75 basis points) exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "TREASURY YIELD" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and,
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in the case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Secured Certificate and trading in the public securities market either
as determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in the
public securities markets, (A) one maturing as close as possible to, but earlier
than, the Average Life Date of such Secured Certificate and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such
Secured Certificate, in each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Secured Certificate is reported on the
most recent H.15(519), such weekly average yield to maturity as published in
such H.15(519). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable redemption date and the "MOST
RECENT H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [
], so long as such party shall have any interest in the Trust
Estate, and transferees thereof as permitted by Section 8 of the Participation
Agreement.
"PA Amendment No. 1" shall mean the First Amendment to
Participation Agreement [NW 1996 A], dated as of the Closing Date, among Lessee,
the Owner Trustee, the Pass Through Trustee, the Owner Participant, the
Subordination Agent and State Street Bank and Trust Company, in its individual
capacity and as Indenture Trustee.
"Participants" shall mean and include the Loan Participants and
the Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1996 A], dated as of February 27, 1996, among the Owner Trustee,
the Indenture Trustee, Lessee and the Participants, as amended by the PA
Amendment No. 1, as the same may from time to time be supplemented or further
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
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<PAGE> 12
"Payment Date" shall mean each January 2 and July 2, commencing
on January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in accordance
with the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee,
a responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Holder" shall have the meaning specified in Section
2.15(c) hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
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"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a
supplement to the Trust Agreement and to this Indenture, in substantially the
form of Exhibit A hereto, which shall particularly describe the Aircraft, and
any Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust
Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this
Amended and Restated Trust Indenture and Security Agreement [NW 1996 A] as it
may from time to time be supplemented or amended as herein provided, including
supplementing by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties referred to in
the Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of
this Trust Indenture the terms used but not defined herein are used as defined
in the Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
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FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 A] DATED AS OF FEBRUARY 27, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N537US.
No.____ Date:[______,__]
$_______________
INTEREST RATE MATURITY DATE
[________]
[______,______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 A], dated as of
February 27, 1996, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the
Amended and Restated Trust Indenture and Security Agreement [NW 1996 A], dated
as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust
Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented
from time to time. All other
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<PAGE> 15
capitalized terms used in this Secured Certificate and not defined herein shall
have the respective meanings assigned in the Trust Indenture.
This Secured Certificate shall bear interest, payable on
demand, at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest and any other amounts payable hereunder which are overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount,
if any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for
the purpose of registering transfers and exchanges of Secured Certificates at
the Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at the
Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the
Trust Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Secured Certificate, except
that in the case of any final payment with respect to this Secured Certificate,
the Secured Certificate shall be surrendered promptly thereafter by the
Indenture Trustee to the Owner Trustee for cancellation.
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<PAGE> 16
The holder hereof, by its acceptance of this Secured
Certificate, agrees that, except as provided in the Trust Indenture, each
payment received by it hereunder shall be applied, first, to the payment
of accrued interest on this Secured Certificate (as well as any interest on any
overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, second, to the payment of the Principal Amount
of this Secured Certificate then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the
payment of Principal Amount of this Secured Certificate remaining unpaid in the
inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided
in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to
the extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect
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<PAGE> 17
of [Series A Secured Certificates](1) [Series A and Series B Secured
Certificates](2), and this Secured Certificate is issued subject to such
provisions. The Certificate Holder of this Secured Certificate, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Indenture Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for
such purpose.]**
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Secured Certificate shall not be entitled to any benefit under the Trust
Indenture or be valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ---------------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 18
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By
----------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST
COMPANY,
as Indenture Trustee
By
----------------------------------
Name:
Title:
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<PAGE> 19
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series A, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a
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<PAGE> 20
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity
Facility except to the extent included in Net Interest and Related Charges, and
(c) any and all amounts received by the Owner Trustee which are payable by
Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used
in this Section, "Owner Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or
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Equipment Note means a default in the payment of principal thereof or interest
thereon other than a default in the payment of principal or interest on a Series
D Equipment Note which has not been cured other than solely because of
acceleration. The following terms are used in this Section as defined in the
Intercreditor Agreement without regard to any amendment, modification or
supplement thereto after the Closing Date: Cash Collateral Account, Equipment
Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and
Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Certificate Holders
under this Trust Indenture, each Certificate Holder, by its acceptance of a
Secured Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained
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in this Trust Indenture and any agreement referred to herein other than the
Trust Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies which can be exercised and enforced against the Trust
Estate; therefore, anything contained in this Trust Indenture or such other
agreements to the contrary notwithstanding (except for any express provisions or
representations that the Owner Trustee is responsible for, or is making, in its
individual capacity, for which there would be personal liability of the Owner
Trustee), no recourse shall be had with respect to this Trust Indenture or such
other agreements against the Owner Trustee in its individual capacity or against
any institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to sue the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
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(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee, directly or indirectly (other than the recourse liability
of the Owner Trustee (in its individual capacity), to make payment on account of
any amount payable as principal, Make-Whole Amount, if any, interest or other
amounts on the Secured Certificates or under this Indenture and (iii) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if
any, and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account
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of such holder maintained at such bank. If the Indenture Trustee shall fail to
make any such payment as provided in the immediately preceding sentence after
its receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate such holders for loss of use of funds at the Debt Rate until such
payment is made and the Indenture Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any Secured Certificate,
except that, in the case of the final payment in respect of any Secured
Certificate, such Secured Certificate shall be surrendered to the Indenture
Trustee for cancellation promptly after such payment. Notwithstanding any other
provision of this Trust Indenture to the contrary, the Indenture Trustee shall
not be required to make, or cause to be made, wire transfers as aforesaid prior
to the first Business Day on which it is practicable for the Indenture Trustee
to do so in view of the time of day when the funds to be so transferred were
received by it if such funds were received after 12:00 noon, New York City time,
at the place of payment. Prior to the due presentment for registration of
transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee
shall deem and treat the Person in whose name any Secured Certificate is
registered on the Secured Certificate Register as the absolute owner and holder
of such Secured Certificate for the purpose of receiving payment of all amounts
payable with respect to such Secured Certificate and for all other purposes, and
none of the Owner Trustee or the Indenture Trustee shall be affected by any
notice to the contrary. So long as any signatory to the Participation Agreement
or nominee thereof shall be a registered Certificate Holder, all payments to it
shall be made to the account of such Certificate Holder specified in Schedule I
thereto and otherwise in the manner provided in or pursuant to the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) unless it shall have specified some other account or manner of
payment by notice to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
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If a Certificate Holder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Secured Certificate(s) held by
such holder is made (but prior to the making of such payment), or in either of
the two preceding calendar years, and has not notified the Indenture Trustee of
the withdrawal or inaccuracy of such form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate), the Indenture Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of
Principal Amount, Make-Whole Amount, if any, and interest or other amounts due
thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
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Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE
ESTATE.
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture Estate when and
if the Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates
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which the Certificate Holder making the exchange is entitled to receive. All
Secured Certificates issued upon any registration of transfer or exchange of
Secured Certificates (whether under this Section 2.07 or under Section 2.08
hereof or otherwise under this Trust Indenture) shall be the valid obligations
of the Owner Trustee evidencing the same respective obligations, and entitled to
the same security and benefits under this Trust Indenture, as the Secured
Certificates surrendered upon such registration of transfer or exchange. Every
Secured Certificate presented or surrendered for registration of transfer, shall
(if so required by the Indenture Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by the Certificate Holder or such holder's attorney duly
authorized in writing, and the Indenture Trustee shall require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act, and the securities Laws of any applicable state. The Indenture Trustee
shall make a notation on each new Secured Certificate of the amount of all
payments of Principal Amount previously made on the old Secured Certificate or
Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff),
10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and
warranted (except as provided above), and covenanted, to the parties to the
Participation Agreement as to the matters represented, warranted and covenanted
by the original Loan Participant in the Participation Agreement. Subject to
compliance by the Certificate Holder and its transferee (if any) of the
requirements set forth in this Section 2.07, the Indenture Trustee and the Owner
Trustee shall use all reasonable efforts to issue new Secured Certificates upon
transfer or exchange within 10 Business Days of the date a Secured Certificate
is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed,
lost or stolen, the Owner Trustee shall, upon the written request of the holder
of such Secured Certificate, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new
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Secured Certificate, payable in the same Principal Amount dated the same date
and captioned as issued in connection with the Aircraft. If the Secured
Certificate being replaced has become mutilated, such Secured Certificate shall
be surrendered to the Indenture Trustee and a photocopy thereof shall be
furnished to the Owner Trustee. If the Secured Certificate being replaced has
been destroyed, lost or stolen, the holder of such Secured Certificate shall
furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee
such security or indemnity as may be required by them to save the Owner Trustee,
the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Owner Trustee, the Owner Participant and the Indenture
Trustee of the destruction, loss or theft of such Secured Certificate and of the
ownership thereof. If a "qualified institutional buyer" of the type referred to
in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such destroyed, lost or stolen Secured
Certificate, then the written indemnity of such QIB, signed by an authorized
officer thereof, in favor of, delivered to and in form reasonably satisfactory
to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee
shall be accepted as satisfactory indemnity and security and no further
indemnity or security shall be required as a condition to the execution and
delivery of such new Secured Certificate. Subject to compliance by the
Certificate Holder of the requirements set forth in this Section 2.08, the
Indenture Trustee and the Owner Trustee shall use all reasonable efforts to
issue new Secured Certificates within 10 Business Days of the date of the
written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for
any registration of transfer or exchange of Secured Certificates, but the
Indenture Trustee, as Secured Certificate Registrar, may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
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(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the
Owner Trustee in connection with a transaction described in, and subject to the
terms and conditions of, Section 17 of the Participation Agreement upon at least
30 days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
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(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Secured
Certificates then outstanding shall cease to bear interest. Upon surrender of
any such Secured Certificate for redemption or purchase in accordance with said
notice, such Secured Certificate shall be redeemed at the redemption price. If
any Secured Certificate called for redemption or purchase shall not be so paid
upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable redemption date at the
interest rate in effect for such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation
Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall
assume (on a full recourse basis) all of the obligations of the Owner Trustee
hereunder, under the Secured Certificates and all other Operative Documents by
supplemental indenture satisfactory to the Indenture Trustee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and
12 of the Lease and (ii) other provisions necessary or advisable to effectuate
such assumption), then upon delivery of such supplemental indenture, payment by
Lessee of all expenses (including reasonable fees and expenses of counsel) for
the Owner Trustee and the Owner Participant, delivery by the Guarantor of a
guarantee of the Secured Certificates and other amounts owing to the Certificate
Holders substantially in the form of the Guarantee, and delivery of an opinion
of counsel for Lessee that such assumption has been duly and validly effected,
the Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon the
events and subject to the terms and conditions and for the price set forth in
this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon
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receipt of such price, sell, assign, transfer and convey to such purchaser or
its nominee (without recourse or warranty of any kind except as to its title to
the Secured Certificates and except against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Trust Indenture Estate, this Trust
Indenture and the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant upon any of the
following events, and, in any such event, the purchase price thereof shall equal
for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus
accrued and unpaid interest thereon to the date of purchase and all other
amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Participation Agreement to the
holder thereof. Such option to purchase the Secured Certificates may be
exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall
have occurred and be continuing a Lease Event of Default, provided that if such
option is exercised pursuant to this clause (ii) at a time when there shall have
occurred and be continuing for less than 120 days a Lease Event of Default, the
purchase price thereof shall equal the price provided in the preceding sentence
plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant giving written notice of
its election of such option to the Indenture Trustee, which notice shall specify
a date for such purchase not more than 30 days or less than 15 days after the
date of such notice. The Indenture Trustee shall not exercise any of the
remedies hereunder or, without the consent of the Owner Trustee or the Owner
Participant, under the Lease, during the period from the time that a notice of
exercise by the Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur pursuant to the terms
of the preceding sentence. Such election to purchase the Secured Certificates
shall become irrevocable upon the sixteenth day preceding the date specified in
the written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Certificate Holders will comply with
all the provisions of Section 2.07 to enable new Secured Certificates to be
issued to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured
Certificates of any Series, each Certificate Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of
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such Series, including any payment or distribution of cash, property or
securities after the commencement of a proceeding of the type referred to in
Section 4.02(g) hereof, except as expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER"
shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A
Secured Certificates shall be distributed to the
Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion that
the amount of such payment or payments then due under
each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all
Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of
such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
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and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the
Certificate Holders of Series B ratably, without
priority of one over the other, in the proportion that
the amount of such payment or payments then due under
each Series B Secured Certificate bears to the
aggregate amount of the payments then due under all
Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the
Certificate Holders of Series C ratably, without
priority of one over the other, in the proportion that
the amount of such payment or payments then due under
each Series C Secured Certificate bears to the
aggregate amount of the payments then due under all
Series C Secured Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee as
part of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever of
the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which
event such balance shall be distributed as provided in
this clause "Second" without reference to this
proviso, (ii) Section 3.03 hereof shall be applicable,
in which event such balance shall be distributed in
accordance with the provisions of such Section 3.03,
or (iii) the 120th day after the receipt of such
payment in which case such payment shall be
distributed as provided in this clause "Second"
without reference to this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY
TERMINATION; REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee (i) with respect to the Aircraft as
the result of an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all
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other amounts payable hereunder or to the Indenture Trustee or any Certificate
Holder under the Participation Agreement by applying such funds in the following
order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in
connection with such redemption for which they are entitled to
reimbursement, or indemnity by Lessee, under the Operative
Documents and then (b) to pay any other amounts then due to the
Indenture Trustee and the Certificate Holders under this Trust
Indenture, the Participation Agreement or the Secured
Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the
Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third"
of Section 3.03 hereof plus Make-Whole Amount, if any,
then due and payable in respect of the Series B
Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount,
if any, then due and payable in respect of the Series
C Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 15 of the Lease or Article IV hereof) after
both an Event of Default shall have occurred and be continuing and the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b)
hereof, as well as all payments or amounts then held by the Indenture Trustee as
part of the Trust
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Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other
loss (including, without limitation, all amounts to be expended
at the expense of, or charged upon the tolls, rents, revenues,
issues, products and profits of, the property included in the
Trust Indenture Estate (all such property being herein called
the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof)
incurred by the Indenture Trustee (to the extent not previously
reimbursed), the expenses of any sale, taking or other
proceeding, reasonable attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or
advances made by the Indenture Trustee or the Certificate
Holders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the
Indenture Trustee or any Certificate Holder, liquidated or
otherwise, upon such Event of Default shall be applied by the
Indenture Trustee as between itself and the Certificate Holders
in reimbursement of such expenses and any other expenses for
which the Indenture Trustee or the Certificate Holders are
entitled to reimbursement under any Operative Document and in
the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid, then ratably, without
priority of one over the other, in proportion to the amounts
owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate
Holders for payments made pursuant to Section 5.03 hereof (to
the extent not previously reimbursed) shall be distributed to
such then existing or prior Certificate Holders ratably,
without priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Certificate Holder pursuant to said Section
5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid
Principal Amount of all Series A Secured Certificates,
and the accrued but unpaid interest and other amounts
due thereon and all other Secured Obligations in
respect of the Series A Secured Certificates to the
date of distribution, shall be distributed to the
Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date
of distribution, bears to the aggregate unpaid
Principal Amount of all Series
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A Secured Certificates held by all such holders plus
the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series B Secured Certificates, and the
accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations in respect
of the Series B Secured Certificates to the date of
distribution, shall be distributed to the Certificate
Holders of Series B, and in case the aggregate amount
so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series B
Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution,
bears to the aggregate unpaid Principal Amount of all
Series B Secured Certificates held by all such holders
plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much
of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series C Secured Certificates, and the
accrued but unpaid interest and other amounts due
thereon and all other Secured Obligations in respect
of the Series C Secured Certificates to the date of
distribution, shall be distributed to the Certificate
Holders of Series C, and in case the aggregate amount
so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series C
Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution,
bears to the aggregate unpaid Principal Amount of all
Series C Secured Certificates held by all such holders
plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is
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made in the Lease, the Participation Agreement or any other Operative Document
shall be applied forthwith to the purpose for which such payment was made in
accordance with the terms of the Lease, the Participation Agreement or such
other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt
any indemnity payment received by it from the Owner Trustee or Lessee in respect
of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to
the contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
FIRST, to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated
to indemnify against thereunder, in the manner provided in
clause "First" of Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03
hereof.
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Further, and except as otherwise provided in Sections 3.02,
3.03 and 3.04 hereof, all payments received and amounts
realized by the Indenture Trustee under the Lease or otherwise
with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft
after the termination of the Lease with respect thereto), to
the extent received or realized at any time after payment in
full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of
priority specified in clause (ii) of the immediately preceding
sentence of this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to
the Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee.
The Owner Trustee hereby covenants and agrees (the covenants
and agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Secured Certificates and hereunder in
accordance with the terms of the Secured
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Certificates and this Trust Indenture and all amounts, if any, payable
by it to the Certificate Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge
of an Event of Default, a Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Event of Default,
Default or Event of Loss to the Indenture Trustee, each Certificate
Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each report
or notice received pursuant to Section 9(a) and 11(c) of the Lease to
the extent that the same shall not have been furnished to the Indenture
Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the
consent of the Indenture Trustee (acting pursuant to instructions given
in accordance with Section 9.01 hereof), the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever
the reason for such Event of Default and whether such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
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(a) any Lease Event of Default (provided that any such Lease
Event of Default caused solely by a failure of Lessee to pay to the
Owner Trustee or the Owner Participant when due any amount that is
included in the definition of Excluded Payments shall not constitute an
Event of Default unless notice is given by the Owner Trustee to the
Indenture Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, interest on, Make-Whole Amount, if any,
or other amount due and payable under any Secured Certificate or
hereunder (other than any such failure arising by virtue of a tax
withheld pursuant to Section 2.04(b) hereof or as a result of a Lease
Event of Default or a Lease Default) and such failure shall have
continued unremedied for ten Business Days in the case of any payment
of Principal Amount or interest or Make-Whole Amount, if any, thereon
and, in the case of any other amount, for ten Business Days after the
Owner Trustee or the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in
its individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the
Participation Agreement, or by the Owner Participant pursuant to
Section 8(h) of the Participation Agreement shall remain undischarged
for a period of 30 days after the Owner Trustee and the Owner
Participant shall have received written notice from the Indenture
Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee herein, in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) or in any certificate furnished by the Owner Participant or
the Owner Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any
failure by the Owner Trustee or Owner Participant to observe or perform
any other covenant or obligation of the Owner Trustee or Owner
Participant, as the case may be, for the benefit of the Indenture
Trustee or the Certificate Holders contained in the Participation
Agreement, Section 4.01(a) of the Trust Agreement, the Secured
Certificates or this
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Trust Indenture which is not remedied within a period of 60 days after
notice thereof has been given to the Owner Trustee and the Owner
Participant; or
(f) if at any time when the Aircraft is registered under the
laws of the United States, the Owner Participant shall not be a Citizen
of the United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f) unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary
case or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
a final non-appealable order, judgment or decree shall be entered in
such case or proceeding by a court or a trustee, custodian, receiver or
liquidator, to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g).
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the
Owner Trustee and the Owner Participant prompt written notice of any Event of
Default of which the Indenture
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Trustee has Actual Knowledge and, if any such Event of Default results from a
Lease Event of Default, shall give the Certificate Holders, the Owner Trustee
and the Owner Participant not less than ten Business Days' prior written notice
of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may
commence and consummate the exercise of any remedy or remedies described in
Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies
pursuant to the provisions of Section 15 of the Lease. If an Event of Default
shall have occurred and be continuing, the Owner Trustee shall have the
following rights hereunder, any of which may be exercised directly by the Owner
Participant.
If as a result of the occurrence of an Event of Default in
respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the
Lease, the Indenture Trustee shall have insufficient funds to make any payment
of Principal Amount and interest on any Secured Certificate on the day it
becomes due and payable, the Owner Trustee or the Owner Participant may, but
shall not be obligated to, pay the Indenture Trustee prior to the Enforcement
Date, in the manner provided in Section 2.04 hereof, for application in
accordance with Section 3.01 hereof, an amount equal to the portion of the
Principal Amount and interest (including interest, if any, on any overdue
payments of such portion of Principal Amount and interest) then due and payable
on the Secured Certificates, and, unless the Owner Trustee has cured Events of
Default in respect of payments of Basic Rent on each of the three immediately
preceding Basic Rent payment dates, or on the Commencement Date and each of the
two immediately succeeding Basic Rent payment dates in respect of payment of
Interim Rent, or the Owner Trustee has cured six previous Events of Default in
respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would otherwise have arisen on account of the nonpayment
by Lessee of such installment of Interim Rent or Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has
occurred, the Owner Trustee or the Owner Participant may, but shall not be
obligated to, cure such Event of Default prior to the Enforcement Date as is
necessary to accomplish the observance or performance of the defaulted covenant,
condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Interim Rent or Basic Rent which was overdue at the time of such
payment and interest payable by Lessee on account of its being overdue and any
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Supplemental Rent in respect of the reimbursement of amounts paid by Owner
Trustee pursuant to the immediately preceding paragraph (but in either case
shall have no rights as a secured party hereunder), and thereafter, the Owner
Trustee or the Owner Participant, as the case may be, shall be entitled to
receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the
case may be, and interest thereon upon receipt thereof by the Indenture Trustee
(and shall be entitled to bring an action against Lessee to enforce such
payment); provided, however, that (i) if the Principal Amount and interest on
the Secured Certificates shall have become due and payable pursuant to Section
4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest
on, Make-Whole Amount, if any, and all other amounts due with respect to all
Secured Certificates shall have been paid in full, be subordinate to the rights
of the Indenture Trustee and the Certificate Holders in respect of such payment
of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and
(ii) the Owner Trustee shall not be entitled to seek to recover any such payment
(or any payment in lieu thereof) except pursuant to the foregoing right of
subrogation by demand or suit for damages.
SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an
Event of Default shall have occurred and be continuing and so long as the same
shall continue unremedied, then and in every such case the Indenture Trustee
may, subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Indenture Trustee shall not be entitled to exercise any
remedy hereunder as a result of an Event of Default which arises solely by
reason of one or more events or circumstances which constitute a Lease Event of
Default unless the Indenture Trustee as security assignee of the Owner Trustee
shall have exercised or concurrently be exercising one or more of the remedies
provided for in Section 15 of the Lease to terminate the Lease or take
possession and/or sell the Aircraft; provided, however, that such requirement to
exercise one or more of such remedies under the Lease shall not apply in
circumstances where the Indenture Trustee is, and has been, for a continuous
period in excess of 60 days or such other period as may be specified in Section
1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being
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the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law
or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY
PERIOD"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Indenture
Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person. In the event that the applicability of Section
1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in
judicial proceedings, so long as the Indenture Trustee fails to participate in
such proceedings, the Owner Trustee shall have the right (without affecting in
any way any rights or remedy of the Indenture Trustee hereunder) to participate
in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Indenture Trustee may (and shall,
upon receipt of a written demand therefor from a Majority in Interest of
Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery
of written notice or notices to the Owner Trustee and the Owner Participant,
declare all the Secured Certificates to be due and payable, whereupon the unpaid
Principal Amount of all Secured Certificates then outstanding, together with
accrued but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition
that, if at any time after the Principal Amount of the Secured Certificates
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Secured Certificates and all other amounts payable
under the Secured Certificates (except the Principal Amount of the Secured
Certificates which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Certificate Holders may (but shall not
be obligated to), by written instrument filed with the
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Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to credit against any
purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Trust Indenture (but only to the extent that such purchase price would have been
paid to such Certificate Holder pursuant to Article III hereof if such purchase
price were paid in cash and the foregoing provisions of this subsection (c) were
not given effect).
(d) In the event of any sale of the Trust Indenture Estate, or
any part thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Trust Indenture,
the unpaid Principal Amount of all Secured Certificates then outstanding,
together with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be
continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the
Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Mortgaged Property included in the Trust
Indenture Estate to which the Indenture Trustee shall at the time be entitled
hereunder. If the Owner Trustee shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee hereby specifically consents to the fullest
extent permitted by applicable law, and (ii) pursue all or part of such
Mortgaged Property wherever it may be found and, in the event that a Lease Event
of Default has occurred and is continuing, may enter any of the premises of
Lessee wherever such Mortgaged Property may be or be supposed to be and search
for such Mortgaged Property and take possession of and remove such
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Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee
may, from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Trust Indenture shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of the Owner Trustee or Lessee or to be an acquiescence
therein.
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SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Indenture Trustee, then and in every such case the Owner Trustee, the
Indenture Trustee and Lessee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Mortgaged Property, and all rights, remedies and powers of the
Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such
proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of
Certificate Holders, the Indenture Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such Default shall cease
to exist and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Trust Indenture, but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon;
provided, that in the absence of written instructions from all the Certificate
Holders, the Indenture Trustee shall not waive any Default (i) in the payment of
the Principal Amount, Make-Whole Amount, if any, and interest and other amounts
due under any Secured Certificate then outstanding, or (ii) in respect of a
covenant or provision hereof which, under Article IX hereof, cannot be modified
or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee thereof) for all or any part of the Mortgaged Property,
whether such receivership be incidental to a proposed sale of the Mortgaged
Property or the taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Mortgaged
Property shall be entitled to exercise all the rights and powers of the
Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC..
The Owner Trustee irrevocably appoints the Indenture Trustee
the true and lawful attorney-in-fact of the Owner Trustee in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the
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Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering to
the Indenture Trustee or such purchaser all bills of sale, assignments, releases
and other proper instruments to effect such ratification and confirmation as may
be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture,
the right of any Certificate Holder to receive payment of principal of, and
premium, if any, and interest on a Secured Certificate on or after the
respective due dates expressed in such Secured Certificate, or to bring suit for
the enforcement of any such payment on or after such respective dates in
accordance with the terms hereof, shall not be impaired or affected without the
consent of such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay Rent, the
Indenture Trustee shall give prompt written notice thereof to the Owner Trustee,
the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms
of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture
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Trustee, which failure shall constitute knowledge of a Default) unless notified
in writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Certificate Holders, the Indenture Trustee
shall, subject to the terms of this Section 5.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee;
provided, that anything contained in this Trust Indenture, the Lease or
the other Operative Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or to give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the
rights referred to in this clause (1) shall not be deemed to include
the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at
law or in equity, to enforce payment by Lessee or the Guarantor of such
amounts included in Excluded Payments or performance by Lessee or the
Guarantor of such insurance covenant, or to recover damages for the
breach thereof or for specific performance of any covenant of Lessee or
the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event
shall have occurred and be continuing and except as provided in clause
(4) below, the Indenture Trustee shall not, without the consent of the
Owner Trustee, which consent shall not be withheld if no right or
interest of the Owner Trustee or the Owner Participant shall be
diminished or impaired thereby, (i) enter into, execute and deliver
amendments, modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
provided that, whether or not an Event of Default shall have occurred
and be continuing, no amendment, modification, waiver or consent in
respect of the Lease
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shall affect the amount or timing of, or the right to enforce payment
of, any Excluded Payment;
(3) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee and
the Owner Participant shall have the right, together with the Indenture
Trustee, (i) to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel and other documents and all information
which any thereof is permitted or required to give or furnish to the
Owner Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on Lessor
or the Owner Participant, (iv) to exercise, to the extent necessary to
enable it to exercise its rights under Section 4.03 hereof, the rights
of Lessor under Section 21 of the Lease and (v) to give notices of
default under Section 14 of the Lease;
(4) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee shall
have the right to the exclusion of the Indenture Trustee to adjust
Rent, Stipulated Loss Values and Termination Values as provided in
Section 3(d) of the Lease and to select counsel with respect to any
opinion relating to tax matters to be delivered solely to the Owner
Participant;
(5) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee may,
without the consent of the Indenture Trustee, (i) solicit and make bids
with respect to the Aircraft under Section 9 of the Lease in respect of
a termination of the Lease by Lessee pursuant to Section 9 thereof,
(ii) determine "fair market sales value" and "fair market rental value"
under Section 19 of the Lease for all purposes except following an
Event of Default pursuant to Section 15 of the Lease, and (iii) make an
election pursuant to and in accordance with the provisions of Section
9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights
of the "Lessor" under the Lease shall be exercised by the Owner Trustee
to the exclusion of the Indenture Trustee including, without
limitation, the right to (i) exercise all rights with respect to
Lessee's use and operation, modification or maintenance of the Aircraft
and any Engine which the Lease specifically confers on Lessor, and (ii)
consent to and approve any assignment pursuant to Section 13 of the
Lease; provided that the foregoing shall not limit (A) any rights
separately granted to the Indenture Trustee under the Operative
Documents or (B) the right of the Indenture Trustee to receive any
funds to be delivered to the "Lessor" under the Lease (except with
respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant,
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to (A) declare the Lease to be in default under Section 15 thereof and (B)
subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof,
exercise the remedies set forth in such Section 15 (other than in connection
with Excluded Payments) at any time that a Lease Event of Default shall have
occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take
any action under this Trust Indenture and nothing herein or therein shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
the risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
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SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE
OR INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they
will not use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Indenture Estate
except (i) as required by the terms of the Lease or (ii) in accordance with the
powers granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Trust Indenture and in accordance with the
express terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
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A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to
be received (including the manufacturer,
model, FAA registration number (or other
applicable registration information) and
manufacturer's serial number) as consideration
for the Airframe to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Airframe the Owner Trustee will be
the legal owner of such Replacement Airframe
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that such
Replacement Airframe will on such date be in
good working order and condition, and that
such Replacement Airframe has been or,
substantially concurrently with such
withdrawal, will be duly registered in the
name of the Owner Trustee under the Federal
Aviation Act or under the law then applicable
to the registration of the Airframe and that
an airworthiness certificate has been duly
issued under the Federal Aviation Act (or such
other applicable law) with respect to such
Replacement Airframe, and that such
registration and certificate is in full force
and effect, and that Lessee will have the full
right and authority to use such Replacement
Airframe;
(iv) the existence of the insurance required by
Section 11 of the Lease with respect to such
Replacement Airframe and the payment of all
premiums then due thereon;
(v) that the Replacement Airframe is of the same
or an improved model as the Airframe requested
to be released from this Indenture;
(vi) the fair market value of the Replacement
Airframe as of the date of such certificate
(which in the judgment of Lessee shall be not
less than the then fair market value of the
Airframe requested to be released (assuming
such Airframe was in the condition and repair
required to be maintained under the Lease));
(vii) the fair market value of the Airframe
immediately prior to the date the Airframe
suffered an Event of Loss (assuming such
Airframe was in the condition and repair
required to be maintained under the Lease);
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(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or both,
would become a Lease Event of Default, has
occurred which has not been remedied or
waived, and that Lessee will not be in
default, by the making and granting of the
request for release and the addition of a
Replacement Airframe, in the performance of
any of the terms and covenants of the Lease;
and
(ix) that the release of the Airframe so to be
released will not be in contravention of any
of the provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
(ii) a description of the Replacement Engine
(including the manufacturer's name and serial
number) as consideration for the Engine to be
released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be
the legal owner of such Replacement Engine
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that such
Replacement Engine will on such date be in
good working order and condition and that such
Replacement Engine is substantially the same
as the Engine to be released (or as improved
model);
(iv) the fair market value of the Replacement
Engine as of the date of such certificate
(which value shall not be less than the then
fair market value of the Engine to be released
(assuming such Engine was in the condition and
repair required to be maintained under the
Lease));
(v) the fair market value of the Engine to be
released (immediately prior to any Event of
Loss suffered by such Engine and assuming that
such Engine was in the condition and repair
required to be maintained under the Lease);
(vi) that each of the conditions specified in
Section 10(b) of the Lease with respect to
such Replacement Engine have been satisfied
and that Lessee will not be in default, by the
making and granting of the request for release
and the addition of the Replacement Engine, in
the performance of any of the terms and
covenants of the Lease;
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(vii) that, with respect to the replacement of an
Engine pursuant to Section 9(d) of the Lease,
no Lease Event of Default and no Lease Default
has occurred which has not been remedied or
waived; and
(viii) that the release of the Engine so to be
released will not be in contravention of any
of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the
Owner Trustee title to the Replacement Airframe or Replacement Engine to be
received as consideration for the Airframe or Engine to be released and (ii)
assigning to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting
such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture Trustee
to protect the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be
an employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other
instruments and/or property which have been or
are therewith delivered to and deposited with
the Indenture Trustee conform to the
requirements of this Trust Indenture and the
Lease and, upon the basis of such application,
the property so sold or disposed of may be
lawfully released from the lien of this Trust
Indenture and all conditions precedent herein
provided for relating to such release have
been complied with; and
(ii) the Replacement Airframe or Replacement Engine
has been validly subjected to the lien of this
Indenture and covered by the Lease, the
instruments subjecting such Replacement
Airframe or Replacement Engine to the Lease
and to the Lien of this Trust Indenture, as
the case may be, have been duly filed for
recordation pursuant to the Federal Aviation
Act or any other law then applicable to the
registration of the Aircraft, and no further
action, filing or recording of any document is
necessary or advisable in order to establish
and perfect the right, title, estate
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and interest of the Owner Trustee to and the
lien of this Trust Indenture on such
Replacement Aircraft or Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of
this Trust Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced,
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the
Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of
the Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its
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maturity) by the Indenture Trustee without instructions whenever such sale is
necessary to make a distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or inaction of the other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with
written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall
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not have any duty or responsibility hereunder, including, without limitation,
any of the duties mentioned in clauses (i) through (v) above; provided, that
nothing contained in this sentence shall limit any obligations of the Owner
Participant under the Participation Agreement or relieve the Owner Participant
from any restriction under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT
OR DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE
UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO
HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Owner Trustee made
in its individual capacity and the representations and warranties of the
Indenture Trustee, in each case expressly made in this Trust Indenture or in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement). The Loan Participants, the Certificate Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee
pursuant to any provision hereof and not then required to be distributed to the
Certificate Holders, Lessee or the Owner Trustee as provided in Article III
hereof need not be segregated in any manner except to the extent required by Law
or Section 10(f) or 11(g) of the Lease and Section 5.09
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hereof, and may be deposited under such general conditions as may be prescribed
by Law, and the Indenture Trustee shall not be liable for any interest thereon
(except that the Indenture Trustee shall invest all monies held as directed by
Lessee so long as no Lease Event of Default or Lease Default has occurred and is
continuing (or in the absence of such direction, by the Majority In Interest of
Certificate Holders) in Cash Equivalents; provided, however, that any payments
received, or applied hereunder, by the Indenture Trustee shall be accounted for
by the Indenture Trustee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur
any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or, in the case of the
Owner Participant which originally executed the Participation Agreement,
evidence of the approval by the Executive Committee thereof) of any party to the
Participation Agreement, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to the aggregate unpaid Principal Amount of Secured Certificates
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Indenture Trustee. As to any fact or matter relating to
Lessee the manner of ascertainment of which is not specifically described
herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof
rely on a certificate, signed by a duly authorized officer of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee and the Indenture Trustee for any action taken or omitted to be
taken by them in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trustee is
authorized by the Trust Agreement to enter into this Trust Indenture and to take
all action to be taken by it pursuant to the provisions hereof, and shall not
inquire into the authorization of the Owner Trustee with respect thereto. In the
administration of the trusts hereunder, the Owner Trustee and the Indenture
Trustee each may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may at
the expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein
and in the Trust Agreement provided, and not in its individual capacity, except
as otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
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SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the reasonable
fees and expenses of counsel), for all services rendered hereunder and shall, on
and subsequent to an Event of Default hereunder, have a priority claim on the
Trust Indenture Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely
as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust
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Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
to the extent not reimbursed by Lessee. Without limiting the foregoing, the
Indenture Trustee agrees that, prior to seeking indemnification from the Trust
Indenture Estate, it will demand, and take such action as it may in its
discretion determine to be reasonable to pursue, indemnification available to
the Indenture Trustee under the Lease or the Participation Agreement.
Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to
any indemnification for any Expenses to the extent relating to or arising from
the willful misconduct or gross negligence (or negligence in the case of
handling funds) of the Indenture Trustee in the performance of its duties
hereunder or resulting from the inaccuracy of any representation or warranty of
the Indenture Trustee (in its individual capacity) referred to in Section 6.03
hereof, or as provided in Section 6.01 hereof or in the last sentence of Section
5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of
the Participation Agreement from Lessee's indemnities under such Sections. In
addition, if necessary, the Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner
Trustee pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign
at any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a
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successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having its principal place of business in the Borough
of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Indenture Trustee and the Indenture Trustee under this Trust Indenture without
further act.
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SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary
or desirable in order to conform to any law of any jurisdiction in which all or
any part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon the
Indenture Trustee in respect of the custody, investment and payment of monies
and all monies received by any such additional or separate trustee from or
constituting part of the Trust Indenture Estate or otherwise payable under any
Operative Document to the Indenture Trustee shall be promptly paid over by it to
the Indenture Trustee. All other rights, powers, duties and obligations
conferred or imposed
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upon any additional or separate trustee shall be exercised or performed by the
Indenture Trustee and such additional or separate trustee jointly except to the
extent that applicable Law of any jurisdiction in which any particular act is to
be performed renders the Indenture Trustee incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations (including
the holding of title to all or part of the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional or separate
trustee. No additional or separate trustee shall take any discretionary action
except on the instructions of the Indenture Trustee or a Majority in Interest of
Certificate Holders. No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, except that the Indenture
Trustee shall be liable for the consequences of its lack of reasonable care in
selecting, and Indenture Trustee's own actions in acting with, any additional or
separate trustee. Each additional or separate trustee appointed pursuant to this
Section 8.03 shall be subject to, and shall have the benefit of Articles IV
through VIII and Article X hereof insofar as they apply to the Indenture
Trustee. The powers of any additional or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
(c) If at any time the Indenture Trustee shall deem it no
longer necessary or desirable in order to conform to any such law or take any
such action or shall be advised by such counsel that it is no longer so
necessary or desirable in the interest of the Certificate Holders, or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Certificate Holders, the Indenture Trustee and,
upon the written request of the Indenture Trustee, the Owner Trustee, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Indenture Trustee may act on behalf of the Owner Trustee under this Section
8.03(c) when and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or modification of, or consent under, the
terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant
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may be modified, amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may
enter into amendments of or additions to the Lease to modify Section 5 (except
to the extent that such amendment would affect the rights or exercise of
remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so
long as such amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments until after the payment in
full of all Secured Obligations or otherwise adversely affect the Certificate
Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with
the Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but upon the written request of a Majority in Interest of Certificate
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each holder of
an affected Secured Certificate then outstanding, no such amendment of or
supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the
Participation Agreement or waiver or modification of the terms of, or consent
under, any thereof, shall (i) modify any of the provisions of this Section 9.01,
or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06
hereof, Section 14 (except to add an Event of Default) of the Lease, the
definitions of "Event of Default", "Default", "Lease Event of Default", "Lease
Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or
"Certificate Holder", or the percentage of Certificate Holders required to take
or approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Principal Amount, Make-Whole
Amount, if any, or interest with respect to any Secured Certificate, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the
Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend
any indemnities in favor of the Certificate Holders, (iv) consent to any change
in the Trust Indenture or the Lease which would permit redemption of Secured
Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the
purchase of the Secured Certificates other than as permitted by Section 2.14
hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the
Aircraft or altering the absolute and unconditional character of the obligations
of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi)
permit the creation of
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any Lien on the Trust Indenture Estate or any part thereof other than Permitted
Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust
Indenture on the Trust Indenture Estate, except as provided in connection with
the exercise of remedies under Article IV hereof. So long as no Lease Event of
Default has occurred and is continuing, without the consent of Lessee no
amendment or supplement to this Trust Indenture or waiver or modification of the
terms hereof shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee
under the Trust Agreement or the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 9.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 9.01 hereof,
the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
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SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR
TRUST AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal
Amount of, Make-Whole Amount, if any, and interest on and all other amounts due
under all Secured Certificates and provided that there shall then be no other
Secured Obligations due to the Certificate Holders and the Indenture Trustee
hereunder or under the Participation Agreement, the Owner Trustee shall direct
the Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to
any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
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SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS
BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or
any part thereof (including any part thereof or interest therein), by the
Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind
the Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied,
shall be construed to give any person other than the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders,
any legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to
any Participant, Lessee or any Certificate Holder, addressed to such party at
such address as such party shall have furnished by notice to the Owner Trustee
and the Indenture Trustee, or, until an address is so furnished, addressed to
the address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Secured Certificate Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any Participant or the
Indenture Trustee or any Certificate Holder or Lessee to any of the other of
them, such notice shall be deemed given and such requirement satisfied when such
notice is received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or
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unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in
the table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
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SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a
vote of a Majority in Interest of Certificate Holders, except as otherwise
provided herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture
or the Trust Agreement to the contrary, neither the Indenture Trustee nor the
Owner Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee, as Owner
Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 A]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 A],
dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under
that certain Trust Agreement [NW 1996 A] dated as of February 27, 1996 (the
"TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named
therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 A], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and
Engines described below, and a counterpart of the Trust Indenture is attached
hereto and made a part hereof and this Trust Indenture Supplement, together with
such counterpart of the Trust Indenture, is being filed for recordation on the
date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that
the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the
Trust Indenture Estate covers all of Owner Trustee's right, title and interest
in and to the following described property:
<PAGE> 73
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
- ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest
in and to all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and
EXHIBIT A-2
<PAGE> 74
interest of the Owner Trustee in, to and under the Lease Supplement [of even
date herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Indenture Supplement is being delivered in the State
of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 75
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee, Owner
Trustee
By:
----------------------------------
Name:
Title:
EXHIBIT A-4
<PAGE> 76
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A . . . . . . . . . . . $25,822,519 7.67%
Series B . . . . . . . . . . . $ 8,607,488 8.07%
Series C . . . . . . . . . . . $ 5,569,993 8.97%
</TABLE>
<PAGE> 77
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N537US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 2.00014181%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.99999466%
Jul 2, 1998 0.00000000%
Jan 2, 1999 1.99999466%
Jul 2, 1999 0.00000000%
Jan 2, 2000 1.99999466%
Jul 2, 2000 0.00000000%
Jan 2, 2001 1.99999466%
Jul 2, 2001 0.00000000%
Jan 2, 2002 1.99999466%
Jul 2, 2002 0.00000000%
Jan 2, 2003 1.99999466%
Jul 2, 2003 0.00000000%
Jan 2, 2004 1.99999466%
Jul 2, 2004 0.00000000%
Jan 2, 2005 1.99999466%
Jul 2, 2005 0.00000000%
Jan 2, 2006 1.99999466%
Jul 2, 2006 0.00000000%
Jan 2, 2007 1.99999466%
Jul 2, 2007 0.00000000%
Jan 2, 2008 1.84681053%
Jul 2, 2008 0.15318413%
Jan 2, 2009 1.41749920%
Jul 2, 2009 0.58249546%
Jan 2, 2010 10.28099544%
Jul 2, 2010 1.02852863%
Jan 2, 2011 11.47321065%
Jul 2, 2011 1.50796675%
Jan 2, 2012 11.97103970%
Jul 2, 2012 2.02488766%
Jan 2, 2013 12.50778052%
Jul 2, 2013 2.58221516%
Jan 2, 2014 13.08648471%
Jul 2, 2014 7.53681312%
</TABLE>
<PAGE> 78
SERIES B
AIRCRAFT: N537US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 1.99999117%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.99999117%
Jul 2, 1998 0.00000000%
Jan 2, 1999 1.99999117%
Jul 2, 1999 0.00000000%
Jan 2, 2000 1.99999117%
Jul 2, 2000 0.00000000%
Jan 2, 2001 1.99999117%
Jul 2, 2001 0.00000000%
Jan 2, 2002 1.99999117%
Jul 2, 2002 0.00000000%
Jan 2, 2003 1.99999117%
Jul 2, 2003 0.00000000%
Jan 2, 2004 1.99999117%
Jul 2, 2004 0.00000000%
Jan 2, 2005 1.99999117%
Jul 2, 2005 0.00000000%
Jan 2, 2006 1.99999117%
Jul 2, 2006 0.00000000%
Jan 2, 2007 1.99999117%
Jul 2, 2007 0.00000000%
Jan 2, 2008 18.59999108%
Jul 2, 2008 0.00000000%
Jan 2, 2009 27.44044488%
Jul 2, 2009 0.00000000%
Jan 2, 2010 2.18722350%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 0.00000000%
Jul 2, 2014 29.77243767%
</TABLE>
<PAGE> 79
SERIES C
AIRCRAFT: N537US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 5.91392126%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.97578220%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.02389841%
Jul 2, 1999 0.00000000%
Jan 2, 2000 3.16601834%
Jul 2, 2000 0.00000000%
Jan 2, 2001 4.41059800%
Jul 2, 2001 0.00000000%
Jan 2, 2002 5.76679360%
Jul 2, 2002 0.00000000%
Jan 2, 2003 7.24465901%
Jul 2, 2003 0.00000000%
Jan 2, 2004 8.85509192%
Jul 2, 2004 0.00000000%
Jan 2, 2005 10.60997743%
Jul 2, 2005 0.00000000%
Jan 2, 2006 12.52225990%
Jul 2, 2006 0.00000000%
Jan 2, 2007 29.90511837%
Jul 2, 2007 0.00000000%
Jan 2, 2008 8.60588155%
</TABLE>
<PAGE> 80
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 A]
This LEASE AGREEMENT [NW 1996 A], dated as of February 27, 1996,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement [NW 1996 A] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Administrative Agent" means [_____________], a [__________]
banking corporation, as administrative agent pursuant to the
Participation Agreement, and any successor acting as administrative
agent.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common
control with such person. For the purposes of this definition,
"control" (including "controlled by" and "under common control
with") shall mean 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 or by contract or
otherwise.
"Aircraft" means the Airframe to be delivered and leased
hereunder (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) hereof) together with the two
Engines initially leased hereunder (or any engine substituted for
either of such Engines pursuant to the terms hereof), whether or not
any of such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft (except
Engines or engines from time to time installed thereon) specified in
the initial Lease Supplement, which aircraft shall be leased by
Lessor to Lessee hereunder and under such Lease Supplement, and any
aircraft (except Engines or engines from time to time installed
thereon) which may from time to time be substituted for
<PAGE> 2
such aircraft (except Engines or engines from time to time installed
thereon) pursuant to clause (ii) of the first paragraph of Section
10(a); and (ii) any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft (except
Engines or engines from time to time installed thereon), or (B) so
long as title thereto shall remain vested in Lessor in accordance
with the terms of Section 8 after removal from such aircraft (except
Engines or engines from time to time installed thereon); provided,
however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe pursuant
to the applicable provisions hereof, the replaced Airframe shall
cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then
outstanding and, if no Secured Certificates shall be outstanding,
the Base Rate.
"Assumed Interest Rate" has the meaning set forth in Section
3(c) hereof.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base
rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) as adjusted as provided in Section
3(d) but subject always to the provisions of Section 3(d)(v) hereof
and, for any Renewal Term, Basic Rent determined pursuant to Section
19.
"Basic Term" means the term for which the Aircraft is leased
hereunder pursuant to Section 3(a) hereof commencing on the
Commencement Date and ending on January 2, 2019, or such earlier
date as this Lease may be terminated in accordance with the
provisions hereof.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated
the Delivery Date, specifically referring to the Airframe and each
Engine, which Bill of Sale shall contain, among other things, a
statement that such Bill of Sale thereby conveys to the Owner
Trustee good title to the Airframe and each Engine described in such
Bill of Sale, free and clear of all liens, encumbrances and rights
of others except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or Sunday or
a day on which commercial banks are required or authorized to close
in New York, New York; Boston, Massachusetts; Salt Lake City, Utah;
Phoenix, Arizona or Minneapolis, Minnesota and, in connection with
any payment of Rent and so long as any Secured Certificate is a
Eurodollar Loan (as defined in the Trust Indenture), such day is
also a day for trading by and between banks in the interbank
Eurodollar market.
- 2 -
<PAGE> 3
"Certificate Holder" means Certificate Holder as defined in the
Trust Indenture.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States
Code, for aircraft capable of carrying ten or more individuals or
6,000 pounds or more of cargo.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan Participant or of
the Owner Participant, as the case may be, to finance the Owner
Trustee's payment of Lessor's Cost for the Aircraft.
"Consent and Agreement" means the Consent and Agreement [NW 1996
A], dated as of the date hereof, executed by the Manufacturer, as
the same may be amended, modified or supplemented from time to time
in accordance with the applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated as of
November 2, 1995, among Lessee, the banks, financial institutions
and other institutional lenders listed on the signature pages
thereof, [______________], as documentation agent, [____________],
as administrative agent, and [________________], as syndication
agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Debt Rate" has the meaning set forth in the Trust Indenture.
"Default" means any event which with the giving of notice or the
lapse of time or both would become an Event of Default.
"Delivery Date" means the date of the initial Lease Supplement
for the Aircraft, which date shall be the date the Aircraft is
leased by Lessor to Lessee and accepted by Lessee hereunder.
- 3 -
<PAGE> 4
"Depreciation Period" means the period commencing on the
Delivery Date and ending on December 31, 2003, or such earlier date
as this Lease may be terminated in accordance with the provisions
hereof.
"Documentation Agent" means [_____________], a bank organized
under the laws of [______________], as documentation agent pursuant
to the Participation Agreement, and any successor acting as
documentation agent.
"Dollars" and "$" means the lawful currency of the United States
of America.
"Engine" means (i) each of the two Pratt & Whitney Model PW2037
engines listed by manufacturer's serial number in the initial Lease
Supplement, whether or not from time to time thereafter installed on
the Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for either of such two
engines, together in each case with any and all Parts incorporated
or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 after removal from such
Engine; provided, however, that at such time as an engine shall be
deemed part of the property leased hereunder in substitution for an
Engine pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term "Engines"
means, as of any date of determination, all Engines then leased
hereunder.
"Event of Default" has the meaning specified in Section 14
hereof.
"Event of Loss" with respect to the Aircraft, 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
uneconomic or which renders such property permanently unfit for
normal use by Lessee for any reason whatsoever; (ii) any damage to
such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of such
property, or the confiscation, condemnation, or seizure of, or
requisition of title to, or use of, such property (other than a
requisition for use by the United States Government or any other
government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event
referred to in this clause (iii) (other than a requisition of title)
shall have resulted in the loss of possession of such property by
Lessee for a period in excess of 180 consecutive days or, in the
case of a requisition of title, the requisition of title shall not
have been reversed within 90 days from the date of such requisition
of title; (iv) as a result of any
- 4 -
<PAGE> 5
law, rule, regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of
registry of the Aircraft having jurisdiction, the use of such
property in the normal course of the business of air transportation
shall have been prohibited for a period of 180 consecutive days,
unless Lessee, prior to the expiration of such 180 day period, shall
have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such
property by Lessee, but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no
Event of Loss shall be deemed to have occurred if such prohibition
has been applicable to Lessee's entire U.S. registered fleet of
Boeing Model 757-200 aircraft and Lessee, prior to the expiration of
such two-year period, shall have conformed at least one such
aircraft in its fleet to the requirements of any such law, rule,
regulation, order or other action and commenced regular commercial
use of the same in such jurisdiction and shall be diligently
carrying forward, in a manner which does not discriminate against
the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by
Lessee, but in any event if such use shall have been prohibited for
a period of three years or such use shall be prohibited at the
expiration of the Term; (v) the requisition for use by the United
States Government or any other government of registry of the
Aircraft or any instrumentality or agency of any thereof, which
shall have occurred during the Basic Term (or the Interim Term or
any Renewal Term) and shall have continued for thirty (30) days
beyond the Term, provided, however, that no Event of Loss pursuant
to this clause (v) shall exist if Lessor shall have furnished to
Lessee the written notice specified in Section 10(d) hereof; and
(vi) any divestiture of title to or interest in an Engine treated as
an Event of Loss pursuant to Section 7(b) hereof. 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 Airframe.
"Excess Amount" for the Transition Date or the Commencement Date
means an amount equal to the amount determined by multiplying
Lessor's Cost by the percentage set forth in Exhibit B hereto under
the heading "Excess Amount" opposite the Transition Date or the
Commencement Date; provided, however, that, to the extent that the
aggregate amount of interest due and payable on the Transition Date
on the Secured Certificates relating to the period from and
including the Delivery Date to but excluding the Transition Date is
less than the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the Transition
Date if such Secured Certificates had borne interest at the Assumed
Interest Rate for such period, the corresponding percentage set
forth in Exhibit B shall be decreased by the amount which when
multiplied by Lessor's Cost will equal such differential.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
- 5 -
<PAGE> 6
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC
Form 8050-2 or such other form as may be approved by the Federal
Aviation Administration on the Delivery Date for the Aircraft,
executed by Lessee in favor of the Owner Trustee and dated the
Delivery Date.
"Federal Aviation Act" means that portion of the United States
Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that
amends, supplements or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to their
functions.
"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, Airframe and/or any Engine or
engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal Aviation
Administration, 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
Rijflauchtraatdienst of the Kingdom of the Netherlands, the Ministry
of Transportation of Japan or the Federal Ministry of Transport of
Canada (and any agency or instrumentality of the applicable
government succeeding to the functions of any of the foregoing
entities).
"Funding Loss Amount" has the meaning assigned to that term in
the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 A], dated as of the
date hereof, made by the Guarantor in favor of the Parties, as such
Guarantee may be amended or supplemented from time to time pursuant
to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means the Owner Participant, the Owner Trustee, in
its individual capacity and as trustee under the Trust Agreement,
the Trust Estate, the Indenture Trustee, the Administrative Agent,
the Documentation Agent, the Loan Participants and each other
Certificate Holder, and each of their respective Affiliates,
successors, permitted assigns, directors, officers, employees,
servants and agents.
- 6 -
<PAGE> 7
"Indenture Trustee" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as
indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation Agreement
and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as a
result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust
Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to
take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture
Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation Agreement
pursuant to said Section 7, or (D) claims against the Indenture
Trustee arising out of the transfer by the Indenture Trustee of all
or any portion of its interest in the Aircraft, the Trust Estate,
the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the
Lease or Article IV or V of the Trust Indenture, or a transfer of
the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"Interest Period" means Interest Period as defined in the Trust
Indenture.
"Interim Rent" means the rent payable for the Aircraft for the
Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the Delivery Date
and ending on and including the day immediately preceding the
Commencement Date unless earlier terminated in accordance with the
provisions hereof.
"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Lease Agreement [NW 1996 A] as originally executed
or as modified, amended or supplemented pursuant to the applicable
provisions hereof and in accordance with the Trust Agreement and the
Trust Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant to the
applicable provisions hereof.
"Lease Period" means each of the consecutive semi-annual periods
throughout the Basic Term and any Renewal Term ending on a Lease
Period Date, the first such period commencing on and including the
Commencement Date.
- 7 -
<PAGE> 8
"Lease Period Date" means July 2, 1997 and each succeeding
January 2 and July 2, to and including the last such date in the
Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A hereto, to be entered into between Lessor and
Lessee on the Delivery Date for the purpose of leasing the Aircraft
under and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with the
terms hereof.
"Lessee Documents" means the Participation Agreement, the Lease,
the Lease Supplement covering the Aircraft, the Purchase Agreement
(insofar as it relates to the Aircraft), the FAA Bill of Sale, the
Bill of Sale, the Purchase Agreement Assignment and the Tax
Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title or
interest arising as a result of (i) claims against Lessor, First
Security Bank of Utah, National Association, in its individual
capacity, or the Owner Participant not related to the transactions
contemplated by the Operative Documents, (ii) any act or omission of
the Owner Participant, Lessor, or First Security Bank of Utah,
National Association, in its individual capacity, which is not
related to the transactions contemplated by the Operative Documents
or is in violation of any of the terms of the Operative Documents,
(iii) claims against the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement or
(iv) claims against Lessor or the Owner Participant arising out of
any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner
Participant in the Aircraft, the Trust Estate or the Operative
Documents other than the transfer of possession of the Aircraft by
Lessor pursuant to this Agreement, the transfer pursuant to the
Trust Indenture or a transfer of the Aircraft pursuant to Section 9,
10 or 19 hereof or pursuant to the exercise of the remedies set
forth in Section 15 hereof, provided, however, that any Lien which
is attributable solely to First Security Bank of Utah, National
Association or the Owner Participant and would otherwise constitute
a Lessor Lien hereunder shall not constitute a Lessor Lien hereunder
so long as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the existence of
such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any
Sublessee), (3) the existence of such Lien does not affect the
priority or perfection of, or otherwise jeopardize, the Lien of the
Trust Indenture, (4) First Security Bank of Utah, National
Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not
pose a material threat of interference with the payment of Rent
(other than Excluded Payments
- 8 -
<PAGE> 9
in favor of First Security Bank of Utah, National Association or the
Owner Participant, as appropriate).
"Lessor's Cost" for the Aircraft means the amount denominated as
such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease, sub-sublease or security interest.
"Loan Participant" means each institution executing the
Participation Agreement as a Loan Participant, and its respective
successors and assigns, and any Certificate Holder; at any time when
there is only one Certificate Holder, "each Loan Participant" shall
mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a)
hereof.
"Manufacturer" means The Boeing Company, a Delaware corporation.
"Manufacturer Documents" means the Purchase Agreement and the
Consent and Agreement.
"Net Economic Return" shall have the meaning ascribed to such
term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net present value, as of
the Delivery Date, of Basic Rent set forth in Exhibit B hereto,
discounted at an annual interest rate of 7.166 percent on a
semi-annual basis.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust
Agreement, an acceptance certificate covering the Aircraft in the
form agreed to by the Participants and Lessee, the Tax Indemnity
Agreement, the Lease Supplement covering the Aircraft, the Trust
Supplement covering the Aircraft, the Secured Certificates, the Bill
of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it
relates to the Aircraft), the Guarantee, the Purchase Agreement
Assignment and the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated by
the Operative Documents.
"Owner Participant" means the corporation executing the
Participation Agreement as the Owner Participant and any person to
which such corporation
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<PAGE> 10
transfers all or any portion of its right, title and interest in and
to the Trust Agreement, the Trust Estate and the Participation
Agreement, to the extent permitted by Section 8.01 of the Trust
Agreement and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation Agreement,
the Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor
Owner Trustee pursuant to Section 9.01 of the Trust Agreement, and
references to a predecessor Owner Trustee in its individual capacity
by name in the Operative Documents shall include such successor
Owner Trustee in its individual capacity from and after such
succession.
"Owner Trustee Documents" means the Participation Agreement, the
Trust Agreement, the Trust Supplement covering the Aircraft, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Trust Indenture and the Secured
Certificates.
"Participants" means and includes the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Participation
Agreement [NW 1996 A], dated as of the date hereof, among Lessee,
the Loan Participants, the Indenture Trustee, the Owner Participant
and Owner Trustee, as such Participation Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions
thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by
Lessee from a third party (other than Lessor) and (c) cargo
containers) which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine or so long as title
thereto shall remain vested in Lessor in accordance with Section 8
after removal therefrom.
"Past Due Rate" means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be
paid by the Indenture Trustee to the Loan Participants, or the
holders of any outstanding Secured Certificates, the "Past Due Rate"
as defined in the Trust Indenture and (ii) with respect to the
remaining portion of any payment of Rent (and the entire amount
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<PAGE> 11
of any payment of Rent after the satisfaction and discharge of the
Trust Indenture), a rate per annum equal to 1% over the Base Rate.
"Permitted Lien" means any Lien referred to in clauses (i)
through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a country
listed in Exhibit F hereto.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Prepaid Rent" has the meaning assigned in Section 3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No. 1631,
dated December 1, 1989, between the Manufacturer and Lessee relating
to the purchase by Lessee of the Aircraft, as originally executed or
as modified, amended or supplemented in accordance with the terms
thereof, but only insofar as the foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1996 A], dated as of the date hereof, between Lessee
and Lessor, as the same may be amended, supplemented or modified
from time to time, with a form of Consent and Agreement to be
executed by the Manufacturer attached thereto.
"Reimbursement Amount" has the meaning set forth in Section 3(g)
hereof.
"Renewal Term" means any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 hereof.
"Rent" means Interim Rent, Basic Rent and Supplemental Rent,
collectively.
"Rent Differential Amount" has the meaning set forth in Section
3(c) hereof.
"Secured Certificates" has the meaning assigned to that term in
the Trust Indenture.
"Special Purchase Price" shall mean the amount denominated as
such in Exhibit B to the Lease.
"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including January 2, 2019, means, but subject
always to the
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<PAGE> 12
provisions of Section 3(d)(v) hereof, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage
specified in Exhibit C hereto opposite the Stipulated Loss Value
Date with respect to which the amount is determined (as such Exhibit
C may be adjusted from time to time as provided in Section 3(d)
hereof and in Section 7 of the Tax Indemnity Agreement). To the
extent that the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease Period in
which such Stipulated Loss Value Date occurs up to and including
such Stipulated Loss Value Date is greater or less than the amount
included in calculating the percentage set forth in Exhibit C with
respect to such Stipulated Loss Value Date on account of such
interest, the corresponding percentage set forth in Exhibit C shall
be adjusted appropriately to compensate for such differential.
"Stipulated Loss Value" as of any date after January 2, 2019 shall
be the amount determined as provided in Section 19(a) hereof.
"Stipulated Loss Value Date" means the 2nd calendar day of each
calendar month during the Interim Term, Basic Term and any Renewal
Term.
"Sublease" means any sublease permitted by the terms of Section
7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so long, as
such Person is in possession of the Airframe and/or any Engine
pursuant to the terms of a Sublease which is then in effect pursuant
to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Interim Rent and Basic Rent) which Lessee
assumes or agrees to pay to Lessor or others hereunder, under the
Participation Agreement, under the Tax Indemnity Agreement or under
any of the other Operative Documents. The parties acknowledge that
Supplemental Rent is a general category and, accordingly, agree that
any provision of any Operative Document which calls for the payment
of Supplemental Rent and also calls for the payment of specific
items which are includable in Supplemental Rent is not to be
interpreted as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement,
the Trust Estate, the Indenture Trustee, the Loan Participants and
each other Certificate Holder, and each of their respective
Affiliates, successors and permitted assigns.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1996 A], dated as of the date hereof, between the
Owner Participant and Lessee, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
thereof.
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<PAGE> 13
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value added, property (tangible and
intangible), excise and stamp taxes), license, levies, imposts,
duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to
tax and interest thereon (each, individually a "Tax").
"Term" means the Interim Term, Basic Term and, if actually
entered into, any Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a)
hereof.
"Termination Value" with respect to the Aircraft as of any date
through and including January 2, 2019, means, but subject always to
the provisions of Section 3(d)(v) hereof, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage
specified in Exhibit D hereto opposite the Termination Date with
respect to which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). In the event that the
Termination Date with respect to which Termination Value is
determined is a date on which Basic Rent is payable in advance as
indicated on Exhibit B, to the extent that the actual amount of
interest paid and to be paid on the Secured Certificates during the
Lease Period ending on such Termination Date is greater or less than
the amount included in calculating the corresponding percentage set
forth in Exhibit D with respect to such Termination Date on account
of such interest, the corresponding percentage set forth in Exhibit
D shall be adjusted appropriately to compensate for such
differential.
"Transaction Expenses" means: (i) the reasonable and actual
fees, expenses and disbursements of (1) Bingham, Dana & Gould,
special counsel for the Indenture Trustee, such information to be
furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker,
special counsel for the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (3) Vedder,
Price, Kaufman & Kammholz, special counsel to the Loan Participants,
such information to be furnished by the Documentation Agent, (4)
Cadwalader, Wickersham & Taft, special counsel to Lessee and
Guarantor, such information to be furnished by Lessee, and (5) Crowe
& Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such
information to be furnished by Lessee, (ii) all fees, taxes and
other charges payable in connection with the recording or filing of
instruments and financing statements, such information to be
furnished by Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial
fee and reasonable and actual disbursements of the Indenture Trustee
under the Trust
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<PAGE> 14
Indenture, such information to be furnished by the Indenture
Trustee, (v) the fee of BK Associates, Inc. with respect to the
appraisal of the Aircraft pursuant to Section 4(a)(xxix) of the
Participation Agreement, such information to be furnished by Lessee,
(vi) the reasonable and actual fees, expenses and disbursements of
Feltman, Karesh, Major & Farbman, special counsel to the Owner
Participant, such fees not to exceed the amount previously agreed to
by the Owner Participant and Lessee, and the reasonable and actual
fees, expenses and disbursements of David, Hagner, Kuney & Krupin,
P.C., special tax counsel to the Owner Participant, such fees not to
exceed the amount previously agreed to by the Owner Participant and
Lessee, such information to be furnished by the Owner Participant,
(vii) the equity placement fee and reasonable disbursements of
Babcock and Brown Financial Corporation, such information to be
furnished by Lessee, and (viii) the fee payable to the Loan
Participants on the Delivery Date.
"Transition Date" means the date designated as such in Exhibit B
to the Lease.
"Trust Agreement" means that certain Trust Agreement [NW 1996
A], dated as of the date hereof, between the Owner Participant and
First Security Bank of Utah, National Association, in its individual
capacity, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof,
including, without limitation, supplementation thereof by one or
more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Estate" means the Trust Estate as that term is defined in
the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1996 A], dated as of the date hereof, between
Lessor and the Indenture Trustee, as originally executed or as
modified, amended or supplemented in accordance with the provisions
thereof.
"Trust Supplement" means a supplement to the Trust Agreement and
the Trust Indenture, substantially in the form of Exhibit A to the
Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier as to
which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the Federal Aviation
Act, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or
in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee (or any
Sublessee) agrees to furnish the Airframe and Engines or engines
installed thereon to a third party pursuant to which such Airframe
and Engines or
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<PAGE> 15
engines (i) shall be operated solely by regular employees of Lessee
(or any Sublessee) possessing all current certificates and licenses
that would be required under the Federal Aviation Act or, if the
Aircraft is not registered in the United States, all certificates
and licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions within
the United States of America or such other jurisdiction of registry
(it is understood that cabin attendants need not be regular
employees of Lessee (or any Sublessee)) and (ii) shall be maintained
by Lessee (or any Sublessee) in accordance with its normal
maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term. The
Interim Term shall commence on the Delivery Date and end on and include the day
immediately preceding the Commencement Date unless earlier terminated pursuant
to the provisions hereof. The Basic Term shall commence on the Commencement Date
and end on January 2, 2019, or such earlier date as this Lease may be terminated
in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the Commencement
Date in an amount equal to Lessor's Cost multiplied by the percentage specified
in Exhibit B hereto for Interim Rent on the Commencement Date.
Although the Interim Rent percentage set forth in Exhibit B hereto
has been computed on the assumption that the rate of interest on the Secured
Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that
the actual rate of interest on the Secured Certificates may be a rate from time
to time which may be greater or less than the Assumed Interest Rate and that the
related basis upon which interest on the Secured Certificates will be computed
will be as provided in the Trust Indenture. Accordingly, the Interim Rent
payable on the Commencement Date shall be increased or decreased (but not below
zero) by the difference between (i) the aggregate amount of interest due and
payable on the Secured Certificates on the Commencement Date relating to the
period from the Transition Date to but excluding the Commencement Date and (ii)
the aggregate amount of interest on the Secured Certificates that would have
been due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to the Commencement Date if such
Secured Certificates had borne interest at the Assumed Interest Rate. If the
amount determined in accordance with clause (i) of the preceding sentence shall
be greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of
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<PAGE> 16
Interim Rent payable on the Commencement Date shall be increased by such
difference. If the amount determined in accordance with clause (i) of the
preceding sentence shall be less than the amount determined in accordance with
clause (ii) of such sentence, the amount of Interim Rent payable on the
Commencement Date shall be decreased (but not below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect to each
Lease Period during the Basic Term on each Lease Period Date during the Basic
Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B hereto
have been computed on the assumption that the rate of interest on the Secured
Certificates throughout the Term will be 7.166% per annum, computed on the basis
of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor
and Lessee recognize that the actual rate of interest on the Secured
Certificates may be a rate from time to time which may be greater or less than
the Assumed Interest Rate and that the related basis upon which interest on the
Secured Certificates will be computed will be as provided in the Trust
Indenture. Accordingly, each installment of Basic Rent shall be increased or
decreased (but not below zero), as the case may be, by the Rent Differential
Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT"
shall mean, as of any Lease Period Date with respect to the Basic Term, the
difference between (i) the aggregate amount of interest due and payable on such
Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of
interest on the Secured Certificates that would have been due and payable on
such Lease Period Date if such Secured Certificates had borne interest at the
Assumed Interest Rate, in each case for the period from and including the Lease
Period Date (or the Commencement Date in the case of the first Lease Period)
next preceding such Lease Period Date to but excluding such Lease Period Date.
If, as of any Lease Period Date, the amount determined in accordance with clause
(i) of the immediately preceding sentence shall be greater than the amount
determined in accordance with clause (ii) of such sentence, the amount of Basic
Rent payable on such Lease Period Date shall be increased by the Rent
Differential Amount. If, as of any Lease Period Date, the amount determined in
accordance with such clause (ii) shall exceed the amount determined in
accordance with such clause (i), the amount of Basic Rent due on such Lease
Period Date shall be decreased (but not below zero) by the Rent Differential
Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs other than on
February 29, 1996, or (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are
determined to be other than 1.0% of Lessor's Cost, then in each case
the Basic Rent percentages set forth in Exhibit B and Stipulated
Loss Value percentages set forth in Exhibit C and the Termination
Value percentages set forth in Exhibit D shall be recalculated by
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<PAGE> 17
the Owner Participant, on or prior to June 15, 1996 using the same
methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages, in order
to: (1) maintain the Owner Participant's Net Economic Return and (2)
minimize the Net Present Value of Rents to Lessee to the extent
possible consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing or a refunding as
contemplated by Section 17 of the Participation Agreement, then the
Basic Rent percentages set forth in Exhibit B and Stipulated Loss
Value percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated (upwards or
downwards) by the Owner Participant as contemplated by such Section
to (1) maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof, minimize
the Net Present Value of Rents to Lessee and (B) in the event that
Lessee elects to satisfy any indemnity obligation under the Tax
Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax
Indemnity Agreement, then the Basic Rent percentages set forth in
Exhibit B and the Stipulated Loss Value percentages set forth in
Exhibit C and the Termination Value percentages set forth in Exhibit
D shall be recalculated (upwards or downwards) by Owner Participant,
using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss (as
defined in the Tax Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used to
calculate the Basic Rent percentages, the Stipulated Loss Value
percentages and the Termination Value percentages on the Delivery
Date, in order to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant to this
Section 3(d), the Owner Participant shall redetermine the Excess
Amounts set forth in Exhibit B in a manner consistent with such
recalculation. In addition, (X) any recalculation of Basic Rent,
Stipulated Loss Value or Termination Value percentages made pursuant
to this Section 3(d) shall take into account any decrease in the
Excess Amount with respect to the Transition Date required by the
proviso to the definition of "Excess Amount", (Y) after January 31,
1997 but prior to July 2, 1997, the Basic Rent percentages set forth
in Exhibit B, the Stipulated Loss Value percentages set forth in
Exhibit C and the Termination Value percentages set forth in Exhibit
D shall be recalculated to take into account any decrease in Excess
Amount with respect to the Transition Date that has not therefore
been taken into account in accordance with clause (X) of this
sentence, and (Z) at the time of any payment of Stipulated Loss
Value or Termination Value, the Stipulated Loss Value percentage set
forth in Exhibit C or the Termination Value percentage set forth in
Exhibit D, by reference to which the amount of such payment is
determined shall be recalculated to take into account any decrease
in the Excess Amount with respect to the Transition
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<PAGE> 18
Date that has not theretofore been taken into account in accordance
with clause (X) or clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess Amounts and
Stipulated Loss Value and Termination Value percentages pursuant to
this Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in Exhibit
E hereto. Such recalculated Basic Rent, Excess Amounts and
Stipulated Loss Value and Termination Value percentages shall be set
forth in a Lease Supplement or an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this
Lease to the contrary notwithstanding, each installment of Interim
Rent and Basic Rent payable hereunder, whether or not adjusted in
accordance with this Section 3(d), shall, together with the amount
of the Excess Amount in respect of the date on which such
installment is payable, and each payment of Termination Value and
Stipulated Loss Value, whether or not adjusted in accordance with
this Section 3(d), shall, together with all other amounts (including
an amount equal to the premium, if any, payable by Lessor on the
Secured Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in any
event, in an amount at least sufficient to pay in full, on the date
on which such amount of Rent is due, any payments then required to
be made on account of the principal of, premium, if any, and
interest on the Secured Certificates. It is agreed that no
installment of Interim Rent, Basic Rent or payment of Termination
Value or Stipulated Loss Value shall be increased or adjusted by
reason of (i) any attachment or diversion of Rent on account of (A)
Lessor Liens or (B) any Loan Participant Lien or other Lien on or
against the Trust Estate, any part thereof or the Operative
Documents arising as a result of claims against the Indenture
Trustee not related to the transactions contemplated by the
Operative Documents, (ii) any modification of the payment terms of
the Secured Certificates made without the prior written consent of
Lessee or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of Default"
(as defined in the Trust Indenture) which does not constitute an
Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d) shall
be (A) in compliance with the tests of Sections 4.02(5), 4.07
and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal
Revenue Code of 1986, as amended, as each is in effect on the
Delivery Date (provided that the test of Rev. Proc. 75-28 Section
4.08(1) and Section 467 shall be applied on a prospective basis from
the date of such adjustment if and to the extent permitted by
applicable law, as then in effect) and (B) subject to verification
pursuant to Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting
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<PAGE> 19
Stipulated Loss Value or Termination Value as the same shall become due and
owing and all other amounts of Supplemental Rent within five days after demand
or within such other relevant period as may be provided in any Operative
Document, and in the event of any failure on the part of Lessee to pay any
Supplemental Rent when due, Lessor shall have all rights, powers and remedies
provided for herein or in any other Operative Document or by law or equity or
otherwise in the case of nonpayment of Basic Rent. Lessee shall pay as
Supplemental Rent when due any amount of premium payable when due under the
Trust Indenture and shall pay amounts equal to the amounts payable pursuant to
Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same
shall become due and payable. Lessee also will pay to Lessor, or to whomsoever
shall be entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, interest at the Past Due Rate on any part of any
installment of Interim Rent and Basic Rent not paid when due for any period for
which the same shall be overdue and on any payment of Supplemental Rent not paid
when due for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made directly
by Lessee (whether or not any Sublease shall be in effect) by wire transfer of
immediately available funds prior to 10:30 A.M., New York time, on the date of
payment, to Lessor at its account at First Security Bank of Utah, National
Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1996 A (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby directs
and Lessee agrees, that, unless the Indenture Trustee shall otherwise direct,
all Rent payable to Lessor and assigned to the Indenture Trustee pursuant to the
Trust Indenture shall be paid prior to 10:30 A.M., New York time on the due date
thereof in funds of the type specified in this Section 3(f) directly to the
Indenture Trustee at its account at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996
A (or such other account of the Indenture Trustee in the continental United
States as the Indenture Trustee shall direct in a notice to Lessee at least 10
Business Days prior to the date such payment of Rent is due). All payments of
Supplemental Rent owing to the Indenture Trustee or to a Loan Participant or any
other Certificate Holder pursuant to the Participation Agreement shall be made
in Dollars in immediately available funds prior to 10:30 A.M., New York time, on
the due date thereof at the office of the Indenture Trustee or at such other
office of such other financial institution located in the continental United
States as the party entitled thereto may so direct at least 10 Business Days
prior to the due date thereof. All payments of Supplemental Rent payable to the
Owner Participant, to the extent that such amounts constitute Excluded Payments
(as defined in the Trust Indenture), shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date thereof, to
the account of the Owner Participant specified in Schedule I to the
Participation Agreement (or to such other account as may be specified in writing
by the Owner Participant from time to time).
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<PAGE> 20
Notwithstanding anything to the contrary contained herein, if any
date on which a payment of Rent becomes due and payable is not a Business Day,
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day with the same force and effect as if made on
such scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if any, that
there shall not have been received by the Indenture Trustee to its account and
in funds of the type specified in Section 3(f) hereof by 10:30 A.M., New York
time, on the Transition Date or the Commencement Date from Lessor an amount
equal to the Excess Amount for such date, Lessee shall on the Transition Date or
the Commencement Date, prepay on the Transition Date or the Commencement Date a
portion of Basic Rent equal to the Excess Amount not so paid (the amount of such
Basic Rent to be prepaid by Lessee being herein called "PREPAID RENT"); provided
that Lessee shall, under all circumstances and whether or not an Event of
Default shall be continuing on the Transition Date, pay as Basic Rent (and not
as Prepaid Rent) on the Transition Date an amount equal to the excess, if any,
of the interest on the Secured Certificates relating to the period from and
including the Delivery Date to but excluding the Transition Date over the Excess
Amount payable on the Transition Date; provided, further, that Lessee will also
pay to the Indenture Trustee, on demand, as Supplemental Rent, to the extent
permitted by applicable law, interest at the Past Due Rate in effect from time
to time on any part of any Prepaid Rent and on the amount, if any, payable
pursuant to the immediately preceding proviso not paid when due for any period
for which the same shall be overdue. Lessor agrees to reimburse Lessee in the
manner provided in the following sentence for (x) the Prepaid Rent so paid by
Lessee, plus (y) any Supplemental Rent paid with respect to Prepaid Rent by
Lessee pursuant to this Section 3(g), plus (z) accrued interest on the
unreimbursed portion thereof at a rate per annum equal to 5% over the Base Rate
from the date such amount is paid by Lessee to but not including the date of
each such reimbursement (such amounts to be reimbursed being herein called the
"REIMBURSEMENT AMOUNT"). Lessor shall pay to Lessee, in funds of the type
specified in Section 3(f) hereof, within five days after Lessor, the Owner
Participant and the Indenture Trustee shall have received written notice from
Lessee demanding payment, the Reimbursement Amount. In addition, if, for any
reason, Lessor shall fail to pay to Lessee the Reimbursement Amount as above
provided, Lessee shall be entitled to offsets (without duplication) against each
succeeding payment (other than as limited by the proviso to this sentence) due
from Lessee to Persons other than the Loan Participants, the Indenture Trustee
and the Owner Trustee in its individual capacity (including, without limitation,
Basic Rent, payments due under Section 9, 10, 15 and 19 hereof, payments due
under the Tax Indemnity Agreement and payments due to Persons other than the
Loan Participants, the Indenture Trustee and Lessor in its individual capacity
under Section 7 of the Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however, that in the case of
any payment due from Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right of offset shall be limited to amounts distributable to
Lessor thereunder. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any installment of Interim Rent or Basic Rent
to an amount insufficient, together with the Excess Amount and all other amounts
payable
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<PAGE> 21
simultaneously by Lessee, to pay in full the payments then required to be made
on account of the principal of and interest on (and premium, if any, due with
respect to) the Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR LEASES
AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS." NEITHER
LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE
DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO
HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that First Security Bank of
Utah, National Association, in its individual capacity, (i) represents and
warrants that on the Delivery Date, Lessor shall have received whatever title to
the Aircraft was conveyed to it by Lessee, (ii) represents and warrants that on
the Delivery Date the Aircraft shall be free of Lessor Liens (including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) attributable to it, (iii) covenants that it will not, through
its own actions or inactions, interfere in Lessee's quiet enjoyment of the
Aircraft during the Term so long as this Lease shall not have been declared in
default pursuant to Section 15 hereof, (iv) agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor Lien attributable
to it on or with respect to the Airframe or any Engine or any portion of the
Trust Estate and (v) represents and warrants that it is a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement, and agrees that if at any time it shall cease to be a Citizen of
the United States without making use of a voting trust, voting powers agreement
or similar arrangement it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants, the
Owner Participant or Lessee), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. None of
the provisions of this Lease shall be deemed to amend, modify or otherwise
affect the representations, warranties or other obligations (express or implied)
of the Manufacturer, any subcontractor or supplier of the Manufacturer with
respect to the Airframe, the Engines or any Parts, or to release the
Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not, through its own actions or inactions interfere
in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and agrees
that it will not directly or indirectly create,
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<PAGE> 22
incur, assume or suffer to exist any Lessor Lien attributable to it on or with
respect to the Airframe or any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return. Unless
purchased by Lessee pursuant to Section 19 hereof, upon the termination of this
Lease at the end of the Basic Term or any Renewal Term or pursuant to Section
9(c) or 15, Lessee, at its own expense, will return the Airframe to Lessor at a
major airport in one of the forty-eight contiguous states of the United States
chosen by Lessee, and Lessee will give Lessor at least ten (10) days' prior
written notice of the place of such return; provided, however, that if Lessor
shall have made the request for storage pursuant to Section 5(d) hereof, Lessee
shall return the Airframe to Lessor at the site of the storage at the end of the
storage period. At the time of such return, Lessee will, unless otherwise
requested by Lessor at least ninety (90) days prior to the return hereunder,
cause the Aircraft, if it is not then so registered, to be registered under the
laws of the United States with the Federal Aviation Administration in the name
of the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by reason
of the failure of Lessor or its designee to be eligible on such date to own an
aircraft registered with the Federal Aviation Administration or (ii) such
registration is otherwise prohibited by applicable law; the Airframe will be
fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines
or two engines of the same or another manufacturer of not less than equivalent
utility, value and remaining useful life, and suitable for installation and use
on the Airframe without impairing the value, utility or remaining useful life of
the Aircraft; provided that both engines shall be of the same make and model)
duly installed thereon. Also, at the time of such return, such Airframe and
Engines or engines (i) shall be certified (or, if not then registered under the
Federal Aviation Act, shall be eligible for certification) as an airworthy
aircraft by the Federal Aviation Administration, (ii) shall be free and clear of
all Liens (other than Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens),
Indenture Trustee's Liens and Loan Participant Liens) and rights of third
parties under pooling, interchange, overhaul, repair or other similar agreements
or arrangements, (iii) shall be in as good an operating condition as when
delivered to Lessee hereunder, ordinary wear and tear excepted, or, in the case
of any such engines owned by Lessee, shall have a value, utility and remaining
useful life at least equal to, and shall be in as good an operating condition as
required by the terms hereof with respect to, Engines constituting part of the
Aircraft but not then installed on the Airframe, and (iv) shall be in compliance
with the return conditions, if any, set forth in Exhibit G.
During the last six (6) months of the Term (unless Lessee shall have
elected to purchase the Aircraft or renew this Lease in accordance with the
terms of this Lease), with reasonable notice, Lessee will cooperate, and cause
any Sublessee to cooperate, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating thereto, provided that such cooperation shall not interfere with the
operation or maintenance of the Aircraft by Lessee or any Sublessee.
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<PAGE> 23
(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
to Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
title) bill of sale with respect to each such engine, in form and substance
satisfactory to Lessor (together with an opinion of counsel to the effect that
such full warranty bill of sale has been duly authorized and delivered and is
enforceable in accordance with its terms and that such engines are free and
clear of Liens other than Lessor Liens (including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
Loan Participant Liens and Indenture Trustee Liens), against receipt from Lessor
of a bill of sale or other instrument evidencing the transfer, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), by Lessor to Lessee or its designee of all of Lessor's right,
title and interest in and to any Engine constituting part of the Aircraft but
not installed on the Airframe at the time of the return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessor shall pay Lessee, as compensation for any fuel or oil contained in
the fuel or oil tanks of such Airframe, the value of such fuel or oil at the
price paid by Lessee for such fuel or oil, as the case may be, and (ii) Lessee
shall deliver or cause to be delivered to Lessor all logs, manuals and data and
inspection, modification and overhaul records required to be maintained with
respect thereto under applicable rules and regulations of each country under the
laws of which the Aircraft has been registered during the period of operation
thereof, which logs, manuals, data and records, if not maintained in English,
shall be translated into English at Lessee's expense.
(d) Storage Upon Return. If, at least sixty (60) days prior to
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with free parking facilities for the Aircraft
(maintenance costs and other out-of-pocket costs other than parking fees to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such period
not exceeding thirty (30) days and be reimbursed by Lessor for the premiums
thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens
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<PAGE> 24
for taxes of Lessee (or any Sublessee) either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material risk of the sale, forfeiture or loss of the Airframe or any Engine
or any interest therein, or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture, (v)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing obligations
that are not overdue for a period of more than forty-five (45) days or are being
contested in good faith by appropriate proceedings so long as such proceedings
do not involve any material risk of the sale, forfeiture or loss of the Airframe
or any Engine or any interest therein or, so long as any Secured Certificates
shall be outstanding, adversely affect the Lien of the Trust Indenture, (vi)
Liens arising out of any judgment or award against Lessee (or any Sublessee),
unless the judgment secured shall not, within sixty (60) days after the entry
thereof, have been discharged, vacated, reversed or execution thereof stayed
pending appeal or shall not have been discharged, vacated or reversed within
sixty (60) days after the expiration of such stay, (vii) any other Lien with
respect to which Lessee (or any Sublessee) shall have provided a bond, cash
collateral or other security adequate in the reasonable opinion of Lessor, and
(viii) Liens approved in writing by Lessor. Lessee will promptly, at its own
expense, take (or cause to be taken) such actions as may be necessary duly to
discharge any such Lien not excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION AND
SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) forthwith upon
the delivery thereof hereunder, cause the Aircraft to be duly registered in the
name of Lessor, and, subject to the second paragraph of this Section 7(a) and
Section 8(f) of the Participation Agreement, to remain duly registered in the
name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and shall cause the
Trust Indenture to be duly recorded and maintained of record as a first mortgage
on the Aircraft; (ii) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) the Aircraft so as to keep the
Aircraft in as good an operating condition as delivered to Lessee hereunder,
ordinary wear and tear excepted, and as may be necessary to enable the
applicable airworthiness certification for the Aircraft to be maintained in good
standing at all times (other than temporary periods of storage in accordance
with applicable regulations or during maintenance or modification permitted
hereunder) under the Federal Aviation Act, except when all Boeing 757-200
aircraft powered by engines of the same type as those with which the Airframe
shall be equipped at the time of such grounding and registered in the United
States have been grounded by the FAA (although such certification need actually
be maintained only during such periods as the Aircraft is registered in the
United States), or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, utilizing, except during any period that a
Sublease is in effect, the
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<PAGE> 25
same manner and standard of maintenance, service, repair or overhaul used by
Lessee with respect to similar aircraft operated by Lessee in similar
circumstances and utilizing, during any period that a Sublease is in effect, the
same manner and standard of maintenance, service, repair or overhaul used by the
Sublessee with respect to similar aircraft operated by the Sublessee in similar
circumstances; provided, however, that in all circumstances the Aircraft shall
be maintained by Lessee (or any Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by, the FAA
or the central civil aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom; (iii) maintain or cause to be maintained all
records, logs and other materials required to be maintained in respect of the
Aircraft by the FAA or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered; and (iv) promptly
furnish or cause to be furnished to Lessor and the Owner Participant such
information as may be required to enable Lessor to file any reports required to
be filed by Lessor or the Owner Participant with any governmental authority
because of Lessor's ownership of the Aircraft. (II) Operation. Lessee will not
maintain, use, service, repair, overhaul or operate the Aircraft (or permit any
Sublessee to maintain, use, service, repair, overhaul or operate the Aircraft)
in violation of any law or any rule, regulation, order or certificate of any
government or governmental authority (domestic or foreign) having jurisdiction,
or in violation of any airworthiness certificate, license or registration
relating to the Aircraft issued by any such authority, except to the extent
Lessee (or, if a Sublease is then in effect, any Sublessee) is contesting in
good faith the validity or application of any such law, rule, regulation or
order in any reasonable manner which does not materially adversely affect Lessor
or, so long as any Secured Certificates shall be outstanding, the first priority
Lien of the Trust Indenture and does not involve any material risk of sale,
forfeiture or loss of the Aircraft. Lessee will not operate the Aircraft, or
permit any Sublessee to operate the Aircraft, in any area excluded from coverage
by any insurance required by the terms of Section 11; provided, however, that
the failure of Lessee to comply with the provisions of this sentence shall not
give rise to an Event of Default hereunder where such failure is attributable to
causes beyond the reasonable control of Lessee (or any Sublessee) or to
extraordinary circumstances involving an isolated occurrence or series of
incidents not in the ordinary course of the regular operations of Lessee (or any
Sublessee) and in each such case Lessee (or such Sublessee, as the case may be)
is taking all reasonable steps to remedy such failure as soon as is reasonably
practicable.
At any time after the Depreciation Period, Lessor, upon compliance
with all of the terms of Section 8(f) of the Participation Agreement, shall, at
the request and sole expense of Lessee, cooperate with Lessee to take all
actions required to change the registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(e) or 14(f) or Event of Default shall have occurred and be
continuing at the time of such sublease, delivery, transfer or relinquishment of
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<PAGE> 26
possession or installation or such Wet Lease, and so long as the action to be
taken shall not deprive the Indenture Trustee of the perfected first priority
Lien of the Trust Indenture on the Airframe or (subject to the further proviso
(B) to clause (i) of this Section 7(b)) any Engine, and so long as Lessee (or
any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof,
Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines then
installed thereon to normal interchange agreements or any Engine to
normal pooling or similar arrangements, in each case customary in
the airline industry and entered into by Lessee (or any Sublessee)
in the ordinary course of its business; provided that (A) no such
agreement or arrangement contemplates or requires the transfer of
title to the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such divestiture
shall be deemed to be an Event of Loss with respect to such Engine
and Lessee shall (or shall cause Sublessee to) comply with Section
10(b) hereof in respect thereof, and (C) any interchange agreement
to which the Airframe may be subject shall be with a U.S. Air
Carrier or a Foreign Air Carrier;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service, repair,
maintenance or overhaul work on the Airframe or Engine or any part
of any thereof or for alterations or modifications in or additions
to such Airframe or Engine to the extent required or permitted by
the terms of Section 8(c) hereof;
(iii) install an Engine on an airframe owned by Lessee (or any
Sublessee) free and clear of all Liens, except: (A) Permitted Liens
and those which apply only to the engines (other than Engines),
appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety), (B) the rights of
third parties under interchange agreements which would be permitted
under clause (i) above, provided that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the first
priority Lien of the Trust Indenture shall not be divested or
impaired as a result thereof and (C) mortgage liens or other
security interests, provided that (as regards this clause (C)) such
mortgage liens or other security interests effectively provide that
such Engine shall not become subject to the lien of such mortgage or
security interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and
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<PAGE> 27
(y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject any
appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the Airframe
or any Engine to the Civil Reserve Air Fleet Program and transfer
(or permit any Sublessee to transfer) possession of the Airframe or
any Engine to the United States of America or any instrumentality or
agency thereof pursuant to the Civil Reserve Air Fleet Program, so
long as Lessee (or any Sublessee) shall (A) promptly notify Lessor
upon subjecting the Airframe or any Engine to the Civil Reserve Air
Fleet Program in any contract year and provide Lessor with the name
and address of the Contracting Office Representative for the Air
Mobility Command of the United States Air Force to whom notice must
be given pursuant to Section 15 hereof, and (B) promptly notify
Lessor upon transferring possession of the Airframe or any Engine to
the United States of America or any agency or instrumentality
thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be given
prior to entering into such Wet Lease, if practicable, but in any
event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
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<PAGE> 28
(x) Lessee may, at any time, enter into any sublease with (1) a
U.S. Air Carrier, (2) any Person approved in writing by the Owner
Participant and the Indenture Trustee, which approval shall not be
unreasonably withheld or (3) after the Depreciation Period, any
Permitted Sublessee if (A) in any such case, the Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the date
such sublease is entered into, (B) in the event that the Sublessee
under such sublease is a foreign air carrier (other than a foreign
air carrier principally based in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based at the time such sublease is
entered into (or, in the case of a sublease to a proposed Sublessee
principally based in Taiwan, maintains diplomatic relations at least
as good as those in effect on the Delivery Date) and (C) in the
event that the Sublessee under such sublease is a foreign air
carrier, Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee to the effect that (I) the terms of the
proposed sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally) enforceable
against the proposed Sublessee in the country in which the proposed
Sublessee is principally based, (II) there exist no possessory
rights in favor of the Sublessee under such Sublease under the laws
of such Sublessee's country of domicile that would, upon bankruptcy
or insolvency of or other default by Lessee and assuming at such
time such Sublessee is not insolvent or bankrupt, prevent the return
or repossession of the Aircraft in accordance with the terms of this
Lease, (III) the laws of such Sublessee's country of domicile
require fair compensation by the government of such jurisdiction
payable in currency freely convertible into Dollars for the loss of
use of the Aircraft in the event of the requisition by such
government of such use, and (IV) the laws of such Sublessee's
country of domicile would give recognition to Lessor's title to the
Aircraft, to the registry of the Aircraft in the name of the Lessor
(or Lessee, as "lessee", or the proposed Sublessee, as "sublessee",
as appropriate) and to the Lien of the Trustee Indenture, provided,
however, that no sublease entered into pursuant to this clause (x)
shall extend beyond the expiration of the Basic Term or any Renewal
Term then in effect unless Lessee shall have irrevocably committed
to purchase the Aircraft.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant to
Section 15 hereof and to avoid such Sublease upon such repossession, and Lessee
shall remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such Sublease or transfer had not
occurred, and, except as otherwise provided herein, the terms of any such
Sublease shall not permit any Sublessee to take any action not permitted to
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<PAGE> 29
be taken by Lessee in this Lease with respect to the Aircraft. No pooling
agreement, sublease or other relinquishment of possession of the Airframe or any
Engine or Wet Lease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any sublease permitted under this Section 7(b) shall
expressly prohibit any further sub-sublease by the Sublessee. Lessor agrees, for
the benefit of Lessee (and any Sublessee) and for the benefit of any mortgagee
or other holder of a security interest in any engine (other than an Engine)
owned by Lessee (or any Sublessee), any lessor of any engine (other than an
Engine) leased to Lessee (or any Sublessee) and any conditional vendor of any
engine (other than an Engine) purchased by Lessee (or any Sublessee) subject to
a conditional sale agreement or any other security agreement, that no interest
shall be created hereunder in any engine so owned, leased or purchased and that
none of Lessor, its successors or assigns will acquire or claim, as against
Lessee (or any Sublessee) or any such mortgagee, lessor or conditional vendor or
other holder of a security interest or any successor or assignee of any thereof,
any right, title or interest in such engine as the result of such engine being
installed on the Airframe; provided, however, that such agreement of Lessor
shall not be for the benefit of any lessor or secured party of any airframe
(other than the Airframe) leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other security
agreement or for the benefit of any mortgagee of or any other holder of a
security interest in an airframe owned by Lessee (or any Sublessee), unless such
lessor, conditional vendor, other secured party or mortgagee has expressly
agreed (which agreement may be contained in such lease, conditional sale or
other security agreement or mortgage) that neither it nor its successors or
assigns will acquire, as against Lessor, any right, title or interest in an
Engine as a result of such Engine being installed on such airframe. Lessee shall
provide to the Owner Participant and the Indenture Trustee (i) written notice of
any Sublease hereunder (such notice to be given not later than five days prior
to entering into such Sublease, if practicable, but in any event promptly after
entering into any such Sublease) and (ii) a copy of each Sublease which has a
term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
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<PAGE> 30
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost and
expense, replace such Parts as promptly as practicable. All replacement Parts
shall be free and clear of all Liens (except for Permitted Liens and pooling
arrangements to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Parts replaced assuming such replaced Parts
were in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in paragraph (c) of this Section 8, all Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until such time as such Parts shall be replaced
by Parts which have been incorporated or installed in or attached to the
Airframe or such Engine and which meet the requirements for replacement Parts
specified above. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided,
without further act (subject only to Permitted Liens and any pooling arrangement
to the extent permitted by paragraph (b) of this Section 8 and except in the
case of replacement property temporarily installed on an emergency basis), (i)
title to such replacement Part shall thereupon vest in Lessor, (ii) such
replacement Part shall become subject to this Lease and be deemed part of the
Airframe or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Airframe or such
Engine, and (iii) title to the replaced Part shall thereupon vest in Lessee (or,
if a Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part
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<PAGE> 31
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) and by causing title to such further
replacement Part to vest in Lessor in accordance with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any applicable regulatory agency
or body of any other jurisdiction in which the Aircraft may then be registered
as permitted by Section 8(f) of the Participation Agreement; provided, however,
that Lessee (or, if a Sublease is then in effect, any Sublessee) may, in good
faith, contest the validity or application of any such law, rule, regulation or
order in any reasonable manner which does not adversely affect Lessor or, so
long as any Secured Certificates are outstanding, the Indenture Trustee. In
addition, Lessee (or any Sublessee), at its own expense, may from time to time
add further parts or accessories and make such alterations and modifications in
and additions to the Airframe or any Engine as Lessee (or any Sublessee) may
deem desirable in the proper conduct of its business, including, without
limitation, removal of Parts which Lessee (or any Sublessee) has determined in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or such Engine (such parts, "OBSOLETE PARTS"); provided that
no such alteration, modification or addition shall materially diminish the
value, utility or remaining useful life of the Airframe or such Engine below the
value, utility or remaining useful life thereof immediately prior to such
alteration, modification or addition, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease,
except that the value (but not the utility or remaining useful life) of the
Airframe or any Engine may be reduced by the value of Obsolete Parts which shall
have been removed so long as the aggregate value of all Obsolete Parts which
shall have been removed and not replaced shall not exceed $400,000. Title to all
Parts incorporated or installed in or attached or added to the Airframe or an
Engine as the result of such alteration, modification or addition (the
"ADDITIONAL PARTS") shall, without further act, vest in Lessor. Notwithstanding
the foregoing sentence, Lessee (or any Sublessee) may remove or suffer to be
removed any Additional Part, provided that such Additional Part (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Section 7 hereof or the first sentence of this paragraph (c)
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<PAGE> 32
and (iii) can be removed from the Airframe or such Engine without diminishing or
impairing the value, utility or remaining useful life which the Airframe or such
Engine would have had at the time of removal had such alteration, modification
or addition not occurred, assuming that such Airframe or Engine was in the
condition and repair required to be maintained by the terms hereof. Upon the
removal by Lessee (or Sublessee) of any Part as provided above, title thereto
shall, without further act, vest in Lessee (or any Sublessee, as the case may
be) and such Part shall no longer be deemed part of the Airframe or Engine from
which it was removed. Any Part not removed by Lessee (or any Sublessee) as above
provided prior to the return of the Airframe or Engine to Lessor hereunder shall
remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on
any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(3) Lessee shall give to Lessor at least one hundred twenty (120)
days' revocable advance written notice of Lessee's intention to so terminate
this Lease (any such notice, a "TERMINATION NOTICE") specifying (i) the Lease
Period Date on which Lessee intends to terminate this Lease in accordance with
this Section 9 (such specified date, a "TERMINATION DATE") and (ii) that Lessee
has determined that the Aircraft is obsolete or surplus to its needs. Any
Termination Notice shall become irrevocable fifteen (15) days prior to the
Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee shall
have exercised its right to terminate this Lease under Section 9(a)(2), then
during the period from the giving of the notice referred to in Section 9(a)(3)
until the proposed Termination Date (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date), Lessee, as agent
for Lessor and at no expense to Lessor, shall use its best efforts to obtain
bids in the worldwide market for the purchase of the Aircraft and, in the event
it receives any bid, Lessee shall, within five Business Days after receipt
thereof and at least ten Business Days prior to the proposed Termination Date,
certify to Lessor in writing the amount and terms of such bid, and the name and
address of the party or parties (who shall not be Lessee or any Affiliate of
Lessee or any Person with whom Lessee or any such Affiliate has an arrangement
or understanding regarding the future use of the Aircraft by Lessee or any such
Affiliate but who may be the Owner Participant, any Affiliate thereof or any
Person contacted by the Owner Participant) submitting such bid. After Lessee
shall have certified to Lessor all bids received, the Owner Participant, any
Affiliate thereof or any Person contacted by the Owner Participant may submit a
further bid or bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have
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<PAGE> 33
revoked the Termination Notice specifying such proposed Termination Date).
Subject to the next succeeding sentence, on or before the Termination Date,
subject to the release of all mortgage and security interests with respect to
the Aircraft under the Trust Indenture: (1) Lessee shall deliver the Aircraft,
or cause the Aircraft to be delivered, to the bidder(s), if any, which shall
have submitted the highest bid therefor at least ten (or, in the case of the
Owner Participant, any Affiliate thereof, or Person contacted by the Owner
Participant, five) Business Days prior to such Termination Date, in the same
manner and in the same condition and otherwise in accordance with all the terms
of this Lease as if delivery were made to Lessor pursuant to Section 5, and
shall duly transfer to Lessor title to any engines not owned by Lessor all in
accordance with the terms of Section 5, (2) Lessor shall comply with the terms
of the Trust Indenture and shall, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), subject to prior
or concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total selling price realized at such
sale to be retained by Lessor, and (3) Lessee shall simultaneously pay or cause
to be paid to Lessor in funds of the type specified in Section 3(f) hereof, an
amount equal to the sum of (A) the excess, if any, of (i) the Termination Value
for the Aircraft, computed as of the Termination Date, over (ii) the sale price
of the Aircraft sold by Lessor after deducting the reasonable expenses incurred
by Lessor in connection with such sale, (B) all unpaid Basic Rent with respect
to the Aircraft due prior to such Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all unpaid Supplemental Rent due on or prior to the
Termination Date with respect to the Aircraft, and (C) the premium and Funding
Loss Amount, if any, due on the Secured Certificates, and upon such payment
Lessor simultaneously will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
all of Lessor's right, title and interest in and to any Engines constituting
part of the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor shall
give to Lessee written notice of such election at least five Business Days prior
to the Termination Date accompanied by an irrevocable undertaking by the Owner
Participant to make available to the Lessor for payment to the Indenture Trustee
on the Termination Date the amount required to pay in full the unpaid principal
amount of the Secured Certificates outstanding on the Termination Date plus
interest accrued thereon through the Termination Date together with the premium
and Funding Loss Amount, if any, due on the Secured Certificates, if the same is
not otherwise paid. Upon receipt of notice of such an election by Lessor and the
accompanying undertaking by the Owner Participant, Lessee shall cease its
efforts to obtain bids as provided above and shall reject all bids theretofore
or thereafter received. On the Termination Date, Lessor shall (subject to the
payment by Lessee of all Rent due on or prior to such date as set forth below)
pay in full the unpaid principal amount of the Secured Certificates outstanding
on the Termination Date plus interest accrued thereon through the Termination
Date together with all premium and Funding Loss Amount, if any, due on the
Secured Certificates and, so long as the Secured Certificates are paid as
aforesaid, Lessee shall deliver the Airframe and Engines or engines to Lessor in
accordance with Section 5 and shall
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<PAGE> 34
pay all Basic Rent due prior to the Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all Supplemental Rent (other than premium, Funding Loss
Amount or Termination Value) due on or prior to the Termination Date. If no sale
shall have occurred on the Termination Date and Lessor has not made the payment
contemplated by the preceding sentence and thereby caused this Lease to
terminate, this Lease shall continue in full force and effect as to the
Aircraft, Lessee shall pay the reasonable costs and expenses incurred by the
Owner Participant and Lessor (unless such failure to terminate the Lease is a
consequence of the failure of Lessor or the Owner Participant without due cause
to make, or cause to be made, the payment referred to in the immediately
preceding sentence), if any, in connection with preparation for such sale and
Lessee may give one or more additional Termination Notices in accordance with
Section 9(a)(2), subject to the last sentence of this Section 9(c). In the event
of any such sale or such retention of the Aircraft by Lessor and upon compliance
by Lessee with the provisions of this paragraph, the obligation of Lessee to pay
Basic Rent or any other amounts hereunder shall cease to accrue and this Lease
shall terminate. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise take any action
in connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft,
against receipt of the payments provided herein. Lessee may revoke a Termination
Notice given pursuant to Section 9(a)(2) no more than two times during the Term.
(d) Termination as to Engines. So long as no Event of Default shall
have occurred and be continuing, Lessee shall have the right at its option at
any time during the Term, on at least thirty (30) days' prior written notice, to
terminate this Lease with respect to any Engine. In such event, and prior to the
date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and Lessor shall transfer such
right, title and interest as it may have to the replaced Engine as provided in
Section 5(b). No termination of this Lease with respect to any Engine as
contemplated by this Section 9(d) shall result in any reduction of Interim Rent
or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of Loss
with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) the third Business Day following the receipt of
insurance proceeds in respect of such occurrence (but
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<PAGE> 35
not earlier than thirty (30) days after such occurrence) (the "LOSS
PAYMENT DATE"), Lessee shall pay or cause to be paid to Lessor in
funds of the type specified in Section 3(f) hereof, an amount equal
to the Stipulated Loss Value of the Aircraft corresponding to the
Stipulated Loss Value Date occurring on or immediately following the
Loss Payment Date; provided, however, that if the Commencement Date
or a Lease Period Date shall occur prior to the Loss Payment Date
with respect to which Stipulated Loss Value is determined, Lessee
shall pay on the Commencement Date or such Lease Period Date an
amount equal to the Interim Rent or Basic Rent that would have been
due on the Commencement Date or such Lease Period Date if such Event
of Loss had not occurred, or
(ii) substitute an aircraft or an airframe or an airframe and
one or more engines, as the case may be; provided that, if Lessee
does not perform its obligation to effect such substitution in
accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor
on the Business Day next succeeding the 120th day following the
occurrence of such Event of Loss the amount specified in clause (i)
above.
At such time as Lessor shall have received the amounts specified in
subparagraph (i) above, together with all other amounts that then may be due
hereunder (including, without limitation, all Basic Rent due before the date of
such payment and all Supplemental Rent), under the Participation Agreement and
under the Tax Indemnity Agreement, (1) the obligation of Lessee to pay the
installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
Termination Value or any other amount shall cease to accrue, (2) this Lease
shall terminate, (3) Lessor will comply with the terms of the Trust Indenture
and transfer to or at the direction of Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
all of Lessor's right, title and interest in and to the Airframe and any Engines
subject to such Event of Loss, as well as any Engines not subject to such Event
of Loss, and furnish to or at the direction of Lessee a bill of sale in form and
substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such
transfer, and (4) Lessee will be subrogated to all claims of Lessor, if any,
against third parties, for damage to or loss of the Airframe and any Engines
which were subject to such Event of Loss to the extent of the then insured value
of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or an
airframe or an airframe and one or more engines which, together with the Engines
constituting a part of the Aircraft but not installed thereon at the time of
such Event of Loss constitute the Aircraft) free and clear of all Liens (other
than Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Aircraft subject to
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<PAGE> 36
such Event of Loss assuming that the Aircraft had been maintained in accordance
with this Lease; provided that any aircraft, airframe or engine so substituted
hereunder shall be of the same or improved model as those initially leased
hereunder and (B) prior to or at the time of any such substitution, Lessee (or
any Sublessee), at its own expense, will (1) furnish Lessor with a full warranty
bill of sale and a Federal Aviation Administration bill of sale, in form and
substance reasonably satisfactory to Lessor, evidencing such transfer of title,
(2) cause a Lease Supplement and a Trust Supplement to be duly executed by
Lessee and filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in which the
Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (3) cause a financing statement or statements with
respect to such substituted property to be filed in such place or places as are
deemed necessary or desirable by Lessor to perfect its and the Indenture
Trustee's interest therein and herein, (4) furnish Lessor with such evidence of
compliance with the insurance provisions of Section 11 with respect to such
substituted property as Lessor may reasonably request, (5) furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor simultaneously will comply with
the terms of the Trust Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest,
if any, in and to the Aircraft or the Airframe and one or more Engines, as the
case may be, with respect to which such Event of Loss occurred and furnish to or
at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish
Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft
and, if not, other counsel chosen by Lessee and reasonably acceptable to Lessor)
reasonably satisfactory to Lessor to the effect that Lessor and the Indenture
Trustee as assignee of Lessor will be entitled to the benefits of Section 1110
of the U.S. Bankruptcy Code with respect to the substitute aircraft, provided
that such opinion need not be delivered to the extent that immediately prior to
such substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were
not, solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, and (7) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe or
the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event, within fifteen days after such occurrence) give
Lessor written notice thereof and shall, within sixty (60) days after the
occurrence of such Event of Loss, convey or cause to be conveyed to
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<PAGE> 37
Lessor, as replacement for the Engine with respect to which such Event of Loss
occurred, title to another Pratt & Whitney Model PW2037 engine (or engine of the
same or another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; provided that both Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine, (ii)
cause a Lease Supplement and Trust Supplement to be duly executed by Lessee and
to be filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in which the
Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (B) all claims, if any,
against third parties, for damage to or loss of the Engine subject to such Event
of Loss, and such Engine shall thereupon cease to be the Engine leased
hereunder. For all purposes hereof, each such replacement engine shall, after
such conveyance, be deemed part of the property leased hereunder, and shall be
deemed an "ENGINE". No Event of Loss with respect to an Engine under the
circumstances contemplated by the terms of this paragraph (b) shall result in
any reduction in Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine or engines then installed thereon), (A)
unless the same are replaced pursuant to the last paragraph of
Section 10(a), after reimbursement of Lessor (as provided in Section
7.01 of the Trust Agreement) for reasonable costs and expenses, so
much of such payments remaining as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a),
shall be applied in reduction of Lessee's obligation to pay
Stipulated Loss Value, if not already paid by Lessee, or, if already
paid by
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<PAGE> 38
Lessee, shall be applied to reimburse Lessee for its payment of
Stipulated Loss Value, and following the foregoing application, the
balance, if any, of such payments will be paid over to, or retained
by Lessee, provided that Lessor shall be entitled to so much of the
excess, if any, of such payment over the greater of (x) the
Stipulated Loss Value and (y) the fair market value of the Aircraft
as Lessor shall demonstrate to Lessee's reasonable satisfaction is
attributable to compensation for loss of Lessor's interest in the
Aircraft as distinguished from the loss of use of the Aircraft; or
(B) if such property is replaced pursuant to the last paragraph of
Section 10(a), such payments shall be paid over to, or retained by,
Lessee; provided that Lessee shall have fully performed or,
concurrently therewith, will fully perform the terms of the last
paragraph of Section 10(a) with respect to the Event of Loss for
which such payments are made; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by Section 10(b) hereof, so much of
such payments remaining after reimbursement of Lessor (as provided
for in Section 7.01 of the Trust Agreement) for reasonable costs and
expenses shall be paid over to, or retained by, Lessee, provided
that Lessee shall have fully performed, or concurrently therewith
will perform, the terms of Section 10(b) with respect to the Event
of Loss for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other government
of registry of the Aircraft or any instrumentality or agency of any thereof,
Lessee shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government prior to the end of the Term, Lessee shall be obligated to
return the Airframe and such Engines or engines to Lessor pursuant to, and in
all other respects in compliance with the provisions of, Section 5 promptly on
the date of such return by such government. If, in the event of any such
requisition, Lessee shall fail to return the Aircraft on or before the thirtieth
day beyond the end of the Term, such failure shall constitute an Event of Loss
which shall be deemed to have occurred on the last day of the Term and in such
event Lessee shall make the payment contemplated by Section 10(a)(i) in respect
of such Event of Loss; provided, however, that Lessor may notify Lessee in
writing on or before the twentieth day prior to the last day of the Term that,
in the event Lessee shall fail by reason of such requisition to return the
Airframe and such Engines or engines on or before the thirtieth day beyond the
end of the Term, such failure shall not be deemed an Event of Loss. Upon the
giving of such notice and such failure to return by the thirtieth day beyond the
end of the Term, Lessee shall be relieved of all of its obligations pursuant to
the provisions of Section 5 (including Exhibit G) but not under any other
Section, except that if any engine not owned by Lessor shall then be installed
on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
furnished, to Lessor a full warranty (as to title) bill of sale with respect to
each such engine, in form and substance
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<PAGE> 39
reasonably satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of Lessor
Liens), Loan Participant Liens and Indenture Trustee Liens), against receipt
from Lessor of a bill of sale evidencing the transfer, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of Lessor
Liens), by Lessor to Lessee or its designee of all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft but not then
installed on the Airframe. All payments received by Lessor or Lessee from such
government for the use of such Airframe and Engines or engines during the Term
shall be paid over to, or retained by, Lessee (or, if directed by Lessee, any
Sublessee); and all payments received by Lessor or Lessee from such government
for the use of such Airframe and Engines or engines after the end of the Term
shall be paid over to, or retained by, Lessor unless Lessee shall have exercised
its purchase option hereunder, in which case such payments shall be made to
Lessee.
(e) Requisition for Use of an Engine by the United States Government
or the Government of Registry of the Aircraft. In the event of the requisition
for use of an Engine by the United States Government or any other government of
registry of the Aircraft or any agency or instrumentality of any thereof (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Event of Default, such amount shall be
paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i) aircraft
public liability (including, without limitation, passenger legal liability) (and
including aircraft war risk and hijacking insurance, if and to the extent the
same is maintained by Lessee (or any Sublessee) with respect to other aircraft
owned or leased, and operated by Lessee (or such Sublessee) on the same routes)
insurance and property damage insurance (exclusive of manufacturer's product
liability insurance) with respect to the Aircraft, in an amount not less than
the greater of (x)
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<PAGE> 40
the amount of public liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee of the same type as the
Aircraft and (y) such amount per occurrence as may have been agreed to on the
Delivery Date by the Owner Participant and (ii) cargo liability insurance, in
the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft operated by Lessee of the
same type as the Aircraft and (B) which is maintained in effect with insurers of
recognized responsibility. Any policies of insurance carried in accordance with
this paragraph (a) and any policies taken out in substitution or replacement for
any of such policies (A) shall be amended to name Lessor, in its individual
capacity and as owner trustee, the Indenture Trustee and the Owner Participant
(but without imposing on any such parties liability to pay the premiums for such
insurance) (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds as their respective
interests may appear, (B) shall provide that in respect of the respective
interests of Lessor, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if any Sublease is then in effect, any Sublessee) or
any other Person and shall insure Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee (or, if
any Sublease is then in effect, any Sublessee), (C) may provide for
self-insurance to the extent permitted by Section 11(d) and (D) shall provide
that if the insurers cancel such insurance for any reason whatever or if any
material change is made in such insurance which adversely affects the interest
of Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), or
such insurance shall lapse for non-payment of premium, such cancellation, lapse
or change shall not be effective as to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) for thirty (30) days (seven (7) days
in the case of war risk and allied perils coverage) after issuance to Lessor,
the Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), respectively,
of written notice by such insurers of such cancellation, lapse or change;
provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable. Each liability policy (1) shall be primary
without right of contribution from any other insurance which is carried by
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), (2)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured, and (3) shall waive any right of the insurers to any
set-off or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of Lessor or the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) to the extent of any moneys due to
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease).
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<PAGE> 41
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that (A) the amounts of coverage shall not be required
to exceed the amounts of public liability and property damage insurance from
time to time applicable to aircraft owned or operated by Lessee of the same type
as the Aircraft which are on the ground and not in operation; and (B) the scope
of the risks covered and the type of insurance shall be the same as from time to
time shall be applicable to aircraft owned or operated by Lessee of the same
type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except as
provided in clause (II) of this Section 11(b), Lessee shall maintain or cause to
be maintained in effect, at its or any Sublessee's expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, any Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned by Lessee of the same type as the Aircraft;
provided that such insurance shall at all times while the Aircraft is subject to
this Lease be for an amount (subject to self-insurance to the extent permitted
by Section 11(d)) not less than the Stipulated Loss Value for the Aircraft. Any
policies carried in accordance with this paragraph (b) covering the Aircraft and
any policies taken out in substitution or replacement for any such policies (i)
shall name Lessor, as owner trustee, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds, as their respective
interests may appear (but without imposing on any such party liability to pay
premiums with respect to such insurance), (ii) may provide for self-insurance to
the extent permitted in Section 11(d), (iii) shall provide that (A) in the event
of a loss involving proceeds in excess of $3,500,000 (or, if the Aircraft is
then under a Sublease, in excess of $2,000,000), the proceeds in respect of such
loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall
be payable to Lessor (or, so long as the Trust Indenture shall not have been
discharged, the Indenture Trustee) (except in the case of a loss with respect to
an Engine installed on an airframe other than the Airframe, in which case Lessee
(or any Sublessee) shall arrange for any payment of insurance proceeds in
respect of such loss to be held for the account of Lessor (or, so long as the
Trust Indenture shall not have been discharged, the Indenture Trustee) whether
such payment is made to Lessee (or any Sublessee) or any third party), it being
understood and agreed that in the case of any payment to Lessor (or the
Indenture Trustee) otherwise than in respect of an Event of Loss, Lessor (or the
Indenture Trustee) shall, upon receipt of evidence satisfactory to it that the
damage giving rise to such payment shall have
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<PAGE> 42
been repaired or that such payment shall then be required to pay for repairs
then being made, pay the amount of such payment to Lessee or its order, and (B)
the entire amount of any loss involving proceeds of $3,500,000 (or, if the
Aircraft is then under a Sublease, of $2,000,000) or less or the amount of any
proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft
shall be paid to Lessee or its order unless an Event of Default shall have
occurred and be continuing and the insurers have been notified thereof by Lessor
or the Indenture Trustee, (iv) shall provide that if the insurers cancel such
insurance for any reason whatever, or such insurance lapses for non-payment of
premium or if any material change is made in the insurance which adversely
affects the interest of Lessor, the Indenture Trustee or the Owner Participant,
such cancellation, lapse or change shall not be effective as to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty (30)
days (seven (7) days in the case of hull war risk and allied perils coverage)
after issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change, provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (v) shall
provide that in respect of the respective interests of Lessor, the Indenture
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) in such policies the
insurance shall not be invalidated by any action or inaction of Lessee (or, if a
Sublease is then in effect, any Sublessee) or any other Person and shall insure
the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by Lessee (or, if a Sublease is then in effect, any Sublessee), (vi) shall be
primary without any right of contribution from any other insurance which is
carried by Lessor, the Owner Participant or the Indenture Trustee (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), and
(viii) shall waive any right of the insurers to set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee or
the Owner Participant. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Lessor shall hold any payment to it
of any insurance proceeds in respect of such loss for the account of Lessee or
any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), (i) unless such
property is replaced pursuant to the last paragraph of Section
10(a), so much of such payments
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<PAGE> 43
remaining, after reimbursement of Lessor (as provided in Section
7.01 of the Trust Agreement) for reasonable costs and expenses, as
shall not exceed the Stipulated Loss Value required to be paid by
Lessee pursuant to Section 10(a) hereof shall be applied in
reduction of Lessee's obligation to pay such Stipulated Loss Value,
if not already paid by Lessee, or, if already paid by Lessee, shall
be applied to reimburse Lessee for its payment of such Stipulated
Loss Value, and the balance, if any, of such payments remaining
thereafter will be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee); or (ii) if such property is
replaced pursuant to the last paragraph of Section 10(a), such
payments shall be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee), provided that Lessee shall have
fully performed or, concurrently therewith, will fully perform the
terms of the last paragraph of Section 10(a) with respect to the
Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so
much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, shall be paid over to, or retained by, Lessee
(or if directed by Lessee, any Sublessee), provided that Lessee
shall have fully performed or, concurrently therewith, will fully
perform, the terms of Section 10(b) with respect to the Event of
Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any balance (or if already
paid for by Lessee (or any Sublessee), all such insurance proceeds) remaining
after compliance with such Sections with respect to such loss shall be paid to
Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned by Lessee of
the same type similarly on the ground and not in operation, provided that Lessee
shall maintain insurance against risk of loss or damage to the Aircraft in an
amount equal to the Stipulated Loss Value of the Aircraft during such period
that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be furnished, to
Lessor, the Indenture Trustee and the Owner Participant, on or before the
Delivery Date and on or before July 1 in each year thereafter during the Term
commencing July, 1996, a report, signed by Marsh & McLennan, Incorporated or any
other independent firm of insurance brokers reasonably acceptable to Lessor (the
"INSURANCE BROKERS"), describing in reasonable detail the
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<PAGE> 44
insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants or
the Owner Participant to anyone except (A) to permitted transferees of Lessor's,
the Loan Participants', the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to Lessor's, the
Loan Participants', the Owner Participant's or the Indenture Trustee's counsel
or independent certified public accountants or independent insurance advisors
who agree to hold such information confidential or (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation. Lessee will cause such Insurance Brokers to agree to advise Lessor,
the Indenture Trustee and the Owner Participant in writing of any default in the
payment of any premium and of any other act or omission on the part of Lessee of
which it has knowledge and which might invalidate or render unenforceable, in
whole or in part, any insurance on the Aircraft. To the extent such agreement is
reasonably obtainable, Lessee will also cause such Insurance Brokers to agree to
advise Lessor, the Indenture Trustee and the Owner Participant in writing at
least thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage), prior to the expiration or termination date of any insurance carried
and maintained on the Aircraft pursuant to this Section 11. In addition, Lessee
will also cause such Insurance Brokers to deliver to Lessor, the Indenture
Trustee and the Owner Participant, on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form as delivered by
Lessee to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or the
Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or the
Indenture Trustee, as the case may be, without waiver of any other rights Lessor
or the Indenture Trustee may have; provided, however, that no exercise by Lessor
or the Indenture Trustee, as the case may be, of said option shall affect the
provisions of this Lease, including the provisions of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
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<PAGE> 45
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
Notwithstanding any other provision of this Lease, all proceeds of insurance
carried by Lessor shall be paid to Lessor.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written consent
of Lessor, other government of registry of the Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee (or any Sublessee)
with respect to the Aircraft (including permitted self-insurance) shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 11 which is payable to
or retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or any Sublessee) if at the time of such payment or retention an Event
of Default shall have occurred and be continuing, but shall be held by or paid
over to Lessor as security for the obligations of Lessee (or any Sublessee)
under this Lease and, if Lessor declares this Lease to be in default pursuant to
Section 15 hereof, applied against Lessee's obligations hereunder as and when
due. At such time as there shall not be continuing any such Event of Default,
such amount shall be paid to Lessee (or such Sublessee) to the extent not
previously applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, Lessor, the Owner
Participant or the Indenture Trustee or their respective authorized
representatives may (not more than once every calendar year (unless an Event of
Default has occurred and is continuing when such inspection right shall not be
so limited)) inspect the Aircraft and inspect and make copies (at Lessor's, the
Owner Participant's or the Indenture Trustee's expense, as the case may be) of
the books and records of Lessee relating to the maintenance of the Aircraft; any
such inspection of the Aircraft shall be limited to a visual, walk-around
inspection and shall not include opening any panels, bays or the like without
the express consent of Lessee; provided that no exercise of such inspection
right shall interfere with the operation or maintenance of the Aircraft by, or
the business of, Lessee (or any Sublessee). Upon receipt by Lessee of a written
request from the Owner Participant specifying that the Owner Participant desires
to have an authorized representative observe the next scheduled major overhaul
to be performed on the Aircraft, Lessee shall cooperate with the Owner
Participant to enable the Owner Participant's authorized representative to
observe the next scheduled major overhaul to be performed on the Aircraft;
provided that Lessee shall be required to so
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<PAGE> 46
cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe one scheduled major overhaul during each
three year period of the Term and (notwithstanding the foregoing but only if a
major overhaul is scheduled during the last year of the Term) one scheduled
major overhaul during the last year of the Term; provided that the Owner
Participant's authorized representative shall merely observe such major
overhaul, shall not interfere with or extend in any manner the conduct or
duration of the major overhaul and shall not be entitled to direct any of the
work performed in connection with such overhaul. None of Lessor, the Owner
Participant or the Indenture Trustee shall have any duty to make any such
inspection nor shall any of them incur any liability or obligation by reason of
not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein, Lessee
will not, without prior written consent of Lessor, assign in whole or in part
any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) and each such Event of
Default shall continue so long as, but only as long as, it shall not have been
remedied:
(a) Lessee shall not have made a payment of Interim Rent, Basic
Rent or Stipulated Loss Value within ten (10) days after the same
shall have become due; or
(b) Lessee shall have failed to make a payment of Supplemental
Rent (other than Stipulated Loss Value) after the same shall have
become due and such failure shall continue for ten (10) Business
Days after Lessee's receipt of written demand therefor by the party
entitled thereto (provided that any failure to pay any amount owed
by Lessee under the Tax Indemnity Agreement or any failure of Lessee
to pay to Lessor or the Owner Participant when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an
Event of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall constitute
an Event of Default); or
(c) Lessee shall have failed to perform or observe (or caused to
be performed and observed) in any material respect any covenant or
agreement (except the covenants set forth in the Tax Indemnity
Agreement and in clauses (i)(B) and (ii) of the first sentence of
second paragraph of Exhibit G) to be performed or observed by it
under any Operative Document, and such failure
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<PAGE> 47
shall continue unremedied for a period of thirty (30) days after
receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause (ii)
or clause (iii) of the first sentence of Section 7(a), or under the
second sentence of Section 7(a) as it relates to maintenance,
service, repair or overhaul or under Section 8 and, notwithstanding
the diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty day period but is curable
with future due diligence, there shall exist no Event of Default
under this Section 14 so long as Lessee is proceeding with due
diligence to cure such failure and such failure is remedied not
later than one hundred eighty (180) days after receipt by Lessee of
such written notice; or
(d) any representation or warranty made by Lessee herein or in
the Participation Agreement or any document or certificate furnished
by Lessee in connection herewith or therewith or pursuant hereto or
thereto (except the representations and warranties set forth in
Section 3 of the Tax Indemnity Agreement and such documents or
certificates as are furnished to the Owner Participant solely in
connection with matters dealt with in the Tax Indemnity Agreement
and for no other purpose and except the representations and
warranties in, or in connection with, the Credit Agreement) shall
prove to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the extent
of the adverse impact of such incorrectness on the interests of the
Owner Participant, Lessor or the Certificate Holders) within thirty
(30) days after the receipt by Lessee of a written notice from
Lessor or the Indenture Trustee advising Lessee of the existence of
such incorrectness; or
(e) the commencement of an involuntary case or other proceeding
in respect of Lessee in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar
law in the United States or seeking the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its property,
or seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed and
unstayed for a period of ninety (90) consecutive days or an order,
judgment or decree shall be entered in any proceeding by any court
of competent jurisdiction appointing, without the consent of Lessee,
a receiver, trustee or liquidator of Lessee, or of any substantial
part of its property, or sequestering any substantial part of the
property of Lessee and any such order, judgment or decree or
appointment or sequestration shall be final or shall remain in force
undismissed, unstayed or unvacated for a period of ninety (90) days
after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
any other
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applicable federal or state bankruptcy, insolvency or other similar
law in the United States, or the consent by Lessee to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of Lessee or for all or substantially all of its property,
or the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to authorize
any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance
required to be maintained in accordance with the provisions of
Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as Lessee
is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of Default
and at any time thereafter so long as the same shall be continuing, Lessor may,
at its option, declare by written notice to Lessee this Lease Agreement to be in
default; and at any time thereafter, so long as any such outstanding Events of
Default shall not have been remedied, Lessor may do one or more of the following
with respect to all or any part of the Airframe and any or all of the Engines as
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, applicable law then in
effect; provided, however, that during any period the Aircraft is subject to the
Civil Reserve Air Fleet Program in accordance with the provisions of Section
7(b) hereof and in possession of the United States government or an agency or
instrumentality of the United States, Lessor shall not, on account of any Event
of Default, be entitled to do any of the following in such manner as to limit
Lessee's control under this Lease (or any Sublessee's control under any
Sublease) of any Airframe or any Engines installed thereon, unless at least
sixty (60) days' (or such lesser period as may then be applicable under the Air
Mobility Command program of the United States Government) written notice of
default hereunder shall have been given by Lessor by registered or certified
mail to Lessee (and any Sublessee) with a copy addressed to the Contracting
Office Representative for the Air Mobility Command of the United States Air
Force under any contract with Lessee (or any Sublessee) relating to the
Aircraft:
(a) upon the written demand of Lessor and at Lessee's expense,
cause Lessee to return promptly, and Lessee shall return promptly,
the Airframe or any Engine as Lessor may so demand to Lessor or its
order in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 5 as if such Airframe
or Engine were being returned at the end of the Term, or Lessor, at
its option, may enter upon the premises where all or any part of the
Airframe or any Engine is located and take immediate possession of
and remove the same by summary proceedings or otherwise (and/or, at
Lessor's option, store the same at Lessee's premises until disposal
thereof by
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<PAGE> 49
Lessor), all without liability accruing to Lessor for or by reason
of such entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public or private
sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle the Aircraft as Lessor, in its
sole discretion, may determine, all free and clear of any rights of
Lessee, except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph
(a) or paragraph (b) above with respect to the Airframe and/or any
Engine, Lessor, by written notice to Lessee specifying a payment
date which shall be the Lease Period Date not earlier than ten days
from the date of such notice, may demand that the Lessee pay to
Lessor, and Lessee shall pay Lessor, on the payment date so
specified, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the installments of Interim Rent or Basic Rent
for the Aircraft due for the Commencement Date, Lease Periods
commencing on or after the Commencement Date or the Lease Period
Date specified as the payment date in such notice), any unpaid
Interim Rent or Basic Rent due on the Commencement Date and Lease
Period Dates prior to the payment date so specified (including,
without limitation, any adjustments to Basic Rent payable pursuant
to Section 3(d)) plus whichever of the following amounts Lessor, in
its sole discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from such
specified payment date until the date of actual payment of such
amount): (i) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft, computed as of the Lease
Period Date specified as the payment date in such notice, over the
aggregate fair market rental value (computed as hereafter in this
Section 15 provided) of such Aircraft for the remainder of the Term,
after discounting such aggregate fair market rental value to present
value as of the Lease Period Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 1%; or
(ii) an amount equal to the excess, if any, of the Stipulated Loss
Value for such Aircraft, computed as of the Lease Period Date
specified as the payment date in such notice over the fair market
sales value of such Aircraft (computed as hereafter in this Section
provided) as of the Lease Period Date specified as the payment date
in such notice;
(d) in the event Lessor, pursuant to paragraph (b) above, shall
have sold the Airframe and/or any Engine, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such
Aircraft, may, if it shall so elect, demand that Lessee pay Lessor,
and Lessee shall pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in
lieu of the installments of Interim Rent or Basic Rent for the
Aircraft
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<PAGE> 50
due on or after such date), any unpaid Interim Rent or Basic Rent
with respect to the Aircraft due prior to such date (including,
without limitation, any adjustments to Basic Rent payable pursuant
to Section 3(d)) plus the amount of any deficiency between the net
proceeds of such sale (after deduction of all reasonable costs of
sale) and the Stipulated Loss Value of such Aircraft, computed as of
the Stipulated Loss Value Date on or immediately following the date
of such sale together with interest, if any, on the amount of such
deficiency, at the Past Due Rate, from the date of such sale to the
date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to the Aircraft,
and/or may exercise any other right or remedy which may be available
to it under applicable law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market rental
value" or the "fair market sales value" of the Aircraft shall be the rental
value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller in possession under no compulsion
to sell, as the case may be, in each case based upon the actual condition and
location of the Aircraft, which value shall be determined by mutual agreement
or, in the absence of mutual written agreement, pursuant to an appraisal
prepared and delivered by a nationally recognized firm of independent aircraft
appraisers nominated by Lessor, and Lessor shall immediately notify Lessee of
such nomination. Unless Lessee shall have objected in writing within ten days
after its receipt of Lessor's notice, Lessor's nomination shall be conclusive
and binding. If Lessee shall object, however, Lessor and Lessee shall endeavor,
within ten days after such objection is made, to select a mutually acceptable
appraiser; provided that, if Lessee shall not so endeavor to make such
selection, Lessor's nomination referred to in the preceding sentence hereof
shall be conclusive and binding. If Lessor and Lessee fail to reach agreement
(except for the reason referred to in the proviso in the preceding sentence), or
if any appraiser selected fails to act for any reason, then the question shall
be determined by an appraisal (applying the definitions of "fair market rental
value" and "fair market sales value" as set forth above based upon the actual
condition of the Aircraft) mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may
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<PAGE> 51
apply to the American Arbitration Association (or any successor organization
thereto) in New York, New York for the appointment of such third appraiser. The
decision of the third appraiser so appointed shall be given within twenty
Business Days after the appointment of such third appraiser. As soon as the
third appraiser has delivered his appraisal, that appraisal shall be compared
with the appraisals given by the other two appraisers. If the determination of
one appraiser is more disparate from the average of all three determinations
than each of the other two determinations, then the determination of such
appraiser shall be excluded, the remaining two determinations shall be averaged
and such average shall be final and binding upon the parties hereto. If no
determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. The cost of such appraisal or appointment
shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or amendment to be duly
filed and recorded, and maintained of record, in accordance with the applicable
laws of the government of registry of the Aircraft. In addition, Lessee will
promptly and duly execute and deliver to Lessor such further documents and take
such further action as Lessor or
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the Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor and the Indenture Trustee hereunder, including, without limitation, if
requested by Lessor or the Indenture Trustee, at the expense of Lessee, the
execution and delivery of supplements or amendments hereto or to the Trust
Indenture, each in recordable form, subjecting to this Lease and the Trust
Indenture, any airframe or engine substituted for the Airframe or any Engine
pursuant to the terms thereof and the recording or filing of counterparts
thereof, in accordance with the laws of such jurisdictions as Lessor or the
Indenture Trustee may from time to time deem advisable. Lessee agrees to furnish
to Lessor and the Indenture Trustee promptly after execution and delivery of any
supplement and amendment hereto and promptly after the execution and delivery of
any supplement and amendment to the Trust Indenture (except for any such
supplement or amendment which does not require or receive the approval of Lessee
pursuant to the Operative Documents and is not required pursuant to the terms of
the Operative Documents), an opinion of counsel reasonably satisfactory to
Lessor and the Indenture Trustee as to the due recording or filing of such
supplement or amendment. Commencing in 1996, on or before April 30 of each year
during the Term, Lessee will deliver to Lessor and the Indenture Trustee a
certificate of Lessee, signed by the President, a Vice President or the Chief
Financial Officer of Lessee to the effect that the signer is familiar with or
has reviewed the relevant terms of this Lease and the signer does not have
actual knowledge of the existence, as of the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default. Lessee
agrees that if the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Treasurer or an Assistant Treasurer of Lessee has actual
knowledge of the existence of a Default, then Lessee shall promptly give to
Lessor, the Owner Participant and the Indenture Trustee notice thereof and such
other information relating thereto as Lessor, the Owner Participant or the
Indenture Trustee may reasonably request. Lessee agrees that if an officer of
Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee may reasonably
request. Lessee will deliver to Lessor, the Owner Participant and the Indenture
Trustee (i) within sixty (60) days after the end of each of the first three
quarterly periods of each fiscal year of the Guarantor, the publicly filed Form
10-Q report of the Guarantor; and (ii) within one hundred twenty (120) days
after the close of such fiscal year, the publicly filed annual report and Form
10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest Drive (A4010),
St. Paul, Minnesota 55111-3034, and for overnight courier at 2700
Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior
Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665),
or to such other address
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or telecopy number as Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate Trust Department (Telecopy No. (801)
246- 5053), or to such other address or telecopy number as Lessor
shall from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at such address or telecopy number
as such Loan Participant, the Indenture Trustee or the Owner
Participant shall have furnished by notice to Lessor and to Lessee,
and, until an address is so furnished, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at its
address or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(f). Except as
provided in Section 3(g) hereof, Lessee's obligation to pay all Rent payable
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which Lessee may have against Lessor, in its
individual capacity or as Owner Trustee under the Trust Agreement, the Indenture
Trustee (in its individual capacity or as Indenture Trustee), any Loan
Participant, the Owner Participant, or anyone else for any reason whatsoever
(whether in connection with the transactions contemplated hereby or any other
transactions), including, without limitation, any breach by Lessor or the Owner
Participant of their respective warranties, agreements or covenants contained in
any of the Operative Documents, (ii) any defect in the title, registration,
airworthiness, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interruption or
cessation in or prohibition of the use or possession thereof by Lessee (or any
Sublessee) for any reason whatsoever, including, without limitation, any such
interruption, cessation or prohibition resulting from the act of any government
authority, (iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against Lessee (or any Sublessee) or any other person, or (iv)
any other circumstance, happening, or event whatsoever, whether or not
unforeseen or similar to any of the foregoing. 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 without
limitation of the other rights or remedies of Lessor hereunder, subject to the
rights of Lessee to setoff under Section 3(g) hereof, to pay to Lessor an amount
equal to each Rent payment at the time such payment would have become due and
payable in accordance with the terms hereof had this Lease not been terminated
in whole or in part. Lessee hereby waives, to the extent permitted by applicable
law, any and all rights which it may now have or which at any time hereafter may
be conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof.
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<PAGE> 54
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION. (a)
Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right to renew
this Lease for up to three consecutive one year renewal terms the first of which
shall commence only upon the expiration of the Basic Term (any such renewal
term, a "FIXED RENEWAL TERM") by delivery to Lessor at least ninety (90) days
before the end of the Basic Term, the first Fixed Renewal Term or the second
Fixed Renewal Term, as the case may be, a written notice irrevocably electing to
renew this Lease for a Fixed Renewal Term. Basic Rent during any Fixed Renewal
Term shall be payable in an amount and at the times specified in Section
19(a)(4).
(2) Fair Market Renewal Term. Not less than ninety (90) days before
the end of the third Fixed Renewal Term, the first Fair Market Renewal Term or
the second Fair Market Renewal Term for the Aircraft, Lessee shall have the
right to renew this Lease by delivery to Lessor of a written notice irrevocably
electing to renew this Lease for a renewal term of not less than one year and
not more than two years for a Basic Rent equal to the "fair market rental value"
of the Aircraft for such period (any such renewal term, a "FAIR MARKET RENEWAL
TERM"); provided that Lessee shall not be entitled to renew this Lease pursuant
to this Section 19(a)(2) more than three times.
(3) If no written notice is delivered by Lessee to Lessor pursuant
to Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee has
elected to renew this Lease as aforesaid, and provided that there shall not then
have occurred and be continuing a Default of the type referred to in Section
14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all necessary
governmental authorizations and approvals shall have been received and that
Basic Rent for the Renewal Term has already been determined as above provided
and a Lease Supplement evidencing such renewal has been executed and filed for
recordation with the Federal Aviation Administration, this Lease shall continue
in full force and effect during the Renewal Term, except that (x) Lessee shall
pay Lessor Basic Rent for the Aircraft during the Renewal Term in an amount
equal to the "fair market rental value" thereof determined in accordance with
Section 19(c), but not to exceed in the case of a Fixed Renewal Term one-half of
the average Basic Rent during the Basic Term (such average being determined as
the total of all payments of Basic Rent during the Basic Term added together and
divided by the number of payments of Basic Rent during the Basic Term), which
Basic Rent shall be payable in semi-annual installments in arrears unless in the
case of a Fixed Renewal Term, any portion of Basic Rent during the Basic Term is
payable in advance, in which case the same proportion of Basic Rent during such
Fixed Renewal Term shall also be payable in advance, each such installment being
due and payable on each Lease Period Date occurring during the Renewal Term,
commencing with the Lease Period Date immediately following the commencement of
the Renewal Term, and (y) the Stipulated Loss Values applicable during the
Renewal Term shall be determined separately for each Renewal Term by the Owner
Participant in good faith to reflect Stipulated Loss Values determined in
accordance with the following sentence. Stipulated Loss Values during a Renewal
Term shall on the date on which such Renewal Term begins be equal to the fair
market sales value of the Aircraft as
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of such date, determined in accordance with the provisions of this Section
19(a)(4) and Section 19(c) hereof, and shall decline ratably on a monthly basis
to the fair market sales value of the Aircraft as of the last day of such
Renewal Term, determined in accordance with the provisions of this Section
19(a)(4) and Section 19(c) hereof.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
(b) Purchase Options. Lessee shall have the option, upon at least
ninety (90) days' irrevocable prior written notice to Lessor, to purchase the
Aircraft on the last Business Day of the Basic Term or any Renewal Term for a
purchase price equal to the lesser of the fair market sales value of the
Aircraft and 50% of Lessor's Cost. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred sixty-five
(365) days prior to the date on which Lessee may purchase the Aircraft pursuant
to Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1) or
Section 19(a)(2) hereof, Lessee may deliver to Lessor a revocable notice of its
intent to exercise its renewal option or purchase option. For all purposes of
this Section 19, including the appraisal referred to in this Section 19(c), in
determining "fair market rental value" or "fair market sales value", the
Aircraft shall be valued (i) as if in the condition and otherwise in compliance
with the terms of Section 5 upon a return of the Aircraft to the United States
and as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the basis
of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding the purchase and renewal options of the lessee provided
in this Lease, and (iii) in the case of such valuation for determining "fair
market rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred seventy
(270) days prior to the end of the Basic Term or the Renewal Term in question,
then the question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five
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Business Days after Lessor or Lessee shall have received written notice from the
other party of a demand that such an appraisal be made, which notice shall
specify the appraiser chosen by the party giving the notice or, if such
appraisers cannot agree on the amount of such appraisal within twenty Business
Days after the end of such five-day period, each shall render its own appraisal
and shall by mutual consent choose another appraiser within five Business Days
after the end of such twenty-day period. If, within such five-day period, such
two appraisers fail to appoint a third appraiser, then either Lessor or Lessee,
on behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall be
given within twenty Business Days after the appointment of such third appraiser.
As soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the determination
of such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon the parties hereto. If
no determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. Lessee and Lessor shall share equally all
expenses relating to such appraisal procedure provided if Lessee elects not to
renew this Lease or purchase the Aircraft following such appraisal, Lessee shall
pay all expenses of such appraisal.
(d) Special Purchase Option. On July 2, 2014 (or, if July 2, 2014 is
not a Business Day, the Business Day immediately succeeding July 2, 2014),
Lessee shall have the option, upon at least ninety (90) days' irrevocable prior
notice to Lessor and, if any Secured Certificates are then outstanding, the
Indenture Trustee, to purchase the Aircraft on such date for a purchase price
equal to the Special Purchase Price. In addition, if on such date there shall be
any Secured Certificates outstanding, Lessee shall have the option to assume,
pursuant to Section 8(x) of the Participation Agreement and Section 2.15 of the
Trust Indenture, all of the obligations of Lessor under the Trust Indenture. If
such assumption is made, Lessee shall pay Lessor a purchase price equal to (I)
the Special Purchase Price minus (II) an amount equal to principal of, and
accrued but unpaid interest on, any Secured Certificates that are outstanding on
such date. Upon such payment in full and payment of any other amounts then due
hereunder (including costs or expenses of the Owner Participant in connection
with such purchase, any installments of Basic Rent due prior to such date and,
if Basic Rent is payable in arrears on such date as indicated on Exhibit B, on
such date (but not any installment of Basic Rent due on such date if Basic Rent
is payable in advance on such date), and all unpaid Supplemental Rent due on or
prior to such date), Lessor will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of Lessor
Liens), all of Lessor's right, title and interest in and to the Aircraft and
under the Trust Indenture and, unless there shall be any Secured Certificates
outstanding after such payment, exercise such rights as it has to cause the
Aircraft to be released from the Lien of the Trust Indenture.
- 56 -
<PAGE> 57
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF SECURED
CERTIFICATES. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein set
forth. To the extent, if any, that this Lease, the Lease Supplements and any
amendments to this Lease constitute 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, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the assignment
of all Lessor's right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. Subject to Section 3(f) hereof, Lessee agrees to
pay directly to the Indenture Trustee (or, after receipt by Lessee of notice
from the Indenture Trustee of the discharge of the Trust Indenture, to Lessor),
all amounts of Rent due or to become due hereunder and assigned to the Indenture
Trustee and Lessee agrees that the Indenture Trustee's right to such payments
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an Event of
Default hereunder) Lessor may itself make such payment or perform or comply with
such agreement but shall not be obligated hereunder to do so, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and
- 57 -
<PAGE> 58
surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("MOODY'S") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of A1 by S&P or P1 by Moody's and having a
final maturity of ninety (90) days or less from the date of purchase thereof;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing.
Lessee shall be responsible for any net loss realized as a result of any such
investment and shall reimburse Lessor (or the Indenture Trustee, as the case may
be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not
- 58 -
<PAGE> 59
modify, define, expand or limit any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's continued possession, use and operation of, and quiet
enjoyment of, the Aircraft or Lessee's rights, benefits and obligations pursuant
to the Overall Transaction during the Term of this Lease, and this Lease shall
not be terminated except as expressly provided herein.
- 59 -
<PAGE> 60
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Lessor
BY: _____________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY: _____________________________
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of _________________, 1996.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY: _____________________________
Title:
- SIGNATURE PAGE -
<PAGE> 61
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 A]
LEASE SUPPLEMENT NO.
[NW 1996 A]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee under the Trust Agreement [NW 1996 A], dated as of
February 27, 1996, between [________________________], as Owner Participant, and
such Owner Trustee (such Owner Trustee, in its capacity as such Owner Trustee,
being herein called "LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement [NW 1996 A], dated as of February 27, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1) The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
(2)The Lease Agreement relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated _______________, 19__ to the Lease Agreement, has
been recorded by the Federal Aviation Administration on ________________, 19__,
as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the
date hereof consists of the following components:
- --------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 62
(i) Airframe: FAA Registration No. ______; manufacturer's serial no.
_____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing,
respectively, manufacturer's serial nos. P______ and P______ (each
of which engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent for
the Aircraft throughout the Term therefor in accordance with Section 3 of the
Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE> 63
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By ______________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By ______________________________________
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By ______________________________________
Title:
- ------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 64
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 A]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST,
TRANSITION DATE AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
<TABLE>
<CAPTION>
<S> <C>
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
---------- --------------
Excess Amount Interim Rent
Commencement (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------ -------------- --------------
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------- --------------
</TABLE>
* Denotes payment in arrears from preceding Lease Period Date (or Commencement
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
<PAGE> 65
INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST,
TRANSITION DATE AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<TABLE>
<CAPTION>
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------- --------------
<S> <C>
</TABLE>
* Denotes payment in arrears from preceding Lease Period Date (or Commencement
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
EXHIBIT B - PAGE 2
<PAGE> 66
INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST,
TRANSITION DATE, AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - PAGE 3
<PAGE> 67
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 A]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<TABLE>
<CAPTION>
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<S> <C>
</TABLE>
<PAGE> 68
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1996 A]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<TABLE>
<CAPTION>
Termination
Termination Value
Date Percentage
----------- -----------
<S> <C>
</TABLE>
<PAGE> 69
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1996 A]
RENT RECALCULATION AND
INDEMNIFICATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE> 70
EXHIBIT F
TO
LEASE AGREEMENT
[NW 1996 A]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
- -----------------------------
* So long as on the date of entering into the proposed sublease such country and
the United States have diplomatic relations at least as good as those in effect
on the Delivery Date.
<PAGE> 71
EXHIBIT G
TO
LEASE AGREEMENT
[NW 1996 A]
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is
intentionally deleted from the FAA filing counterpart as the parties hereto deem
it to contain confidential information.
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 A]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 A], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1996 A], dated as of February 27,
1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1996 A], dated as of February 27,
1996 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1996 A] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated February 29, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N537US; manufacturer's serial No. 26484; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727164 and P727165;
WHEREAS, Section 17 of the Participation Agreement [NW 1996
A], dated as of February 27, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants
named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor
and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates
that the Secured Certificates issued by the Owner Trustee under the Trust
Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996,
between Lessor (in its individual capacity as expressly provided therein and as
trustee) and the Indenture Trustee may be refinanced under certain
circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1996 A], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess
Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages in
order to reflect, among other things, the interest rate of the refinanced
Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess
Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages,
Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1996 A], dated as of February 27,
1996, and the Trust Agreement and Indenture Supplement [NW 1996 A], dated
February 29, 1996, was recorded by the Federal Aviation Administration (the
"FAA") on March 1, 1996, and assigned Conveyance No. P05934;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Certificated Air
Carrier", "Delivery Date", "Indemnitee", "Indenture Trustee's Liens", "Loan
Participant", "Net Present Value of Rents", "Operative Documents", "Stipulated
Loss Value", "Supplemental Rent", "Tax Indemnitee", "Termination Value" and
"Transaction Expenses" in Section 1 of the Lease are hereby amended applicable
on and after the Closing Date to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York;
Boston, Massachusetts; or Minneapolis, Minnesota.
"CERTIFICATED AIR CARRIER" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title
49, United States Code, for aircraft capable of carrying ten
or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required
to fall within the purview of 11 U.S.C. Section 1110 or any
analogous successor provision of the Bankruptcy Code.
"DELIVERY DATE" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) the Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i)
through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the
respective directors, officers, employees, agents and
servants of each of the Persons described in clauses (i)
-2-
<PAGE> 3
through (viii), inclusive, (xii) the successors and permitted
assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of
the Persons described in clauses (v), (vi), (vii) and (viii).
"INDENTURE TRUSTEE'S LIENS" means any Lien which arises
as a result of (A) claims against the Indenture Trustee not
related to its interest in the Aircraft or the administration
of the Trust Estate pursuant to the Trust Indenture, (B) acts
of the Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the
Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or
willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation
Agreement pursuant to said Section 7, or (D) claims against
the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in
the Aircraft, the Trust Estate, the Trust Indenture Estate or
the Operative Documents other than a transfer of the Aircraft
pursuant to Section 9, 10 or 19 of the Lease or Article IV or
V of the Trust Indenture, or a transfer of the Aircraft
pursuant to Section 15 of the Lease while an Event of Default
is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
"NET PRESENT VALUE OF RENTS" means the net present
value, as of the Commencement Date, of Basic Rent set forth
in Exhibit B hereto, discounted at an annual interest rate of
7.166% on a semi-annual basis.
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of
the Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount
is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss
-3-
<PAGE> 4
Value" as of any date after January 2, 2019 shall be the
amount determined as provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than
Interim Rent or Basic Rent) which Lessee assumes or agrees to
pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to
clause (b) of the third paragraph of Section 2.02 of the
Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreement, and
(d) Lessor's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except
with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein,
"Lessor's pro rata share" means as of any time a fraction,
the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of
all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee
under the Trust Agreement, the Trust Estate, the Indenture
Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as of
any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with respect to which the amount is
determined (as such Exhibit D may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement).
"TRANSACTION EXPENSES" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana
& Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2)
Ray, Quinney & Nebeker, special counsel for the Owner Trustee
under the Trust Agreement, such information to be furnished
by the Owner Trustee, (3) Shearman & Sterling, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished
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<PAGE> 5
by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and
financing statements, such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (iv)
the initial fee and reasonable and actual disbursements of the
Indenture Trustee under the Trust Indenture, such information
to be furnished by the Indenture Trustee, (v) the fee of BK
Associates, Inc. with respect to the appraisal of the Aircraft
pursuant to Section 4(a)(xxix) of the Participation Agreement,
such information to be furnished by Lessee, (vi) the
reasonable and actual fees, expenses and disbursements of
Feltman, Karesh, Major & Farbman, special counsel to the Owner
Participant, such fees not to exceed the amount previously
agreed to by the Owner Participant and Lessee, and the
reasonable and actual fees, expenses and disbursements of
David, Hagner, Kuney & Krupin, P.C., special tax counsel to
the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee, such
information to be furnished by the Owner Participant, (vii)
the equity placement fee and reasonable disbursements of
Babcock and Brown Financial Corporation, such information to
be furnished by Lessee, and (viii) the fee payable to the Loan
Participants on the Delivery Date.
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable
on and after the Closing Date:
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing shall
occur.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and
the Liquidity Provider, and any replacement thereof, in each
case as the same may be amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider under the Liquidity Facilities, or any
successor thereto.
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<PAGE> 6
"MAJORITY IN INTEREST OF CERTIFICATE HOLDERS" has the
meaning set forth in the Trust Indenture.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and
Security Agreement [NW 1996 A], dated as of February 27,
1996, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass
through trust agreement and supplement pursuant to which the
Class D pass through certificates are issued.
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the three separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as
trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as
successor trustee under any such Pass Through Trust
Agreement.
"PURCHASERS" means the Pass Through Trustees under each
Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
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<PAGE> 7
"REFINANCING DATE" means the proposed date on which the
outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers
pursuant to the Trust Indenture Amendment and the Refunding
Agreement on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption
of the Secured Certificates issued on February 29, 1996 and
the concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1996 A], dated as of June 3, 1996, among
Lessor, Lessee, the Owner Participant, the Purchasers, the
Indenture Trustee, the Subordination Agent and the Guarantor,
as the same may from time to time be supplemented or amended,
or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust
Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 A],
dated as of the Closing Date, between Lessor and State Street
Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
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<PAGE> 8
SECTION 2. AMENDMENT OF SECTIONS 3(B), 3(C), 3(D), 3(E), 3(F)
AND 3(G) OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended by deleting
on and after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended by deleting
on and after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs other
than on June 12, 1996, or (B) Refinancing Expenses paid by
Lessor or the Owner Participant pursuant to Section 11(a) of
the Refunding Agreement is determined to be other than
1.3481% of Lessor's Cost, then in each case, the Basic Rent
percentages set forth in Exhibit B and the Stipulated Loss
Value percentages set forth in Exhibit C and the Termination
Value percentages set forth in Exhibit D shall be
recalculated by the Owner Participant, on or prior to October
1, 1996 using the same methods and assumptions used to
calculate original Basic Rent and Stipulated Loss Value and
Termination Value percentages, in order to: (1) maintain the
Owner Participant's Net Economic Return and (2) minimize the
Net Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof. In such recalculation
there will be no change in the amortization of the Secured
Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by
deleting on and after the Closing Date the words "or a refunding" in the first
line thereof.
(e) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is
hereby amended to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay as Supplemental Rent the Make-Whole
Amount, if any, due pursuant to Section 2.10(b) or Section
2.11 of the Trust Indenture in connection with a prepayment
of the Secured Certificates upon redemption of such Secured
Certificates in accordance with such Section 2.10(b) or
Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the numbers and punctuation "124-000-12"
in the first sentence thereof and substituting therefor the numbers and
punctuation "124-0000-12", (ii) adding on and after the Closing Date the word
"irrevocably" after the word "hereby" in the proviso in the first sentence
thereof, and (iii) deleting on and after the Closing Date the word "All" at the
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<PAGE> 9
beginning of the second sentence thereof and substituting the words "Lessor
hereby directs and Lessee agrees that all" therefor.
(h) Section 3(g) of the Lease is hereby amended by deleting
it in its entirety on and after the Closing Date.
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by deleting
on and after the Closing Date the words "the Owner Participant and the Indenture
Trustee" and substituting therefor the word "Lessor".
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
Section 9(c) of the Lease is hereby amended by deleting on
and after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by deleting on
and after the Closing Date the words "the third Business Day following the
receipt of insurance proceeds in respect of such occurrence (but not earlier
than thirty (30) days after such occurrence)" in clause (i)(y) thereof and
substituting therefor the words "an earlier Business Day irrevocably specified
fifteen days in advance by notice from Lessee to Lessor and the Indenture
Trustee".
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on
and after the Closing Date the words and punctuation ", the Refunding Agreement"
after the words "Participation Agreement" and (ii) adding on and after the
Closing Date the words "and except for representations or warranties contained
in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in
the Refunding Agreement) or any document or instrument furnished pursuant to
either thereof" after the word "Agreement" at the end of the first parenthetical
phrase therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE.
Section 17 of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or
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<PAGE> 10
if such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective
when received, addressed:
(i) if to Lessee, for U.S. Mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010),
Eagan, Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer, (Telecopy No. (612)
726-0665), or to such other address, telex number or
telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address
or telecopy number as Lessor shall from time to time
designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at such
address or telecopy number as such Loan Participant,
the Indenture Trustee or the Owner Participant shall
have furnished by notice to Lessor and to Lessee, and,
until an address is so furnished, addressed to such
Loan Participant, the Indenture Trustee or the Owner
Participant at its address or telecopy number set forth
on the signature pages of the Refunding Agreement."
SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The second sentence of Section 19(d) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
In addition, if on such date there shall be any Secured
Certificates outstanding, Lessee shall have the option to
assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.13 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture.
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26
of the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
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<PAGE> 11
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
(b) The parties hereto agree that Exhibits B, C and D
attached hereto reflect the recalculation of Basic Rent, Excess Amount,
Stipulated Loss Value and Termination Value percentages to take into account the
interest rates borne by the Secured Certificates as of the Closing Date and the
actual amount of Transaction Expenses.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to
the Lease set forth in Sections 1 through 10 hereof shall be effective as of the
date hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 12
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By:
---------------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By:
---------------------------------------
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of __________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By:
---------------------------------------
Title:
- -------------------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 A]
This GUARANTEE [NW 1996 A], dated as of February 27, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1996 A], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1996 A], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1996 A], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully
aware of the terms and conditions of the Lease, the Participation Agreement and
the other Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby, and
does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent), the
Participation Agreement, the Tax Indemnity Agreement and the other Operative
Documents to which the Lessee is a party (such obligations of the Lessee
guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL
OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance
with the terms of the Operative Documents, and the timely performance of all
other obligations of the Lessee thereunder (individually, a "NONFINANCIAL
OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively
with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby
agree that in the event that the Lessee fails to pay any Financial Obligation
when due for any reason (including, without limitation, the liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceedings affecting the status, existence, assets or obligations of,
the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such proceeding)
within five days after the date on which such Financial Obligation became due
and payable and the applicable grace period has expired, the Guarantor shall pay
or cause to be paid forthwith, upon the receipt of notice from any Party (such
notice to be sent to the Lessee (to the extent such Party is not stayed or
prevented from doing so by operation of law) and the Guarantor) stating that
such Financial Obligation was not paid when due and for five days after the
applicable grace period has expired, the amount of such Financial Obligation.
The Guarantor hereby agrees that in the event the Lessee fails to perform any
Nonfinancial Obligation for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party in
any such proceeding) within 10 Business Days after the date on which such
Nonfinancial Obligation is required to be performed (for avoidance of doubt, to
include any applicable grace period), the Guarantor shall cause such
Nonfinancial Obligation to be performed within 10 Business Days following the
receipt of notice from any Party (such notice to be sent to the Lessee (to the
extent such Party is not stayed or prevented from doing so by operation of law)
and the Guarantor) stating that such Nonfinancial Obligation was not performed
when so required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not be,
to the fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in
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<PAGE> 3
accordance with the terms of the Operative Documents) without the consent of the
Guarantor, or by any priority or preference to which any other obligations of
the Lessee may be entitled over the Lessee's obligations under the Lease and the
other Operative Documents to which the Lessee is a party, or by any other
circumstance that might otherwise constitute a legal or equitable defense to or
discharge of the obligations of a surety or guarantor including, without
limitation, any defense arising out of any laws of the United States of America
or any State thereof which would excuse, discharge, exempt, modify or delay the
due or punctual payment and performance of the obligations of the Guarantor
hereunder. Without limiting the generality of the foregoing, it is agreed that
the occurrence of any one or more of the following shall not, to the fullest
extent permitted by law, affect the liability of the Guarantor hereunder: (a)
the extension of the time for or waiver of, at any time or from time to time,
without notice to the Guarantor, the Lessee's performance of or compliance with
any of its obligations under the Operative Documents (except that such extension
or waiver shall be given effect in determining the obligations of the Guarantor
hereunder)), (b) any assignment, transfer, sublease or other arrangement by
which the Lessee transfers possession or loses control of the use of the
Aircraft, (c) any defect in the title, condition, design, operation or fitness
for use of, or damage to or loss or destruction of, the Aircraft, whether or not
due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or
the Guarantor into or with any other Person, or any sale, transfer, lease or
disposal of any of its assets or (e) any change in the ownership of any shares
of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any unpaid
amounts due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim for
personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate (as such
term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain
or assert a claim for personal judgment against any other Person liable for the
Obligations, or make any effort at collection of the Obligations from any such
other Person, or exercise or assert any other right or remedy to which any Party
is or may be entitled in connection with the Obligations or any security or
other guaranty therefor, or (v) assert or file any claim against the assets of
the Lessee or any other guarantor or other Person liable for the Obligations, or
any part thereof, before or as a condition of enforcing the liability of the
Guarantor under this Guarantee or requiring payment of said Obligations by the
Guarantor hereunder, or at any time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted by
law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be prevented
by applicable law from exercising its remedies (or any of them) under Section 15
of the Lease, the Lessor (or any assignee thereof, including, without
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<PAGE> 4
limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive
hereunder from the Guarantor, upon demand therefor the sums that would otherwise
have been due from the Lessee under the Lease had such remedies been able to be
exercised. The Guarantor hereby unconditionally waives, to the fullest extent
permitted by law, any requirement that, as a condition precedent to the
enforcement of the obligations of the Guarantor hereunder, the Lessee or all or
any one or more of any other guarantors of any of the Obligations be joined as
parties to any proceedings for the enforcement of any provision of this
Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall
not be deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent
permitted by law, all other demands or notices whatsoever, other than the
request for payment hereunder and notice provided for in Section 1 hereof. The
obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect of
any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim by
the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or
in the event of any proceedings for voluntary liquidation, dissolution
or other winding-up of the Lessee, whether or not involving insolvency
or bankruptcy proceedings, in which case the Obligations shall be paid
and performed in full before any payment in respect of a claim by the
Guarantor shall be made by or on behalf of the Lessee.
- 4 -
<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to this
Guarantee, or waiver or modification of, or consent under, the terms hereof,
shall be effective unless evidenced by an instrument in writing signed by the
Guarantor and each Party against whom such amendment, supplement, waiver,
modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in
the Trust Indenture, the Lessor will assign, and create a security interest in,
certain of its rights hereunder to and for the benefit of the Indenture Trustee.
From and after the execution and delivery of the Trust Indenture, and until
receipt by the Guarantor of a written notice from the Indenture Trustee to the
effect that the Trust Indenture has been fully satisfied and discharged, no
remedy or election hereunder may be exercised by the Lessor or consent given by
the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing in
good standing pursuant to the laws of the State of Delaware. It has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to
enter into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval of,
or exemption by, or the giving of notice to, or the registration with
or the taking of any other action in respect of, any Federal, state,
municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to authorize
the execution, delivery and performance (other than as contemplated by
the Operative Documents in the case of the
- 5 -
<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee,
or for the legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee, the
performance of its obligations hereunder, nor its consummation of the
transactions contemplated hereby, will conflict with or result in any
breach of, or constitute a default under, or result in any creation or
imposition of any Lien upon any of its property or assets under, any
applicable laws or any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it may be
bound or to which any of its property or assets may be subject, or its
Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor in
New York City as from time to time may be designated by the Guarantor in writing
to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to the
fullest extent permitted by applicable laws. The headings in this Guarantee are
for purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
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<PAGE> 7
10. NOTICES. All requests, notices or other communications
hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and
Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in
the Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other or
further exercise of such right or remedy or the exercise of any other right or
remedy.
12. SURVIVAL. All representations and warranties contained
herein or made in writing by the Guarantor in connection herewith shall survive
the execution and delivery of this Guarantee regardless of any investigation
made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or any provision in any other Operative Document,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
14. GOVERNING LAW . THIS GUARANTEE IS DELIVERED IN, AND SHALL
(AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING
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<PAGE> 8
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL BE
DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any
Party any and all reasonable costs and expenses (including reasonable legal fees
and expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
---------------------------
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
------------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
------------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 A]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 A]
THIS PARTICIPATION AGREEMENT [NW 1996 A] dated as of February
27, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to
the laws of the State of Minnesota (herein called "LESSEE"), (ii) the
institution listed on Schedule I hereto and identified therein as the "OWNER
PARTICIPANT" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below, (iii) the institutions listed on Schedule I and identified
therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the Trust
Agreement (herein, in such latter capacity, together with any successor owner
trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in
such latter capacity together with any successor indenture trustee, called the
"INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain Boeing 757-251 aircraft, including the Aircraft which has been delivered
by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1996 A], dated as of the date hereof (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to
the Owner Trustee certain rights and interests of Lessee under the
Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and Agreement
[NW 1996 A] (herein called the "CONSENT AND AGREEMENT"), substantially
in the form attached to the Purchase Agreement Assignment (herein
called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 A],
dated as of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST AGREEMENT", such
term to include, unless the context otherwise requires, any Trust Supplement
referred to below), with the Owner Trustee, pursuant to which Trust Agreement
the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering into
the Trust Indenture and Security Agreement [NW 1996 A], dated as of the date
hereof (said Trust Indenture and Security Agreement, as the same may be amended
or supplemented from time to time, being herein called the "TRUST INDENTURE",
such term to include, unless the context otherwise requires, the Trust
Supplement referred to below) pursuant to which the Owner Trustee issues to each
of the Loan Participants one or more secured certificates (herein called
collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement and
the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1996 A], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred to
below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale, and
accepted by the Owner Trustee for all purposes of the Lease, such acceptance to
be evidenced by the execution of the Trust Supplement covering the Aircraft, and
such lease to be evidenced by the execution and delivery of a Lease Supplement
covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT.
(a) Participation by Loan Participants. Subject to the terms and conditions of
this Agreement, each Loan Participant agrees to finance, in part, the Owner
Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to
the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule
II opposite the name of such Loan Participant. Each Loan Participant shall make
such Loan to the Owner Trustee on a date to be designated pursuant to Section 1
hereof, but in no event later than March 15, 1996, by transferring to the
account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct.
No. 01014789,
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<PAGE> 3
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite such Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the Trust
Indenture to evidence the obligation of the Owner Trustee to repay the Loans
together with interest thereon. The Owner Trustee agrees to pay the Secured
Certificates in installments in the amounts and on the dates provided in the
Trust Indenture together with interest thereon and all other amounts payable
with respect thereto, all as more fully provided in the Trust Indenture.
(b) Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an equity
investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than March 15,
1996, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later
than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite the Owner
Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation
of each of the Loan Participants and the Owner Participant to be made as
provided above in the payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "COMMITMENT" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount of
its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt by
the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the
Owner Trustee, and the Owner Trustee shall purchase and take title to and accept
delivery of the Aircraft. In consideration of the transfer of title to and
delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to
give each Participant, the Owner Trustee and the Indenture Trustee at least two
Business Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in the
manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner
Participant agrees that its releasing the amount of its Commitment for the
Aircraft to the account of the Owner Trustee in accordance with the terms of
Section 1 shall constitute, subject to satisfaction or waiver of the conditions
set forth in Section 4(a), without further act, authorization and direction by
the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill
of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a portion
of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture; and
(vi) to take such other action as may be required to be taken
by the Owner Trustee on the Delivery Date by the terms of any Operative
Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed ft that the obligations of each of
the Loan Participants and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it
relates to representations and warranties only contained in the Tax Indemnity
Agreement), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and
(xxvii) shall not be a condition precedent to the obligations of the Loan
Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner
Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the
obligation of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall have
received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing or
as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the Documentation
Agent and the Owner Participant and shall be in full force and effect
and executed counterparts shall have been delivered to the Loan
Participants and the Owner Participant, or their respective counsel,
provided that only each Loan Participant shall receive an executed
original of its respective Secured Certificate and provided, further,
that an excerpted copy of the Purchase Agreement shall only be
delivered to and retained by the Owner Trustee (but the Indenture
Trustee shall also retain an excerpted copy of the Purchase Agreement
which may be inspected by the Owner Participant and the Documentation
Agent and their respective counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant or their respective counsel if
and only if there shall occur and be continuing an Event of Default),
the chattel paper counterpart of the Lease and the Lease Supplement
covering the Aircraft dated the Delivery Date shall be delivered to the
Indenture Trustee, and the Tax Indemnity Agreement shall only be
delivered to Lessee and the Owner Participant and their respective
counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent,
the Owner Participant and Lessee (herein called the
"ACCEPTANCE CERTIFICATE") duly completed and executed by
the Owner Trustee or its agent, which may be a
representative of Lessee, and by such representative
on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement; and
(14) the Guarantee.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act, shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Documentation Agent shall have been executed and delivered by
Lessee or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified
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<PAGE> 7
by a Vice President, the Secretary or an Assistant Secretary
of Lessee, duly authorizing the sale of the Aircraft and the
lease by Lessee of the Aircraft under the Lease and the
execution, delivery and performance by Lessee of this
Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease,
the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Tax Indemnity Agreement and each
other document required to be executed and delivered by Lessee
on or before the Delivery Date in accordance with the
provisions hereof and thereof, and a certified copy of the
Certificate of Incorporation and By-Laws of the Guarantor and
a copy of resolutions of the Board of Directors of the
Guarantor, certified by a Vice President, the Secretary or an
Assistant Secretary of the Guarantor, duly authorizing the
execution, delivery and performance by the Guarantor of the
Guarantee;
(2) such other documents and evidence with respect to
Lessee, the Guarantor, the Manufacturer, the Owner Trustee,
the Owner Participant, the Indenture Trustee, and the Loan
Participants as the Documentation Agent or the Owner
Participant, or the respective counsel for the Loan
Participants or the Owner Participant, may reasonably request
in order to establish the authority of such parties to
consummate the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection
therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall be
true, and the Documentation Agent and the Owner Participant shall have
received evidence satisfactory to it to the effect that:
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft
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<PAGE> 8
on such Delivery Date, free and clear of Liens other than the
rights of Lessee under the Lease and Lease Supplement covering
the Aircraft, the mortgage and security interests created by
the Trust Indenture, the rights of the Owner Participant under
the Trust Agreement and the Trust Supplement, and Liens
permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft in
the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and as
of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee, and
reasonably satisfactory as to scope and substance to the Documentation
Agent and the Owner Participant, from Cadwalader, Wickersham & Taft,
special counsel for Lessee and the Guarantor, as to New York and
certain federal law matters, and Lessee's and the Guarantor's in-house
or other counsel, as to Minnesota and certain federal law matters and
the Delaware General Corporation Law, to the collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and perform
its obligations under the Lessee Documents. Lessee is a
Certificated Air Carrier. The Guarantor is a corporation duly
organized and validly existing
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<PAGE> 9
pursuant to the laws of the State of Delaware and has the
corporate power and authority to enter into and perform its
obligations under the Guarantee;
(2) the execution, delivery and performance of the
Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel, any approval or consent of any trustee or
holders of any indebtedness or obligations of Lessee or the
Guarantor, as the case may be (or that any such approval or
consent as is required has been obtained), and neither the
execution and delivery of any thereof by Lessee or the
Guarantor, as the case may be, nor the performance by Lessee
or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel,
judgment or order applicable to or binding on Lessee or the
Guarantor, as the case may be, or (B) to the knowledge of such
counsel, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Permitted Liens) upon any property of
Lessee or the Guarantor, as the case may be, under, any
indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter, by-law
or permit issued by any Minnesota or United States
governmental authority to which Lessee or the Guarantor, as
the case may be, is a party or by which Lessee or the
Guarantor, as the case may be, or its properties may be bound
or affected;
(3) neither the execution and delivery by Lessee of
the Lessee Documents or by the Guarantor of the Guarantee nor
the performance by Lessee or the Guarantor of their respective
obligations thereunder requires the consent or approval of, or
the giving of notice to, or the registration with, or the
taking of any other action in respect of, any Federal or state
governmental authority in the United States, except for (A)
the registration of the Aircraft (including the placement on
board of the owner's copy of the application for registration
of the Aircraft and, if necessary, a flying time wire),
recordations and other actions referred to in paragraph 5
below and (B) such consents, approvals, notices, registrations
and other actions required by the terms of the Lessee
Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
- 9 -
<PAGE> 10
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft with
the Federal Aviation Administration in the name of the Owner
Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof, with
respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document
(including any financing statement with respect to the Lease
under Article 9 of the Uniform Commercial Code of Minnesota or
Utah), is necessary in any applicable jurisdiction within the
United States in order (x) to establish the Owner Trustee's
title to such portion of the Aircraft as against Lessee or any
third parties or (y) to create and perfect the Indenture
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee or any third parties. With respect
to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in
the Federal Aviation Act, except for the filing of financing
statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified
in such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and
when required, (x) under the federal laws of the United States
and the laws of the State of New York no filing or recording
of any document (including any financing statement) is
necessary under Article 9 of the Uniform Commercial Code in
order to establish the Owner Trustee's title to such portion
of the Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and the laws of
the State of New York no filing or recording of any document
(including any financing statement) is necessary or advisable
under Article 9 of the Uniform Commercial Code in order to
create or perfect the Indenture
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<PAGE> 11
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee and any third parties in any
applicable jurisdiction within the United States; and
(6) to the best knowledge of such in-house counsel,
there are no legal or governmental proceedings pending or
threatened to which Lessee or any of its subsidiaries is a
party or to which any of the properties of Lessee or any of
its subsidiaries is subject other than those proceedings
summarized in the Guarantor's publicly filed annual, quarterly
and other reports filed with the Securities and Exchange
Commission, and proceedings which such in-house counsel
believes would not reasonably be expected to have a material
adverse effect on Lessee and its subsidiaries, taken as a
whole, or on the power or ability of Lessee to perform its
obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of Ray,
Quinney & Nebeker with respect to the opinion in paragraph (5) above
insofar as it relates to the laws of the State of Utah and (C) upon the
representations and warranties set forth herein, including, without
limitation, in Section 8 hereof, with respect to matters of fact, and
may state that no opinion is expressed as to laws other than laws of
the State of New York (in the case of such special counsel's opinion),
the State of Minnesota and the Delaware General Corporation Law (in the
case of Lessee's in-house or other counsel's opinion) and the Federal
laws of the United States. Such counsel may assume that, except for the
filings and recordations contemplated herein, there are no filings or
recordations with respect to the Aircraft, the Lease, the Lease
Supplement covering the Aircraft, the Trust Agreement, the Trust
Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be identified
in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the Manufacturer Documents and such other matters as such
parties may reasonably request.
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<PAGE> 12
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National Association
is a national banking association duly organized, validly
existing and in good standing under the laws of the United
States, is a Citizen of the United States and has under the
laws of the State of Utah and federal banking law the power,
authority and legal right to execute, deliver and carry out in
its capacity as Owner Trustee or in its individual capacity,
as the case may be, the terms of the Owner Trustee Documents,
including the Secured Certificates;
(2) each of the Owner Trustee Documents has been duly
authorized, executed and delivered by First Security Bank of
Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by the
Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to such counsel after due inquiry to which First
Security Bank of Utah, National Association in its individual
capacity or as the Owner Trustee is a party or by which it is
bound, or of any Federal or Utah law, governmental rule or
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<PAGE> 13
regulation applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the Owner
Trustee and, where appropriate, by First Security Bank of
Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal laws governing
the banking and trust powers of First Security Bank of Utah,
National Association, or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the Trust
Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated in substantial part in the State of New York, and
that the closing of a substantial portion of the transactions
contemplated by the Operative Documents occurred in the State
of New York, the choice of New York law to govern the
Participation Agreement, the Lease, and each other Operative
Document (other than the Trust Agreement) to which the Owner
Trustee or First Security Bank
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<PAGE> 14
of Utah, National Association in its individual capacity, or
both, is a party is, under the laws of the State of Utah, a
valid choice of law and should, in a properly presented case,
be honored by the courts of the State of Utah;
(8) the Owner Trustee has received from Lessee such
title to the Aircraft as Lessee had immediately prior to the
conveyance to the Owner Trustee, subject to the rights of the
Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) to the knowledge of such counsel, there are no
pending or threatened proceedings against or affecting the
Owner Trustee before any court or administrative agency,
individually or in the aggregate, which, if determined
adversely to it, would materially adversely affect the power
or ability of the Owner Trustee to perform its obligations
under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such other
matters incident to the matters covered thereby as the Documentation
Agent, the Owner Participant, the Indenture Trustee or Lessee may
reasonably request. Such opinion may state that (A) no opinion is
expressed as to laws other than the laws of the State of Utah, the
Federal laws of the United States governing the banking and trust
powers of First Security Bank of Utah, National Association, and the
Federal Aviation Act as it relates to paragraph (1) and (B) no opinion
is expressed as to the priority of security interests or as to title to
any part of the Trust Estate. Such opinion may assume (M) the due
authentication of the Secured Certificates by the Indenture Trustee,
(N) that the Operative Documents (other than the Trust Agreement) are
legal, valid and binding under the laws of the State of New York and
(O) the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant and of the other Operative Documents
by each of the parties thereto other than First Security Bank of Utah,
National Association in its individual capacity and as the Owner
Trustee.
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<PAGE> 15
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from [______________________________], special
counsel for the Owner Participant, as to New York and certain Federal
law matters, and the Owner Participant's in-house counsel, as to New
York and certain Federal law matters and the Delaware General
Corporation Law, to the collective effect that:
(1) the Owner Participant is a duly incorporated and
validly existing corporation in good standing under the laws
of the State of [___________] and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents;
(2) the Owner Participant Documents have been duly
authorized, executed and delivered by the Owner Participant
and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitute legal, valid
and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations;
(3) neither the execution and delivery by the Owner
Participant of the Owner Participant Documents nor the
consummation of any of the transactions by the Owner
Participant contemplated thereby (A) requires the consent or
approval of, the giving of notice to, or the registration
with, or the taking of any other action with respect to, any
governmental authority or agency of the United States or of
the State in which the principal office of the Owner
Participant is located (or any governmental subdivision
thereof) (except as shall have been duly obtained or given,
specifying the same), or (B) violates any law, governmental
rule or regulation of the United States or the State in which
the principal office of the Owner Participant is located (or
any governmental subdivision thereof);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles
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<PAGE> 16
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
or similar laws affecting the rights of creditors generally;
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee as aforesaid and the
Indenture Trustee, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) assuming the due authorization, execution and
delivery by the Owner Trustee of the Secured Certificates
being issued and delivered on the Delivery Date, and the due
authentication thereof by the Indenture Trustee, such Secured
Certificates are legal, valid and binding obligations of the
Owner Trustee, enforceable against the Owner Trustee in
accordance with their terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(7) the execution, delivery and performance of the
Owner Participant Documents by the Owner Participant does not
require any approval of stockholders of the Owner Participant,
or, to the knowledge of such counsel, any approval or consent
of any trustee or holders of any indebtedness or obligations
of the Owner Participant (or that any such approval or consent
as is required has been obtained), and neither the execution
and delivery of the Owner Participant Documents by the Owner
Participant, nor the performance by the Owner Participant of
its obligations thereunder (A) contravenes any law,
governmental rule or regulation or, to the knowledge of such
counsel, judgment or order applicable to or binding on the
Owner Participant or (B) to the knowledge of such counsel,
contravenes or results in any breach of, or constitutes any
default under, or results in the creation of any Lien (other
than Liens provided for in the Operative Documents) upon any
property of the Owner Participant under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, or any other
agreement or instrument, corporate charter or by-law or permit
issued by any Delaware or United States governmental authority
to which the Owner Participant is a party or by which it or
its properties may be bound or affected; and
(8) to the knowledge of such counsel, there are no
pending or threatened actions or proceedings against or
affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material
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<PAGE> 17
adverse effect on the Owner Participant or the ability of the
Owner Participant to perform its obligations under the Owner
Participant Documents;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's obligations in connection
with this Agreement as the Documentation Agent, the Indenture Trustee,
the Owner Trustee or Lessee may reasonably request. Such opinion may
rely upon the representations and warranties set forth herein,
including, without limitation, in Section 8 hereof, as to matters of
fact. Such opinion may state that (M) no opinion is expressed as to
laws other than the laws of the State of New York (in the case of such
special counsel's opinion), the laws of the State of New York and the
General Corporation Law of the State of Delaware (in the case of the
Owner Participant's in-house or other counsel), and the Federal laws of
the United States, and (N) no opinion is expressed as to the priority
of security interests or as to title to any part of the Trust Estate.
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the
Trust Supplement attached thereto and the Trust Indenture,
with the Trust Supplement attached thereto are in due form for
recording by and have been duly filed for recordation with the
Federal Aviation Administration in accordance with the
provisions of Section 44107 of Title 49 of the United States
Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal title
to the Aircraft, and the Aircraft is free and clear of all
Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in the
name of the Owner Trustee and will be duly registered in due
course in the name of the Owner
- 17 -
<PAGE> 18
Trustee pursuant to and in accordance with the provisions of
Sections 44102 and 44103 of Title 49 of the United States
Code;
(5) the Trust Indenture as supplemented by the Trust
Supplement creates a duly and validly perfected first priority
security interest in the Aircraft and a duly perfected
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease as supplemented by the
Lease Supplement (insofar as such security interest affects an
interest covered by the recording system established by the
Federal Aviation Administration pursuant to Section 44107 of
Title 49 of the United States Code), subject only to the Lease
and to Liens permitted by the Lease and the Trust Indenture,
it being understood that no opinion need be expressed as to
the validity or enforceability of such security interest under
local law or as against third parties in respect of the
Aircraft when the same is outside the United States;
(6) none of the Trust Indenture, the Trust Agreement,
the Trust Supplement, the Lease or the Lease Supplement is
required to be filed or recorded in any other place within the
United States in order to perfect the security interest in the
Aircraft and the Lease as supplemented by the Lease Supplement
(insofar as such security interest affects an interest covered
by the recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code), under the applicable laws of any
jurisdiction within the United States; and
(7) no authorization, approval, consent, license or
order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States. Said opinion may also
contain a statement to the effect that such opinion is limited to the
records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the filing
of notice thereof with the Federal Aviation Administration, such as
Federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Code and possessory artisans' liens, and is subject
to the accuracy of FAA personnel in the filing, indexing and recording
of instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Said opinion may also rely
on the opinion obtained by such counsel from counsel for the
Aeronautical Center of the FAA, satisfactory in form and scope to such
counsel, and on past practice of the FAA which is consistent with such
Aeronautical Center counsel's opinion.
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<PAGE> 19
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould, special counsel for the Indenture Trustee, to the effect that:
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power, authority
and legal right to enter into and perform its obligations
under the Indenture Trustee Documents and, in its capacity as
Indenture Trustee, to authenticate the Secured Certificates to
be delivered on the Delivery Date;
(2) the execution, delivery and performance by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the Indenture
Trustee Documents and the consummation by State Street Bank
and Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, of the transactions contemplated
thereby and compliance by State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, as the
case may be, with the terms thereof including, without
limitation, the authentication of the Secured Certificates to
be delivered on the Delivery Date, have been duly authorized
by all necessary corporate action on the part of State Street
Bank and Trust Company, and neither the execution and delivery
thereof nor the consummation by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee,
as the case may be, of the transactions contemplated thereby
nor compliance by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, with any of the terms and provisions thereof (i) does or
will contravene any law or governmental rule or regulation of
the United States governing the banking or trust powers of
State Street Bank and Trust Company or the Commonwealth of
Massachusetts or any order or judgment known to such counsel
and applicable to or binding on State Street Bank and Trust
Company, or (ii) does or will contravene or result in any
breach of, or constitute any default under, the charter
documents or by-laws of State Street Bank and Trust Company or
the provisions of any indenture, mortgage, contract or other
agreement, in each case known to such counsel, to which State
Street Bank and Trust Company is a party or by which it or any
of its properties is or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby
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<PAGE> 20
requires or required the consent or approval of, the giving of
notice to, the registration with, the recording or filing of
any document with, or the taking of any other action in
respect of, any Federal or Massachusetts governmental
authority or agency governing the banking or trust powers of
State Street Bank and Trust Company or under any Massachusetts
law;
(4) each of the Indenture Trustee Documents has been
duly executed and delivered by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee,
as the case may be, and, assuming that each such agreement is
the legal, valid and binding obligation of each other party
thereto, is the legal, valid and binding obligation of State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, enforceable against
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, in accordance with its
terms, except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of
creditors' rights;
(5) the Secured Certificates to be issued and dated
the Delivery Date have been duly authenticated and delivered
by the Indenture Trustee pursuant to the terms of the
Indenture Trustee Documents;
(6) to the knowledge of such counsel, there are no
pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration board or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other governmental
charges ("TAXES") payable under the laws of the Commonwealth
of Massachusetts with respect to the execution of and delivery
by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the Indenture Trustee Documents (except for taxes on any
fees payable to State Street Bank and Trust Company in its
individual capacity) which would not have been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts. Neither State Street Bank and Trust Company, in
its individual capacity or as Indenture Trustee, as the case
may be, the Owner Participant, the Owner Trustee, nor the
trust created by the Trust Agreement will, as a result of the
transactions contemplated thereby, be subject to any taxes
under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for taxes on any fees
payable to State Street Bank and Trust Company in its
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<PAGE> 21
individual capacity) which would have not been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts, and there are no taxes under the laws of the
Commonwealth of Massachusetts or any political subdivision
thereof (except for taxes on any fees payable to State Street
Bank and Trust Company in its individual capacity) upon or
with respect to the Aircraft or any Engine or any part of any
interest therein, or the purchase, ownership, delivery, lease,
sublease, possession, presence, use, operation, condition,
storage, maintenance, modification, alteration, repair, sale,
return, transfer or other disposition of the Aircraft or any
Engine which would not have been imposed if State Street Bank
and Trust Company did not have its principal place of business
in Massachusetts or did not perform its administrative duties
under the Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request. Such
opinion may state that no opinion is expressed as to laws other than
the internal substantive laws of the Commonwealth of Massachusetts and
the Federal laws of the United States. Such opinion may further state
that with respect to paragraph (4) in connection with the opinion
relating to legality, validity and binding effect of the documents
there referred to, such counsel has assumed that the laws of the
jurisdictions whose laws govern such documents are not materially
different from the internal substantive laws of the Commonwealth of
Massachusetts.
(xvii) The Loan Participants shall have received from Vedder,
Price, Kaufman & Kammholz, special counsel for the Loan Participants, a
favorable opinion satisfactory in substance and form to the
Documentation Agent, as to such matters incident to the transactions
contemplated hereby as the Documentation Agent may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive Vice
President, any Senior Vice President or any Vice President of Lessee,
dated the Delivery Date, addressed to the Loan Participants and the
Owner Participant and certifying as to the matters stated in paragraphs
(viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this
Section 4(a). Copies of the orders, permits, waivers, authorizations,
exemptions and approvals referred to in Section 4(a)(viii) shall have
been furnished to the Loan Participants and the Owner Participant.
(xix) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b) of this Agreement, be deemed to
have reaffirmed the representations and warranties made by it in
Section 8 of this Agreement.
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<PAGE> 22
(xx) [Intentionally omitted.]
(xxi) The Loan Participants and Owner Participant shall have
received an independent insurance broker's report, in form and
substance satisfactory to the Documentation Agent and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event of
Loss (or event which with the passage of time would become an Event of
Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from David,
Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner
Participant, a favorable opinion, in form and substance satisfactory to
the Owner Participant, with respect to certain Federal income tax
aspects of the transaction contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions of
the Internal Revenue Code of 1986, as amended through the date hereof,
and the regulations promulgated under the Code (including temporary
regulations), Internal Revenue Service Revenue Procedures or Revenue
Rulings, or other administrative interpretations, applicable judicial
precedents or Executive Orders of the President of the United States,
all as in effect on the date hereof, the effect of which might preclude
the Owner Participant from obtaining any of the income tax benefits and
consequences assumed to be available to the Owner Participant as set
forth in Section 1 of the Tax Indemnity Agreement.
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<PAGE> 23
(xxviii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants
and the Owner Participant, and reasonably satisfactory as to scope and
substance to the Documentation Agent and the Owner Participant, from
Cadwalader, Wickersham & Taft, special counsel for the Lessee, which
opinion shall state (with customary assumptions and qualifications)
that the Owner Trustee, as lessor under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease
pursuant to the Trust Indenture, would be entitled to the benefits of
11 U.S.C. Section1110 with respect to the Aircraft.
(xxix) The Loan Participants shall have received an opinion,
in form and substance reasonably satisfactory to the Documentation
Agent, from B.K. Associates, Inc., independent aircraft appraisers, to
the effect that the fair market value of the Aircraft on the Delivery
Date is equal to Lessor's Cost.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner Trustee,
the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease
Supplement, such Trust Supplement, the Lease and the Trust Agreement and the
lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It
is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner
Trustee and (B) to accept delivery of the Aircraft under the Lease, are all
subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on or
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii)
and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have
been duly authorized, executed and delivered by the respective party or
parties thereto (other than
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<PAGE> 24
Lessee and the Guarantor) in the manner specified in Section 4(a)(v),
shall each be satisfactory in form and substance to Lessee, shall be in
full force and effect on the Delivery Date, and an executed counterpart
of each thereof (other than the Secured Certificates) shall have been
delivered to Lessee or its special counsel.
(iv) Lessee shall have received evidence of the approval by
the Executive Committee of the Board of Directors of the Owner
Participant, or other evidence of authority satisfactory to Lessee,
certified as of the Delivery Date by the Secretary or an Assistant
Secretary of the Owner Participant, duly authorizing or evidencing
authority for the execution, delivery and performance by the Owner
Participant of all of the Owner Participant Documents, and a copy of
the general authorizing resolutions of the boards of directors of the
Indenture Trustee and the Owner Trustee, certified as of the Delivery
Date by the Secretary or an Assistant Secretary of the Indenture
Trustee and the Owner Trustee, respectively, which authorize the
execution, delivery and performance by the Indenture Trustee of the
Indenture Trustee Documents and the Secured Certificates and by the
Owner Trustee of the Owner Trustee Documents, together with such other
documents and evidence with respect to the Indenture Trustee, the Owner
Participant and the Owner Trustee as Lessee or its special counsel may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and accurate
as of the Delivery Date as though made on and as of such date except to
the extent that such representations and warranties relate solely to an
earlier date (in which event such representations and warranties shall
have been true and accurate on and as of such earlier date) and Lessee
shall have received a certificate signed by the Chairman of the Board,
the President, any Vice President or any Assistant Vice President or
other authorized representative of the Indenture Trustee, the Owner
Participant and the Owner Trustee, respectively, addressed to Lessee
and certifying as to the foregoing matters with respect to the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
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<PAGE> 25
(viii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations by appropriate regulatory
authorities which would make it a violation of law or regulations for
Lessee to enter into any transaction contemplated by the Operative
Documents.
(ix) In the opinion of Lessee and its special counsel, there
shall have been, since the date hereof, no amendment, modification,
addition or change in or to the Internal Revenue Code of 1986, as
amended through the date hereof, the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service
Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. CONFIDENTIALITY OF PARTICIPATION AGREEMENT, LEASE
AND GUARANTEE. The Owner Trustee, the Participants, the Administrative Agent,
the Documentation Agent, the Certificate Holders and the Indenture Trustee shall
keep this Agreement, the Lease and the Guarantee confidential and shall not
disclose, or cause to be disclosed, the same to any Person, except (A) to
prospective and permitted transferees of Owner Trustee's, a Loan Participant's,
a Certificate Holder's, the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to the Owner
Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's
or the Indenture Trustee's counsel or special counsel, independent insurance
brokers or other agents who agree to hold such information confidential, (C) as
may be required by any statute, court or administrative order or decree or
governmental ruling or regulation or to any regulatory authorities having
jurisdiction over them or (D) such other Persons as reasonably deemed necessary
by Owner Trustee, the Participants, the Certificate Holders or the Indenture
Trustee in order to protect the interests of any of such parties or for the
purposes of enforcing such documents by the Owner Trustee or the Indenture
Trustee; provided, however, that any and all disclosures of all or any part of
this Agreement, the Lease and the Guarantee which are permitted by (C) or (D)
above shall be made only to the extent necessary to meet the specific
requirements or needs of the Persons to whom such disclosures are hereby
permitted, and provided further, that the Owner Participant may publish a
tombstone or other advertisement disclosing information relating to this
transaction with the prior approval of Lessee.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No
Certificate Holder (as defined in the Trust Indenture) shall have any further
interest in, or other right with respect to, the mortgage and security interests
created by the Trust Indenture when and if the principal of and interest on all
Secured Certificates held by such holder and all other sums payable to such
holder hereunder, under the Trust Indenture and under such Secured Certificates
shall have been paid in full. Each of the Loan Participants and, by its
acceptance of a Secured Certificate, each Certificate Holder agrees that it will
look solely to the income
- 25 -
<PAGE> 26
and proceeds from the Trust Indenture Estate to the extent available for
distribution to such Certificate Holder as provided in Article III of the Trust
Indenture and that neither the Owner Participant nor the Owner Trustee shall be
personally liable to the Loan Participants or any Certificate Holder for any
amounts payable under the Secured Certificates, the Trust Indenture or
hereunder, except as expressly provided in the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND
INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each
of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the
Owner Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse effect
on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises which,
if not obtained, would not have a material adverse effect on the
consolidated business assets, properties or condition (financial or
otherwise) of Lessee and its subsidiaries taken as a whole or on the
ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of the
Lessee Documents will, on the Delivery Date, have been duly authorized
by all necessary corporate action on the part of Lessee, do not require
any stockholder approval, or approval or consent of any trustee or
holders of any indebtedness or obligations of Lessee except such as
have been duly obtained or by the Delivery Date will have been duly
obtained, and none of such agreements contravenes any law, judgment,
government rule, regulation or order binding on Lessee or the
certificate of incorporation or by-laws of Lessee or contravenes the
provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice to,
or the registration with, or the taking of any other
- 26 -
<PAGE> 27
action in respect of, any Federal, State or foreign government
authority or agency, except for (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee
required to be obtained on or prior to the Delivery Date, which orders,
permits, waivers, exemptions, authorizations and approvals have been
duly obtained and are, or will on the Delivery Date be in full force
and effect (other than a flying time wire, all steps to obtain the
issuance of which will have been, on the Delivery Date, taken or caused
to be taken by Lessee), (B) the registration of the Aircraft referred
to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices,
registrations and other actions required by the terms of the Lessee
Documents to the extent required to be given or obtained only after the
Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
special counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court or
administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft pursuant
to the Federal Aviation Act, (B) the filing for recording pursuant to
said Act of the Trust Agreement, the Lease with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and made a part thereof, the Trust Indenture with the
Trust Supplement attached thereto and made a part thereof and the FAA
Bill of Sale, (C) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security and
other interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified in
the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the
taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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 Owner
Trustee's title to and the Indenture Trustee's security interest in the
Aircraft as against Lessee and any third parties in any applicable
jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving of
notice or the passage of time or both would constitute an Event of
Default under the Lease) which is presently continuing;
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<PAGE> 28
(viii) Lessee is solvent and will not be rendered insolvent by
the sale of the Aircraft; after the sale of the Aircraft the capital of
Lessee will not be unreasonably small for the conduct of the business
in which Lessee is engaged or is about to engage; Lessee has no
intention or belief that it is about to incur debts beyond its ability
to pay as they mature; and Lessee's sale of the Aircraft is made
without any intent to hinder, delay or defraud either present or future
creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1994 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated subsidiaries
for the year then ended, which have been audited by independent
certified public accountants, and (b) the consolidated balance sheets
of the Guarantor and its consolidated subsidiaries as of September 30,
1995 and the related consolidated statements of operations, cash flows
and common stockholders' equity for the nine-month period then ended,
copies of which have been furnished to the Owner Participant and each
Loan Participant, fairly present the consolidated financial condition
of the Guarantor and its consolidated subsidiaries as at such date and
the results of operations and cash flow of the Guarantor and its
consolidated subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied and since September 30, 1995 there has been no material adverse
change in the consolidated financial condition, cash flow or results of
operations of the Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive good
title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of Lessee
under the Lease and the Lease Supplement covering the Aircraft, the
Lien of the Trust Indenture and the beneficial interest of the Owner
Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation G or U of the Board of Governors of the
Federal Reserve System;
(xii) Lessee is not in default in the performance of any term
or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due and
for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft; and
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<PAGE> 29
(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease.
(b) General Tax Indemnity. [Reserved]
- 29 -
<PAGE> 30
(c) General Indemnity. [Reserved]
- 30 -
<PAGE> 31
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than sales, use, license or property Taxes or Taxes in the
nature thereof) (including, without limitation, capital gains taxes, minimum
taxes, income taxes collected by withholding and taxes on tax
- 31 -
<PAGE> 32
preference items), and Taxes which are capital, doing business, excess profits
or net worth taxes and interest, additions to tax, penalties, or other charges
in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The
Owner Participant represents that it is acquiring its interest in the Trust
Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Secured Certificates
or any similar securities for sale to, or solicited any offer to acquire any of
the same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended.
(b) Lessee represents and warrants that neither Lessee
nor anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended.
(c) Each of the Owner Participant and First Security Bank
of Utah, National Association, in its individual capacity, represents and
warrants to the other parties to this Agreement that it is, and on the Delivery
Date will be, a Citizen of the United States without making use of any voting
trust, voting powers agreement or similar arrangement. The Owner Participant
agrees, solely for the benefit of Lessee and the Loan Participants, that if (i)
it shall cease to be, or believes itself likely to cease to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore become ineligible
for registration in the name of the Owner Trustee under the Federal Aviation Act
and regulations then applicable thereunder, then the Owner Participant shall (at
its own expense and without any reimbursement or indemnification from Lessee)
promptly effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee and
the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole expense
of the Owner Participant, to cooperate with the Owner Participant in complying
with its obligations under the provisions of the second sentence of this Section
8(c). First Security Bank of Utah, National Association, in its individual
capacity, agrees that if at any time an officer or responsible employee of the
Corporate Trust Department of First Security Bank of Utah, National Association,
shall obtain actual knowledge that First Security Bank of Utah, National
Association, has ceased to be a Citizen of the United States without making use
of a voting trust, voting powers agreement or similar arrangement, it will
promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act
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as in effect at such time or, if it is not necessary, if and so long as the
Owner Trustee's citizenship would have any material adverse effect on the Loan
Participants, Lessee or the Owner Participant), effective upon the appointment
of a successor Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or First Security Bank of Utah, National
Association, in its individual capacity, does not comply with the requirements
of this Section 8(c), the Owner Trustee, the Indenture Trustee and the
Participants hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the giving of notice or
both) shall not have occurred and be continuing under the Lease due to
non-compliance by Lessee with the registration requirements in the Lease.
(d) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that both the principal place
of business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of Utah,
National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and delivered, shall have been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such instruments
on behalf of the Owner Trustee. First Security Bank of Utah, National
Association, in its individual capacity, represents that it has not offered any
interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire the same from, anyone,
and that no officer or responsible employee of the Corporate Trust Department of
First Security Bank of Utah, National Association, has knowledge of any such
offer or solicitation by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
for sale to, or solicited any offer to buy any Secured Certificate from, any
person or entity other than in a manner in compliance with, and which does not
require registration under, the Securities Act of 1933, as amended, or the rules
and regulations thereunder.
(f) The Owner Participant and each of the Loan
Participants agree that, at any time after the Depreciation Period, Lessee may
elect to effect a change in registration of the Aircraft, at Lessee's cost and
expense, so long as (a) the country of registry of the Aircraft is a country
listed on Exhibit A hereto (or such other country as the Owner Trustee approves)
and (b) the following conditions are met: (i) unless the country of registry is
Taiwan, the United States maintains normal diplomatic relations with the country
of registry of the Aircraft, and if the country of registry is Taiwan, the
United States maintains diplomatic relations at least as good as those in effect
on the Delivery Date; and (ii) the Owner Trustee
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and the Indenture Trustee shall have received favorable opinions (subject to
customary exceptions) addressed to each such party, from counsel of recognized
reputation qualified in the laws of the relevant jurisdiction to the effect
that:
(A) the Owner Trustee's ownership interest in the Aircraft
shall be recognized under the laws of such jurisdiction, (B) the
obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under
the laws of such jurisdiction (or the laws of the jurisdiction to which
the laws of such jurisdiction would refer as the applicable governing
law), (C) after giving effect to such change in registration, the Lien
of the Trust Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft and the Lease shall continue as a valid and duly
perfected first priority security interest and all filing, recording or
other action necessary to protect the same shall have been accomplished
(or, if such opinion cannot be given at the time of such proposed
change in registration because such change in registration is not yet
effective, (1) the opinion shall detail what filing, recording or other
action is necessary and (2) the Owner Trustee and the Indenture Trustee
shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall
be accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior to
the effective date of such change in registration), (D) it is not
necessary, solely as a consequence of such change in registration and
without giving effect to any other activity of the Owner Trustee, the
Owner Participant or the Indenture Trustee (or any Affiliate thereof),
as the case may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify to do business in such jurisdiction, (E)
there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction (it being agreed
that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk), and (F) (unless Lessee shall have agreed to
provide insurance covering the risk of requisition of use of such
Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for
the loss of use of such Aircraft in the event of the requisition by
such government of such use.
In addition, as a condition precedent to any such change in registration, Lessee
shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom. Lessee shall pay all costs, expenses, fees, recording and
registration taxes, including the
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<PAGE> 35
reasonable fees and expenses of counsel to the Owner Trustee, the Owner
Participant and the Indenture Trustee, and other charges in connection with any
such change in registration.
(g) The Owner Participant represents and warrants to
Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization, has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties
and to enter into and perform its obligations under the Owner
Participant Documents, and has a tangible net worth (exclusive of
goodwill) greater than $75,000,000;
(ii) the Owner Participant Documents have been duly authorized
by all necessary corporate action on the part of the Owner Participant,
do not require any approval not already obtained of stockholders of the
Owner Participant or any approval or consent not already obtained of
any trustee or holders of any indebtedness or obligations of the Owner
Participant, and have been duly executed and delivered by the Owner
Participant, and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance
by the Owner Participant with any of the terms and provisions thereof
will contravene any United States Federal or state law, judgment,
governmental rule, regulation or order applicable to or binding on the
Owner Participant (it being understood that no representation or
warranty is made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner Trustee,
other than such laws, rules or regulations relating to financing or the
citizenship requirements of the Owner Participant under applicable
aviation law) or contravene or result in any breach of or constitute
any default under, or result in the creation of any Lien (other than
Liens provided for in the Operative Documents) upon any property of the
Owner Participant under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, corporate charter, by-law or other agreement or instrument
to which the Owner Participant is a party or by which it or its
properties may be bound or affected;
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with the terms
thereof (subject to the qualifications set forth in clause (2) of the
opinion of special counsel to the Owner Participant in Section
4(a)(xiv));
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the
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<PAGE> 36
ability of the Owner Participant to perform its obligations under
the Owner Participant Documents;
(v) upon the execution and delivery of the Trust Indenture,
the Trust Indenture Estate will be free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to the
Owner Participant; and
(vi) neither the execution and delivery of the Owner
Participant Documents nor the performance by the Owner Participant of
its obligations thereunder require the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action in respect of any Federal, state or foreign government
authority or agency except for those exceptions referred to in Section
7(a)(iii) applicable to the Owner Participant and the Owner Participant
Documents.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants and
agrees that it shall not cause or permit to exist a Lessor Lien attributable to
it with respect to the Aircraft or any other portion of the Trust Estate. Each
of First Security Bank of Utah, National Association, in its individual
capacity, and the Owner Participant agrees that it will promptly, at its own
expense, take such action as may be necessary duly to discharge such Lessor Lien
attributable to it. Each of First Security Bank of Utah, National Association,
in its individual capacity, and the Owner Participant agrees to make restitution
to the Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens) attributable
to it. The Owner Participant agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Estate resulting from any Taxes
or Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Lien, arising as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or willful misconduct, (C)
claims against the Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 pursuant to said Section
7, or (D) claims against the Indenture Trustee arising out of the transfer by
the Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a
transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture Trustee has
received all amounts due pursuant to the Trust Indenture.
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<PAGE> 37
(j) Each Loan Participant represents, warrants, covenants
and agrees as to itself: (i) that this Agreement has been duly authorized,
executed and delivered by such Loan Participant and this Agreement constitutes a
legal, valid and binding obligation of such Loan Participant enforceable against
such Loan Participant in accordance with its terms except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); (ii) that such Loan Participant is duly
organized and validly existing under the laws of its jurisdiction of
organization; and (iii) that such Loan Participant has full power, authority and
legal right to execute, deliver and carry out the terms of this Agreement.
(k) Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the Trust Indenture is
being acquired by it for investment and not with a view to resale or
distribution (it being understood that such Loan Participant may pledge or
assign as security its interest in each Secured Certificate issued to it),
provided that the disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may sell, transfer or
otherwise dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement.
(l) The Indenture Trustee, and by acceptance of the
Secured Certificates the Certificate Holders, hereby (i) agree that for purposes
of the application of Section 1111(b) of Title 11 of the United States Code or
any successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to the
Trust Agreement shall be strictly limited to the Trust Estate (excluding the
Excluded Payments) and (ii) make (and hereby agree to make), with respect to the
Trust Indenture Estate, the election provided for in Section 1111(b)(2) of Title
11 of the United States Code. It is hereby agreed by the Indenture Trustee, and
by the acceptance of the Secured Certificates the Certificate Holders hereby
agree, that if (i) all or any part of the Trust Estate becomes the property of,
or the Owner Participant becomes, a debtor subject to the reorganization
provisions of the Bankruptcy Reform Act of 1978 or any successor provision or
any comparable proceeding, (ii) pursuant to such reorganization provisions the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to the holder(s) of the
Secured Certificates or to the Indenture Trustee, directly or indirectly (other
than the recourse liability of the Owner Participant under this Participation
Agreement), to make payment on account of any amount payable as principal or
interest on the Secured Certificates and (iii) any holder(s) of the Secured
Certificates or the Indenture Trustee actually receives any Excess Payment (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of (ii) above, then
such holder(s) or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee or the Owner Participant (whichever shall have made
such payment) such Excess Payment. For purposes of this Section 8(l), "EXCESS
PAYMENT" means the amount by which such payment exceeds the amount which would
have been received by the holder(s)
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<PAGE> 38
of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in
its individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this Section
8(l) shall prevent the holder of a Secured Certificate or the Indenture Trustee
from enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Trustee (in its individual capacity) or the Owner
Participant under this Agreement or the Trust Indenture (and any exhibits or
annexes thereto).
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making use of
any voting trust, voting powers trust agreement or other similar
arrangement, will notify promptly all parties to this Agreement if in
its reasonable opinion its status as a Citizen of the United States
without making use of any voting trust, voting powers trust agreement
or other similar arrangement, is likely to change and that it will
resign as Indenture Trustee as provided in Section 8.02 of the Trust
Indenture if it should cease to be a Citizen of the United States
without making use of any voting trust, voting powers trust agreement
or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized and
validly existing in good standing under the laws of the Commonwealth of
Massachusetts and has the requisite corporate power and authority to
enter into and perform its obligations under the Trust Indenture and
this Agreement and to authenticate the Secured Certificates to be
delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the authentication
of the Secured Certificates to be delivered on the Delivery Date have
been duly authorized by all necessary corporate action on its part, and
neither the execution and delivery thereof nor its performance of any
of the terms and provisions thereof will violate any Federal or state
law or governmental rule or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any
default under its charter or by-laws or the provisions of any
indenture, mortgage, contract or other agreement to which it is a party
or by which it or its properties may be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, enforceable
against State Street Bank and Trust Company, in its individual capacity
or as Indenture Trustee, as the case may be, in accordance with its
terms except as limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights.
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<PAGE> 39
(n) The Owner Participant will not, directly or
indirectly, sell, assign, convey or otherwise transfer any of its right, title
or interest in and to this Agreement, the Trust Estate or the Trust Agreement or
any proceeds therefrom to any person or entity, unless (i) the proposed
transferee is a "Transferee" (as defined below), (ii) Lessee shall have (1)
received an opinion (in form and substance reasonably satisfactory to Lessee) of
counsel to the Owner Participant (who shall be reasonably satisfactory to
Lessee) to the effect that such transfer will not result in any risk of loss of
tax benefits to, or any increase in the tax liability of, Lessee and (2)
received from the Owner Participant so seeking to transfer such right, title or
interest reasonably satisfactory indemnification for any loss of tax benefits
to, and increase in the tax liability of, Lessee, and (iii) the Owner
Participant sells, assigns, conveys or otherwise transfers all of its right,
title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and the proceeds therefrom to a single entity. A "TRANSFEREE" shall
mean either (A) a bank or other financial institution with a combined capital,
surplus and undivided profits of at least $75,000,000 or a corporation whose
tangible net worth is at least $75,000,000, exclusive of goodwill, in either
case as of the proposed date of such transfer, as determined in accordance with
generally accepted accounting principles, or (B) any subsidiary of such a bank,
financial institution or corporation, provided that such bank, financial
institution or corporation furnishes to the Owner Trustee, the Loan
Participants, the Indenture Trustee and Lessee a guaranty with respect to the
Owner Participant's obligations, in the case of the Owner Trustee, under the
Trust Agreement and, in the case of the Loan Participants, the Indenture Trustee
and Lessee, the Owner Participant's obligations hereunder, including but not
limited to, under Section 8(c) and Section 8(h) hereof, in form and substance
reasonably satisfactory to Lessee, the Owner Trustee and the Majority in
Interest of Certificate Holders; provided, however, that any Transferee shall
not be an airline, a commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or other similar person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person. Each such transfer to a Transferee shall be subject to the conditions
that (M) upon giving effect to such transfer, the Transferee is a Citizen of the
United States (without making use of a voting trust agreement, voting powers
agreement or other similar arrangement unless approved by Lessee), and has full
power and authority to enter into the transactions contemplated hereby, (N) the
Transferee has the requisite power and authority to enter into and carry out the
transactions contemplated hereby and such Transferee shall have delivered to
Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an
opinion of counsel in form and substance reasonably satisfactory to such persons
as to the due authorization, delivery, legal, valid and binding effect and
enforceability of the agreement or agreements referred to in the next clause
with respect to the Transferee and any guaranty provided pursuant to the
provisions of this Section 8(n) as to the guarantor, (O) the Transferee enters
into an agreement or agreements, in form and substance reasonably satisfactory
to the Owner Trustee, the Majority in Interest of Certificate Holders, Lessee
and the Indenture Trustee, whereby the Transferee confirms that it shall be
deemed a party to this Agreement and a party to the Trust Agreement and agrees
to be bound by all the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in, the Owner Participant Documents (to
the extent of the participation so
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<PAGE> 40
transferred to it) and makes the representations and warranties made by the
Owner Participant thereunder, (P) such transfer does not affect registration of
the Aircraft under the Federal Aviation Act, or any rules or regulations
promulgated thereunder or create a relationship which would be in violation
thereof or violate any provision of the Securities Act of 1933, as amended, or
any other applicable Federal or state law, (Q) the transferor Owner Participant
assumes the risk of any loss of Interest Deductions, Amortization Deductions and
MACRS Deductions and the risk of any Inclusion Event (each as defined in the Tax
Indemnity Agreement) resulting from such transfer, (R) the transferor Owner
Participant pays all of the costs and expenses (including, without limitation,
fees and expenses of counsel) incurred in connection with such transfer,
including the costs and expenses of the Owner Trustee, the Indenture Trustee,
Lessee and the Loan Participants in connection therewith, and (S) the terms of
the Operative Documents and the Overall Transaction shall not be altered. Upon
any such transfer by the Owner Participant as above provided, the Transferee
shall be deemed the Owner Participant for all purposes hereof and of the other
Operative Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be to the Transferee
and the transferor Owner Participant shall be relieved of all obligations of the
transferor Owner Participant under the Owner Participant Documents arising after
the date of such transfer except to the extent fully attributable to or arising
out of acts or events occurring prior thereto and not assumed by the Transferee
(in each case, to the extent of the participation so transferred). If the Owner
Participant intends to transfer any of its interests hereunder, it shall give 30
days' prior written notice thereof to the Loan Participants, the Indenture
Trustee, the Owner Trustee and Lessee, specifying the name and address of the
proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x)
hereof, unless waived by the Loan Participants, Lessee shall not be entitled to
assume the Secured Certificates on the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease if on such date an Event of Default shall
have occurred and be continuing or any condition or event shall exist which,
with the passage of time or giving of notice or both, would become such an Event
of Default.
(p) First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its individual capacity, agrees
for the benefit of Lessee to comply with the terms of the Trust Indenture which
it is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section 2.14
of the Trust Indenture) unless such entity makes (or is deemed to have made) a
representation and warranty as of the date of transfer that either no part of
the funds to be used by it for the purchase of such Secured Certificate (or any
part thereof) constitutes assets of any
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<PAGE> 41
"employee benefit plan" or that such transfer will not result in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code and ERISA). The
Owner Participant agrees that it will not transfer any of its right, title or
interest in and to this Agreement, the Trust Estate or the Trust Agreement or
any proceeds therefrom to any entity unless such entity makes (or is deemed to
have made) a representation and warranty as of the date of transfer that either
no part of the funds to be used by it for the purchase of such right, title and
interest (or any part thereof) constitutes assets of any "employee benefit plan"
or that such transfer will not result in a prohibited transaction (as defined in
Section 4975 of the Code and ERISA).
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement, (ii) the initial purchase by the Loan
Participants of the Secured Certificates, and (iii) the initial acquisition by
the Owner Participant of its beneficial interest in the Trust Estate will
involve any prohibited transaction within the meaning of Section 406(a) of ERISA
or Section 4975(c)(1)(A) through (D) of the Code (such representation being made
in reliance upon and subject to the accuracy of the representations contained in
subparagraph (A) of this Section 8(q)).
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in connection
with the financing of the Aircraft and the other transactions contemplated by
the Operative Documents (including any transfer of Secured Certificates
(including by way of participation or assignment of an interest, provided such
participant or assignee agrees to hold such terms confidential to the same
extent as herein provided) or the Owner Participant's beneficial interest in the
Trust Estate and any exercise of remedies under the Lease and the Trust
Indenture), (C) with the prior written consent of the Manufacturer and Lessee,
(D) to the Owner Trustee's, the Indenture Trustee's and each Participant's
counsel or special counsel, independent insurance brokers or other agents who
agree to hold such information confidential, or (E) in the case of the Owner
Participant and/or the Owner Trustee, it may disclose so much of the Purchase
Agreement as has been assigned to the Owner Trustee under the Purchase Agreement
Assignment and not specifically reserved to Lessee under Section 1 thereof, to
bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant
severally, not jointly, represent and warrant that none of the funds made
available by the Loan Participants pursuant to Section 1 hereof will be used for
the purpose of purchasing or carrying any "margin security" as defined in
Regulation G of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning of Regulation X of the Board of Governors of the
Federal Reserve System, assuming that the proceeds were and are applied as
contemplated by the provisions of this Agreement.
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<PAGE> 42
(t) Each Loan Participant covenants and agrees that it
shall not cause or permit to exist a Loan Participant Lien attributable to it
with respect to the Aircraft or any other portion of the Trust Estate. Each Loan
Participant agrees that it will promptly, at its own expense, take such other
action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificate of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the date
of payment of such principal amount plus all other amounts owed to such affected
Certificate Holder under the Operative Documents (including any Funding Loss
Amount payable as a result of the applicable purchase occurring on a day other
than the last day of an Interest Period). For purposes of this Section 8(t),
"affected Certificate Holder" shall mean a Certificate Holder which has asserted
claims against the Owner Trustee or Lessee under or sought rights or remedies
provided by Section 7(b) hereof or Sections 11.01 or 11.02 of the Trust
Indenture.
(u) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Indenture Trustee's Liens with respect to the Trust Indenture Estate
or the Trust Estate. State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense, take such action as
may be necessary duly to discharge such Indenture Trustee's Liens. State Street
Bank and Trust Company, in its individual capacity, agrees to make restitution
to the Trust Estate for any actual diminution of the assets of the Trust
Indenture Estate or the Trust Estate resulting from such Indenture Trustee's
Liens.
(v) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner Participant,
each of the other Owner Trustee Documents has been duly executed and
delivered by one of its officers who is duly authorized to execute and
deliver such instruments on behalf of First Security Bank of Utah,
National Association or the Owner Trustee, as the case may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First Security
Bank of Utah, National Association, in its individual capacity, arising
out of any event or condition not related to the ownership, leasing,
use or operation of the Aircraft or to any other transaction
contemplated by
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this Agreement or any of the Operative Documents, including any such
Lien resulting from the nonpayment by First Security Bank of Utah,
National Association, in its individual capacity, of any Taxes imposed
or measured by its net income;
(iii) there has not occurred any event which constitutes (or
to the best of its knowledge would, with the passage of time or the
giving of notice or both, constitute) an Event of Default as defined in
the Trust Indenture which has been caused by or relates to First
Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the
terms and provisions thereof will violate any Federal law governing the
banking and trust powers of First Security Bank of Utah, National
Association, or Utah law or regulation or contravene or result in any
breach of the provisions of its articles of association or By-Laws or
any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both,
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with their respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association
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<PAGE> 44
for services rendered in connection with the transactions contemplated
by the Operative Documents.
(w) The Owner Participant covenants and agrees that if
(i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the
Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease
and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to
Lessee written notice of Lessor's election to retain title to the Aircraft and
(iii) the Owner Trustee has failed to make, on or before the Termination Date,
any payment required to be made by the Owner Trustee pursuant to Section 9(c) in
connection with its retention of title to the Aircraft, the Owner Participant
will indemnify Lessee for any losses, damages, costs or expenses of any kind
(including any additional rents paid by Lessee and any fees and expenses of
lawyers, appraisers, brokers or accountants) incurred as a consequence of such
failure by the Owner Trustee. The Owner Participant further covenants and agrees
to pay those costs and expenses specified to be paid by the Owner Participant
pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if
Lessee elects (a) to purchase the Aircraft pursuant to Section 19(b) of the
Lease or (b) to terminate the Lease and purchase the Aircraft pursuant to
Section 19(d) of the Lease, then each of the parties will execute and deliver
appropriate documentation transferring all right, title and interest in the
Aircraft to Lessee (including, without limitation, such bills of sale and other
instruments and documents as Lessee shall reasonably request to evidence (on the
public record or otherwise) such transfer and the vesting of all right, title
and interest in and to the Aircraft in Lessee), and if Lessee, in connection
with such purchase, elects to assume the obligations of the Owner Trustee
pursuant to the Trust Indenture and the Secured Certificates each of the parties
will execute and deliver appropriate documentation permitting Lessee to assume
such obligations on the basis of full recourse to Lessee, maintaining the
security interest in the Aircraft created by the Trust Indenture, releasing the
Owner Participant and the Owner Trustee from all future obligations in respect
of the Secured Certificates, the Trust Indenture and all other Operative
Documents and all such other actions as are reasonably necessary to permit such
assumption by Lessee.
(y) (A) Lessee will not consolidate with or merge into
any other corporation or convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer
or lease substantially all of the assets of Lessee as an entirety shall
be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
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<PAGE> 45
reasonably satisfactory to such Participant containing an assumption by
such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement mentioned in clause (ii)
above comply with this subparagraph (A) of Section 8(y) and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety in
accordance with this subparagraph (A) of Section 8(y), the successor corporation
or Person formed by such consolidation or into which Lessee is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, Lessee under this
Agreement with the same effect as if such successor corporation or Person had
been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to which
it is a party.
(B) Lessee shall at all times maintain its corporate
existence except as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing, re-recording and
refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture, the Trust Supplement and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the interest of the Owner Trustee in the Aircraft or
will furnish to the Owner Trustee and the Indenture Trustee timely notice of the
necessity of such action, together with such instruments, in execution form, and
such other information as may be required to enable them to take such action.
Lessee will notify the Owner Trustee, the Owner Participant and the Indenture
Trustee of any change in the location of its chief executive office (as such
term is used in Article 9 of the Uniform Commercial Code) promptly after making
such change or in any event within the
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<PAGE> 46
period of time necessary under applicable law to prevent the lapse of perfection
(absent refiling) of financing statements filed under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations of
Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the
Owner Participant hereby agrees to make such recalculations as and when
contemplated by the Lease and subject to all the terms and conditions of the
Lease and promptly to take such further actions as may be necessary or desirable
to give effect to and to cause the Owner Trustee to give effect to the
provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee, and
only with Lessee, and not for the benefit of any other party to this
Participation Agreement, that it will promptly pay in full to the Owner Trustee
any funds necessary to enable the Owner Trustee promptly to pay to Lessee the
full amount of any Reimbursement Amount owed to Lessee.
(cc) The Owner Participant hereby agrees to notify Lessee
or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York
time on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) [_______________] agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the Indenture
Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual
interest expected to accrue on the Secured Certificates during each Interest
Period promptly after the commencement of such Interest Period and after the
occurrence of any event that would cause such actual interest expected to accrue
during such Interest Period to change from the amount previously notified. The
Administrative Agent further agrees to perform all of the functions that are
required to be performed by the Administrative Agent pursuant to the terms of
the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that
it will pay, or cause to be paid, all costs and expenses that are for the
account of the Owner Trustee pursuant to Section 5(d) of the Lease.
(ff) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate unless
and until the transferee agrees in writing (copies of which shall be provided by
the Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant) to
make the representations contemplated to be made by a Loan Participant in this
Agreement and to be bound by the terms of this Agreement and the Trust Indenture
(including, without limitation, the representations and covenants set forth in
Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff)
and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
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<PAGE> 47
(gg) [____________] agrees to act as Documentation Agent
hereunder and to perform all of the functions that are required to be performed
by the Documentation Agent hereunder.
(hh) [____________], [____________] and [________________]
each agrees to furnish to the Administrative Agent timely information for
the purpose of determining each Eurodollar Rate (as defined in the Trust
Indenture).
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN
PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an
adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner
Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized representative of the Owner Participant (the
"REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of
debt amortization and Basic Rent, Excess Amounts, Stipulated Loss Value and
Termination Value percentages. Within forty-five days of its receipt of the
Reoptimization Certificate, Lessee may demand a verification, pursuant to
Exhibit E of the Lease, of the information set forth in the Reoptimization
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Reoptimization Certificate or the determination pursuant to
such verification procedures of such information, the Owner Participant will
cause the Owner Trustee (M) to execute a Lease Supplement setting forth the
reoptimized Basic Rent, Excess Amounts, Stipulated Loss Value and Termination
Value percentages, and (N) to exchange new Secured Certificates containing
reoptimized amortization schedules for the Secured Certificates outstanding
immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of
Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to
this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will
agree to changes in the amortization schedule of the Secured Certificates, and
(N) each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates containing
reoptimized amortization schedules; provided that such changes do not (X) change
the final maturity of any Secured Certificates to beyond twenty years from the
Delivery Date or (Y) reduce Basic Rent, the Stipulated Loss Value or the
Termination Value percentages below the amount necessary (together with the
Excess Amount and all other amounts simultaneously payable by Lessee) to permit
payment of all amounts payable pursuant to the Secured Certificates or (Z)
increase the weighted average lives of the Secured Certificates as of the
Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and
the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to
comply with all of the terms of the Trust Agreement (as the same may hereafter
be amended or supplemented from time to time in accordance with the terms
thereof) applicable to it; (B) agrees with
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Lessee, the Loan Participants and the Indenture Trustee not to amend, supplement
or otherwise modify any provision of the Trust Agreement in a manner adversely
affecting such party without the prior written consent of such party; and (C)
agrees with Lessee and the Loan Participants not to revoke the Trust Agreement
without the prior written consent of Lessee and the Loan Participants.
Notwithstanding the foregoing, so long as the Lease has not been terminated, the
Indenture Trustee and the Owner Trustee hereby agree for the benefit of Lessee
that without the consent of Lessee they will not (i) amend or modify Article III
or IX of the Trust Indenture, (ii) make any amendment which will affect the
stated principal amount or interest on the Secured Certificates or (iii) amend
or modify the provisions of Sections 2.05 or 10.05 of the Trust Indenture. The
Indenture Trustee and the Owner Trustee agree to promptly furnish to Lessee
copies of any supplement, amendment, waiver or modification of any of the
Operative Documents to which Lessee is not a party. Notwithstanding anything to
the contrary contained herein, in the Trust Agreement or in any other Operative
Document, the Owner Participant will not consent to or direct a change in the
situs of the Trust Estate without the prior written consent of Lessee. Each Loan
Participant agrees that it will not take any action in respect of the Trust
Indenture Estate except through the Indenture Trustee pursuant to the Trust
Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and
agrees with each of the Loan Participants, the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act, or shall furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to make
application for such registration, and shall promptly furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to
timely file any reports required to be filed by it as the lessor under the Lease
or as the owner of the Aircraft with any governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements,
all amendments to the Lease, the Trust Indenture, all supplements and amendments
to the Trust Indenture and this Agreement 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. Upon the execution and delivery of the
FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the
Trust Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; first, the
FAA Bill of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and
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<PAGE> 49
the Trust Supplement attached, and third, the Trust Indenture, with the Trust
Supplement attached.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee will be the lessee thereof,
and each party hereto agrees to characterize the Lease as a lease for Federal
income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth
in the Trust Indenture. Unless the context otherwise requires, any reference
herein to any of the Operative Documents refers to such document as it may be
amended from time to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally delivered
or sent by registered or certified mail, postage prepaid, or by telecopier, or
by prepaid courier service, and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 13(b).
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), 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 telecopier
numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants,
the Administrative Agent, the Documentation Agent, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures of
such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto, or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture, or (D) if to the
Guarantor, addressed to the Guarantor at such address as the Guarantor shall
have furnished by notice to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County, for
the purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is
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brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document or the subject matter of any thereof
or any of the transactions contemplated hereby or thereby may not be enforced in
or by such courts. Lessee hereby generally consents to service of process at
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of Lessee in New York City as from
time to time may be designated by Lessee in writing to the Owner Participant,
the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to any
Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a
consequence thereof, Lessee should request that the situs of the trust be moved
to another state in the United States from the state in which it is then
located, the situs of the trust may be moved with the written consent of the
Owner Participant (which consent shall not be unreasonably withheld) and the
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification as the Owner Participant and the Loan Participants may
reasonably request, (B) the rights and obligations under the Operative Documents
of the Owner Participant and the Loan Participants shall not be altered as a
result of the taking of such action, (C) the lien of the Trust Indenture on the
Trust Indenture Estate shall not be adversely affected by such action, and (D)
the Owner Participant and the Loan Participants shall have received an opinion
or opinions of counsel (satisfactory to the Owner Participant and the Loan
Participants), in scope, form and substance satisfactory to the Owner
Participant and the Loan Participants to the effect that (I) the trust, as thus
removed, shall remain a validly established trust, (II) any amendments to the
Trust Agreement necessitated by such removal shall have been duly authorized,
executed and delivered by the parties thereto and shall constitute the valid and
binding obligations of such parties, enforceable in accordance with their terms,
(III) such removal will not result in the imposition of, or increase in the
amount of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner Trustee,
an opinion of counsel to such successor Owner Trustee in form and substance
reasonably satisfactory to the Loan Participants and to the Owner Participant
covering the matters described in Section 4(a)(xiii) hereof and such other
matters as the Loan Participants and the Owner Participant may reasonably
request, and (E) Lessee shall indemnify and hold harmless the Owner Participant,
the Indenture Trustee and the Loan Participants on a net after-tax basis against
any and all reasonable and actual costs and expenses including reasonable
counsel fees and disbursements, registration fees, recording or filing fees and
taxes incurred by the Owner Trustee, the Owner
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<PAGE> 51
Participant, the Indenture Trustee and the Loan Participants in connection with
such change of situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants
and the Owner Participant covenants and agrees that it shall not unreasonably
withhold its consent to any consent requested of the Owner Trustee, as Lessor,
or the Indenture Trustee under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture
Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the
Documentation Agent's and the Owner Participant's obligations under any and all
thereof, shall survive the making available of the respective Commitments by the
Loan Participants and the Owner Participant, the delivery or return of the
Aircraft, the transfer of any interest of the Owner Participant in the Trust
Estate or the Aircraft or any Engine or the transfer of any interest by any Loan
Participant in any Secured Certificate or the Trust Indenture Estate and the
expiration or other termination of this Agreement or any other Operative
Document.
(c) 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 party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Agreement shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, the Administrative Agent and the
Documentation Agent. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the
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<PAGE> 52
Trust Estate and establishing the existence of rights and remedies which can be
exercised and enforced against the Trust Estate. Therefore, anything contained
in this Agreement or such other agreements to the contrary notwithstanding
(except for any express provisions that the Owner Trustee is responsible for in
its individual capacity), no recourse shall be had with respect to this
Agreement or such other agreements against the Owner Trustee in its individual
capacity or against any institution or person which becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this Agreement
and the other Operative Documents.
(e) It is the intention of the parties hereto that the
Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee
of such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any
reorganization of Lessee under such Section.
SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the
Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan
Participants shall promptly submit to the Owner Trustee and Lessee for their
prompt approval (which shall not be unreasonably withheld) copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (but in no event later than April 15,
1996). The Owner Participant agrees to transfer to the Owner Trustee promptly
but in any event no later than April 30, 1996 such amount as shall be necessary
in order to enable the Owner Trustee to pay Transaction Expenses. To the extent
of funds received by it, the Owner Trustee agrees to pay all invoices of
Transaction Expenses that have been approved by it and Lessee promptly upon
receipt thereof. Notwithstanding the foregoing, to the extent that Transaction
Expenses exceed 1.0% of Lessor's Cost, Lessee at its sole option shall have the
right to pay directly any or all Transaction Expenses which are in excess of
1.0% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the
transaction contemplated by this Participation Agreement fails to close as a
result of the Owner Participant's failure to negotiate in good faith or to
comply with the terms and conditions upon which its participation in the
transaction was predicated, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default shall have occurred
and be continuing, Lessee shall have the right to refinance all (but not less
than all) of the Secured Certificates no
- 52 -
<PAGE> 53
more than three times by giving written notice to the Owner Participant and the
Owner Trustee that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refinancing operation (including the terms of any debt to be
issued in connection with such refinancing); provided that no such refinancing
shall require an increase in the amount of the Owner Participant's investment in
the beneficial ownership of the Aircraft or in the principal amount of the
Secured Certificates.
The Owner Participant understands and agrees that the debt to
be issued in connection with such refinancing may be issued in several classes,
each of which may have a different interest rate, final maturity date and
priority of payment. The Owner Participant further understands and agrees that
one or more of such classes may be entitled to the benefit of a liquidity
facility, which will entitle the Indenture Trustee (or a collateral agent
therefor) to make drawings thereunder to pay interest on a current basis on the
enhanced classes of debt for up to three semi-annual interest payments following
a payment default with respect to such enhanced classes. In such a structure the
Owner Participant agrees that drawings of the entire amount available under the
liquidity facility for any class (and the deposit of the proceeds thereof into a
cash collateral account) will be required in the event of a ratings decline with
respect to the related liquidity provider or in the event that the liquidity
facility is not extended or replaced prior to its scheduled expiration. Amounts
owed to the liquidity facility provider for both drawings and interest thereon
will generally be senior to all Loan Participant claims. The Owner Participant
understands and agrees that in any refinancing operation it will agree to these
and any other conditions which do not impair the customary rights of an owner
participant in a leveraged lease transaction.
Upon such agreement:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth (i) the proposed date on which the outstanding
Secured Certificates will be redeemed, any new debt will be issued and the other
aspects of such refinancing will be consummated (such date, the "REFINANCING
DATE") and (ii) the following information calculated pursuant to the provisions
of paragraph (6) of this Section 17(a): (A) subject to the limitations set forth
in this Section 17, the proposed adjusted debt/equity ratio, (B) the principal
amount of debt to be issued by the Owner Trustee on the Refinancing Date, (C)
the amount, if any, by which the Owner Participant's aggregate investment in the
beneficial interest in the Aircraft is to be decreased and (D) the proposed
revised schedules of Basic Rent percentages, debt amortization, Stipulated Loss
Value percentages and Termination Value percentages. The Refinancing Certificate
shall not provide for a debt/equity ratio of more than 4:1. Within fourteen days
of its receipt of the Refinancing Certificate, Lessee may demand a verification
pursuant to Exhibit E to the Lease of the information set forth in the
Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of the
information set forth in the Refinancing Certificate (or the determination
pursuant to such verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised Basic Rent
- 53 -
<PAGE> 54
percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages (such information, whether as set forth or as so
determined, the "REFINANCING INFORMATION") the appropriate parties will take the
actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate and/or
the Aircraft and its resale to the Owner Trustee) with the institution or
institutions to be named therein providing for (i) the issuance and sale by the
Owner Trustee to such institution or institutions on the Refinancing Date of
debt securities in an aggregate principal amount specified in the Refinancing
Information which amount shall be equal to the aggregate principal amount of all
Secured Certificates outstanding on the Refinancing Date (such debt securities,
the "NEW DEBT") except that the principal amount of New Debt may exceed the
principal amount of all outstanding Secured Certificates in connection with the
first refinancing under this Section 17, (ii) the application of the proceeds of
the sale of the New Debt to the redemption of all such Secured Certificates on
the Refinancing Date and (iii) the payment of the excess, if any, of such
proceeds over the amounts necessary to effect such redemption to the Owner
Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to
provide for the securing thereunder of the New Debt in like manner as the
Secured Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses
(other than those of Lessee) of such refinancing (including, but not limited to,
the fees, expenses and disbursements of counsel and any placement or
underwriting fees) and such expenses shall be treated as Transaction Expenses;
and
(6) when calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date in
connection with an adjustment to Rents pursuant to Section 3(d) of the Lease or
such assumptions are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A). All adjustments to Basic Rent
shall also be in compliance with the tests of Sections 4.02(5), 4.07 and
4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc.
- 54 -
<PAGE> 55
75-28 Section 4.08(1) shall be applied on a prospective basis from the date of
such adjustment) and no such adjustment shall cause the Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning of Section
467 of the Code.
(b) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes
each of the Administrative Agent and the Documentation Agent (each, an "AGENT")
to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Operative Documents as are
delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. Each Agent shall
have no duties or responsibilities except those expressly set forth in the
Operative Documents. As to any matters not expressly provided for hereby or by
the Trust Indenture, each Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority in Interest of Certificate Holders (as defined in
the Trust Indenture), and such instructions shall be binding upon all Loan
Participants and all Certificate Holders; provided, however, that such Agent
shall not be required to take any action that exposes such Agent to personal
liability or that is contrary to the Operative Documents or applicable law. Each
Agent agrees to give to each Loan Participant prompt notice of each notice given
to it by the Owner Trustee pursuant to the terms of the Operative Documents with
respect to which such Loan Participant has not otherwise received such notice.
(b) No Agent nor such Agent's directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the Trust Indenture,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (i) may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Loan Participant and
shall not be responsible to any Loan Participant for any statements, warranties
or representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
the Operative Documents on the part of any party thereto or to inspect the
property (including the books and records) of any such party; (iv) shall not be
responsible to any Loan Participant for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, the Operative Documents or any other instrument or
document furnished pursuant thereto; and (v) shall incur no liability under or
in respect of the Operative
- 55 -
<PAGE> 56
Documents by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
(c) With respect to their Loans and any Secured Certificates
issued to them, [____________] and [____________] shall have the same rights and
powers under the Operative Documents as any other Loan Participant and may
exercise the same as though they were not Agents and the term "Loan Participant"
or "Certificate Holder" shall, unless otherwise expressly indicated, include
[____________] and [____________] in their individual capacity. [____________]
and its Affiliates and [____________] and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, the
Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and
any Person who may do business with or own securities of any of such Persons,
all as if [____________] and [____________] were not Agents and without any duty
to account therefor to the Loan Participants.
(d) Each Loan Participant acknowledges that it has,
independently and without reliance upon the Agents or any other Loan Participant
and based on the financial statements referred to in Section 7(a)(ix) of this
Agreement and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Loan Participant also acknowledges that it will, independently and without
reliance upon the Agents or any other Loan Participant and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
(e) Subject to the appointment and acceptance of a
successor agent as provided below, any Agent may resign at any time by giving
written notice thereof to the Loan Participants, the Owner Trustee and Lessee
and may be removed at any time with or without cause by the Majority in Interest
of Certificate Holders (as defined in the Trust Indenture). Upon any such
resignation or removal, the Majority in Interest of Certificate Holders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority in Interest of Certificate Holders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation or removal of the retiring Agent by the Majority in
Interest of Certificate Holders, then the retiring Agent may, on behalf of the
Loan Participants, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the Trust Indenture. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 18 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the Trust Indenture. Notwithstanding anything contrary
herein, the Administrative Agent and the Documentation Agent hereunder and under
the Trust Indenture
- 56 -
<PAGE> 57
shall be the same institution, respectively, as the Administrative Agent and the
Documentation Agent under (and as defined in) the Credit Agreement.
- 57 -
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
---------------------------------------
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[_________________________],
Owner Participant
By:
---------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 59
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
-------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Owner Trustee
By:
-------------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 60
[INSERT BRIDGE LENDERS]
By:
----------------------------------
Title:
By:
----------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 61
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant:
<PAGE> 62
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 A
Owner Trustee: First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as
provided in Section 3(f) of the Lease
shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 A
SCHEDULE I - PAGE 2
<PAGE> 63
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ------------------ -------------
<S> <C>
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
Owner Participant:
<S> <C>
--------------
Total Commitments: 100%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 65
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1996 A]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1996 A]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 A],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ], a [ ]
corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the
Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY
individual capacity except as otherwise expressly provided herein, but solely as
trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three
separate Pass Through Trust Agreements (as defined below), (v) STATE STREET BANK
AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and
(vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as
Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the
Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[ ],
as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and
the Indenture Trustee entered into the Participation Agreement [NW 1996 A],
dated as of February 27, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"),
providing for the sale and lease of one Boeing 757-251 aircraft (the
"AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 A], dated as of
February 27, 1996, as supplemented by Trust Agreement and Indenture Supplement
[NW 1996 A], dated February
<PAGE> 2
29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner
Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 A] dated February 29,
1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set
forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to
lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 A], dated as of February 27, 1996 (the
"TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1996 A] relating to the Aircraft, dated as of February
27, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1996 A] dated as of February 27, 1996 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and Owner Trustee pursuant to such Section 17 of its
desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1996 A], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 A], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue
-2-
<PAGE> 3
new secured certificates substantially in the form set forth in Section 2.01
thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 A], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1996 A] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), three separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date hereof (the
"INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
-3-
<PAGE> 4
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 5 of the Original Participation Agreement and all references
thereto in the Original Participation Agreement are hereby deleted.
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1), (3) and (10) thereof, (ii) deleting clauses (2)
and (4) thereof in their entirety and substituting therefor "Intentionally
Omitted", (iii) deleting the words "any Loan Participant or any Certificate
Holder" from clause (9) thereof and substituting therefor the words "the
Indenture Trustee or the Trust Indenture Estate", (iv) deleting clause (11)(B)
thereof in its entirety, (v) deleting "(C)" from clause (11) thereof and
substituting therefor "(B)", and (vi) deleting the parenthetical clause and the
last proviso from clause (13) thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by deleting the second sentence of the last
paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT . Section 7(b)(x) of the Original Participation
Agreement is hereby amended by (i) deleting the second and third sentences
thereof and (ii) deleting the words "other than a Loan Participant" in the first
sentence thereof.
SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement
is hereby amended by (i) deleting the word "and" between the words "expenses"
and "Transaction Expenses" in the second parenthetical phrase of the first
paragraph thereof and substituting a comma therefor, (ii) inserting after the
phrase "to Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) adding the words and punctuation "and, only in the case of an Indemnitee
who is the Subordination Agent, the Intercreditor Agreement and the Liquidity
Facilities" after the words "in respect thereof" in the first clause (A)
thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement,
the Liquidity Facilities or the Pass Through Trust Agreements" after the words
"Operative Documents" in the second clause (A) thereof and in the second clause
(B) thereof.
SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended by deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof.
-4-
<PAGE> 5
SECTION 8. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "the Loan
Participants," each time they appear in the second sentence thereof, (ii)
deleting the words "the Majority in Interest of the Certificate Holders" from
the first proviso of the second sentence thereof and substituting therefor the
words "Indenture Trustee"; (iii) deleting the "," between the words "Owner
Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof
and substituting therefor "and", (iv) deleting the words "and the Loan
Participants" each time they appear in the third sentence thereof other than in
clause (R) thereof, (v) deleting the words and punctuation "the Majority in
Interest of the Certificate Holders," from clause (O) of the third sentence
thereof, and (vi) deleting the words and punctuation "to the Loan Participants,"
from the fifth sentence thereof.
SECTION 9. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(a) of the Original Participation Agreement
is hereby amended by (i) deleting the word "Each" in the first sentence thereof
and substituting therefor the words "The Owner" and (ii) adding a new sentence
to the end thereof to read as follows: "The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of
the initial supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust
Agreement without the prior written consent of the Owner Participant.".
SECTION 10. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is
hereby amended by deleting the fourth and fifth sentences thereof.
SECTION 11. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by (i) deleting the words "each Loan Participant" therefrom and
(ii) adding a new second paragraph thereto at the end thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to the
effect that (i) the Lien of the Trust Indenture continues to be
a valid and duly perfected first priority security interest in
and to the Aircraft and (ii) the Indenture Trustee should be
entitled to the benefits of 11 U.S.C. Section 1110; provided
that the opinion required by subclause (ii) need only be given
if immediately prior to such assumption the Owner Trustee
should have been entitled to the benefits of 11 U.S.C. Section
1110.
SECTION 12. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(a) of the Original Participation Agreement
is hereby amended by (i) deleting the words "each" the first time it appears in
Section 8(y)(a)(ii) and substituting therefor the words "the Owner", (ii)
deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Indenture Trustee and the Owner",
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<PAGE> 6
(iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the
Indenture Trustee and the Owner Participant".
SECTION 13. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 14. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 15. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 16. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 17. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (B) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (C) thereof and substituting
therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05"
from clause (iii) of the second sentence thereof.
SECTION 18. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 19. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Loan Participants" each time they
appear in clauses (A), (B), and (D) thereof and substituting therefor the words
"Indenture Trustee", (ii) deleting the "," both times it appears between the
words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and
substituting therefor "and", and (iii) deleting the words "and the Loan
Participants" both times they appear in clause (E) thereof.
SECTION 20. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
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<PAGE> 7
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as
Lessor, under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor.
SECTION 21. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 22. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
SECTION 23. MISCELLANEOUS. (a) Each of the parties hereto
agrees that the transactions contemplated hereby shall constitute one of the
three refinancing operations permitted in Section 17 of the Participation
Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement, and (iii) the Purchaser has no liability or obligation
under any covenant in any of such agreements for any period prior to the
Closing.
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee
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<PAGE> 8
under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AMENDMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------------
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By:
-----------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Pass
Through Trustee under each of the Pass
Through Trust Agreements
By:
-----------------------------------------
Name:
Title:
[ ],
as Owner Participant
By:
-----------------------------------------
Name:
Title:
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<PAGE> 10
STATE STREET BANK AND TRUST
COMPANY, OF CONNECTICUT,
NATIONAL ASSOCIATION
as Subordination Agent
By:
-----------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By:
-----------------------------------------
Name:
Title:
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<PAGE> 11
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
REFUNDING AGREEMENT
[NW 1996 A]
This REFUNDING AGREEMENT [NW 1996 A], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[__________], a [__________] corporation (the "OWNER PARTICIPANT"),
(iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
[Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1996 A], dated as of February 27, 1996 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
<PAGE> 2
Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, as
supplemented by Trust Agreement and Indenture Supplement [NW 1996 A], dated
February 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which
the Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996,
as supplemented by Lease Supplement No. 1 [NW 1996 A] dated February 29, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1996 A], dated as of February 27, 1996 (the "TRUST
AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to
hold the Trust Estate defined in Section 1.01 thereof for the benefit of the
Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996
(the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 A]
dated as of February 27, 1996 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 A], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1996 A], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1996 A], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1996 A] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, three separate
grantor trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a
"PASS THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
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<PAGE> 4
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Owner Participant
shall pay to the Indenture Trustee an amount equal to the unpaid
interest on the Original Secured Certificates accrued up to but not
including the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders under the Original Indenture and the Original Participation
Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture; and
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the maturity and aggregate principal amount, bearing
the interest rate and for the purchase price set forth on Schedule II
hereto opposite the name of such Pass Through Trust.
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<PAGE> 5
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
any amount in respect of the prepayment of the Original Secured Certificates,
the Original Secured Certificates shall remain outstanding and in full force and
effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall
not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated the
date hererof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such Pass Through Trust on Schedule II hereto, which Refinancing
Secured Certificates in the aggregate shall be in the principal amounts set
forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through
Trust Agreements and of the other Operative Documents, all such Refinancing
Secured Certificates shall be dated and authenticated as of the Refinancing Date
and shall bear interest therefrom, shall be registered in such names as shall be
specified by the Subordination Agent and shall be paid in the manner and at such
places as are set forth in the Indenture.
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<PAGE> 6
SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. 1;
(5) each of the Pass Through Trust Agreements;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts.
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1, the Guarantee Amendment No. 1
and any other documents to be executed on behalf of the Lessee or
the Guarantor (as the case may be) in connection with the
transactions contemplated hereby and the signatures of such person
or persons;
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<PAGE> 7
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Trust Agreement
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d))
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<PAGE> 8
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1 and any other documents to be executed on
behalf of the Owner Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
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(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal
department, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
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(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Feltman, Karesh, Major & Farbman,
special counsel for the Owner Participant, and an opinion addressed to it from
corporate counsel to the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in-house German counsel
for the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section 1(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements, the
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Guarantee Amendment No. 1 and the PA Amendment No. 1 are subject to the receipt
by the Lessee and the Guarantor of (i) each opinion referred to in subsections
(j) through (n) of Section 3, addressed to the Lessee and the Guarantor or
accompanied by a letter from counsel rendering such opinion authorizing the
Lessee and the Guarantor to rely on such opinion as if it were addressed to the
Lessee and the Guarantor, (ii) each certificate referred to in subsections (e)
through (g) of Section 3, (iii) executed counterparts or conformed copies of the
TIA Amendment No. 1, and (iv) such other documents and evidence with respect to
each other party hereto as the Lessee, the Guarantor or their counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
(b) The respective obligations of each of the Lessee, the Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee to
participate in the transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Refinancing Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The Lessee and the Guarantor, by execution
and delivery hereof, consent to such execution and delivery of the Indenture.
The Indenture shall be effective as of the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver, the Lease Amendment No.
1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof,
to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1
shall be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner
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Participant, by execution and delivery hereof, requests, authorizes and directs
the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the PA Amendment No. 1. Upon the execution and delivery of
the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all necessary corporate action on the part of the
Lessee or the Guarantor, do not
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require any stockholder approval, or approval or consent of any trustee
or holder of any material indebtedness or material obligations of the
Lessee or the Guarantor, except such as have been duly obtained and are
in full force and effect, and do not contravene any law, governmental
rule, regulation or order binding on the Lessee or the Guarantor (as
the case may be) or the certificate of incorporation or by-laws of the
Lessee or the Guarantor (as the case may be), or contravene the
provisions of, or constitute a default under, or result in the creation
of any Lien (other than Permitted Liens) upon the property of the
Lessee or the Guarantor (as the case may be) under, any indenture,
mortgage, contract or other agreement to which the Lessee or the
Guarantor (as the case may be) is a party or by which it may be bound
or affected which contravention, default or Lien, individually or in
the aggregate, would be reasonably likely to have a material adverse
effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
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(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Guarantee, the Lease
and the Tax Indemnity Agreement, when the PA Amendment No. 1, the Lease
Amendment No. 1 and the TIA Amendment No. 1 shall have been executed
and delivered by each of the parties thereto, will constitute, the
legal, valid and binding obligations of the Lessee or the Guarantor (as
the case may be) enforceable against the Lessee or the Guarantor (as
the case may be) in accordance with their respective terms, except as
the same may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity, and except, in the case of the Lease, as limited by applicable
laws which may affect the remedies provided in the Lease, which laws,
however, do not make the remedies provided in the Lease inadequate for
practical realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease and the Lease Amendment No. 1 (to
the extent the Lease constitutes chattel paper), and the filing of
continuation statements at periodic intervals with respect to the
Uniform Commercial Code financing statements in effect on the
Refinancing Date covering the security interests created by the
Original Indenture or describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
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(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the
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Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Trust Agreement, has the corporate
power and authority to carry out the terms of the Trust Agreement, and
has, or had on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust Agreement by the
Owner Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the corporate
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1 and each other Operative Document
(other than the Trust Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, and the Lease, when the
Lease Amendment No. 1 shall have been entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee,
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in its individual capacity or as Owner Trustee, as the case may be,
enforceable against it in its individual capacity or as Owner Trustee,
as the case may be, in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Trust Agreement, the Original Indenture, the Indenture, the
Original Lease, the Lease Amendment No. 1, the Refinancing Secured
Certificates or any other Operative Document to which it is a party,
nor the consummation by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, 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 it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any provision
of, or constitutes or will constitute a default under, or results or
will result in any breach of, or results or will result in the creation
of any Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any
law, governmental rule or regulation of the United States of America or
the State of Utah governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of,
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or the carrying out by, the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement, the Participation
Agreement, the Indenture, the Lease or the Refinancing Secured
Certificates, or any other Operative Document to which it is a party or
by which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were
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not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of [__________] and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has, or had on the
respective dates of execution thereof, as the case may be, the
corporate power and authority to enter into and to perform its
obligations under this Agreement, the Original Participation Agreement,
the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No.
1, and the TIA Amendment No. 1; this Agreement has been duly
authorized, executed and delivered by it; and this Agreement
constitutes, and the
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<PAGE> 20
Participation Agreement when the PA Amendment No. 1 shall have been
entered into, and the Tax Indemnity Agreement when the TIA Amendment
No. 1 shall have been entered into, will constitute, the legal, valid
and binding obligations of the Owner Participant enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights
of creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1 or any other Operative Document to which it is a party
nor (B) compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Owner Participant
(it being understood that no representation or warranty is made with
respect to laws, rules or regulations relating to aviation or to the
nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by it of this Agreement, the PA
Amendment No. 1 and the TIA Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person; the Owner Participant's interest in
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<PAGE> 21
the Trust Estate and the Trust Agreement was acquired for its own
account and was purchased for investment and not with a view to any
resale or distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings and (E)
the existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for the benefit
of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the full corporate power, authority and legal
right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 and this Agreement and
to perform its obligations under this Agreement, the Pass Through Trust
Agreements, the Intercreditor Agreement and the Participation
Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
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<PAGE> 22
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under
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<PAGE> 23
subpart E, Part I of Subchapter J of the Code, such trusts will not be
subject to any Taxes imposed by the Commonwealth of Massachusetts or
any political subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement, will constitute, the legal, valid and binding
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<PAGE> 24
obligations of the Subordination Agent enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
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<PAGE> 25
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States mail, with proper postage for first-class registered or
certified mail prepaid, or when delivered personally or, if promptly confirmed
by mail as provided above, when dispatched by facsimile or other written
telecommunication, addressed, if to the Lessee, the Guarantor, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, at their respective addresses or facsimile
numbers set forth below the signatures of such parties at the foot of this
Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for
the Underwriters, and
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<PAGE> 26
(E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original
Loan Participants;
(2) the reasonable fees, expenses and disbursements of Feltman,
Karesh, Major & Farbman, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section 11
and the agreements referred to herein are not consummated, the Lessee shall bear
and pay all costs, expenses and fees referred to in this Section 11; provided
that if the transactions fail to be consummated as a result of the failure of
the Owner Participant to act in good faith in consummating the transactions, or
to otherwise comply with the terms hereof, the Owner Participant shall bear and
pay its own fees, costs and expenses (including, without limitation, the fees
and expenses of its special counsel) and the Lessee shall pay all other
reasonable fees, costs and expenses as aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each
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<PAGE> 27
counterpart of this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this Agreement, but all
of such counterparts together shall constitute one instrument. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
party against which the enforcement of the termination, amendment, supplement,
waiver or modification is sought; and no such termination, amendment,
supplement, waiver or modification shall be effective unless a signed copy
thereof shall have been delivered to each party hereto. The index preceding this
Agreement and the headings of the various Sections of this Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the Lessee and, subject to the terms of
the Participation Agreement, its successors and permitted assigns, the
Guarantor, the Pass Through Trustee and its successors as Pass Through Trustee
(and any additional trustee appointed) under any of the Pass Through Trust
Agreements, the Indenture Trustee and its successors as Indenture Trustee (and
any additional Indenture Trustee appointed) under the Indenture, the
Subordination Agent and its successors as Subordination Agent under the
Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee
under the Trust Agreement, and the Owner Participant, and, subject to the
provisions of the Participation Agreement, its successors and permitted assigns.
The terms of this Agreement shall insure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 29
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise provided herein,
but solely as Subordination Agent,
Subordination Agent
By: _____________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 30
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but solely
as Indenture Trustee,
Indenture Trustee
By: ____________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 31
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By: ___________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 32
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date among
Northwest Airlines Corporation, Northwest Airlines, Inc. and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C dated as of the Closing Date.
<PAGE> 33
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- -------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1C [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 B]
This TRUST AGREEMENT [NW 1996 B] dated as of April 24, 1996 between
[ ] , a [ ] corporation (the "ORIGINAL OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSBU") and otherwise
not in its individual capacity but solely as trustee hereunder (herein in such
capacity with its permitted successors and assigns called the "OWNER TRUSTEE");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms
used herein shall have the respective meanings assigned thereto in the Lease
(as hereinafter defined) for all purposes hereof. All definitions contained in
this Section 1.01 shall be equally applicable to both the singular and plural
forms of the terms defined. For all purposes of this Trust Agreement the
following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the Trust
Indenture.
"Indenture Event of Default" has the meaning which the term "Event of
Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 B], to be dated as of
the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of Default"
has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its
permitted successors and assigns.
<PAGE> 2
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant, the
percentage of its undivided beneficial interest in the Trust Estate created by
this Trust Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such term in the
Lease.
"Replacement Airframe" has the meaning ascribed to such term in the Trust
Indenture.
"Replacement Engine" has the meaning ascribed to such term in the Trust
Indenture.
"Subsequent Owner Participant" means any Person to which the Original
Owner Participant or any transferee from the Original Owner Participant or any
Subsequent Owner Participant shall have transferred at any time after the
Delivery Date all of the undivided right, title and interest originally held by
the Original Owner Participant in this Trust Agreement, the Trust Estate and
the Participation Agreement in accordance with, so long as the Lease is in
effect or any Secured Certificates remain outstanding, Section 8 of the
Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill
of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in
its individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in the
Trust Indenture.
"Trust Office" shall mean the principal corporate trust office of the
Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or the principal corporate trust office of any
successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to this
Trust Agreement in substantially the form of Exhibit A to the Trust Indenture
which shall
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<PAGE> 3
particularly describe the Aircraft, and any Replacement Airframe and
Replacement Engine included in the property of the Owner Trustee covered by
this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. Subject to the satisfaction
of the conditions set forth in Section 4 of the Participation Agreement, the
Owner Participant hereby authorizes and directs the Owner Trustee to execute
and deliver the Operative Documents and any other agreements, instruments or
documents to which the Owner Trustee is a party in the respective forms thereof
in which delivered from time to time by the Owner Participant to the Owner
Trustee for execution and delivery and, subject to the terms hereof, to perform
its duties and, upon instructions from the Owner Participant, exercise its
rights under said Operative Documents in accordance with the terms thereof and
to execute and deliver all such other instruments, documents or certificates
and take all such other actions in accordance with the directions of the Owner
Participant, as the Owner Participant may deem necessary or advisable in
connection with the transactions contemplated hereby, the taking of any such
action by the Owner Trustee in the presence of the Owner Participant or its
counsel to evidence, conclusively, the direction of the Owner Participant.
SECTION 2.02. DECLARATION OF TRUST. FSBU hereby declares that it will
hold the Trust Estate upon the trusts hereinafter set forth for the use and
benefit of the Owner Participant, subject, however, to the provisions of and
the Lien created by the Trust Indenture.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee
agrees for the benefit of the Owner Participant that it will, on the Delivery
Date, subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering
the Aircraft;
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(d) execute and deliver the Trust Supplement covering the Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the Participation
Agreement;
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of the Owner
Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill
of Sale; (ii) an application for registration of the Aircraft in the name
of the Owner Trustee (including without limitation an affidavit from the
Owner Trustee in compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement.
SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner
Trustee to take the action required by Section 3.01 hereof with respect to the
Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule II of the Participation Agreement
available to the Owner Trustee, in immediately available funds, in
accordance with Section 1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the Original Owner Participant
and the Owner Trustee.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds
and requisition or other payments of any kind included in the Trust Estate
(other than Excluded Payments) payable to the Owner Trustee shall be payable
directly to the Indenture Trustee (and if any of the same are received by the
Owner Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust Indenture
shall have been discharged pursuant to Section 10.01 thereof, any payment of
the type referred
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to in Section 4.01(a) hereof (other than Excluded Payments) received by the
Owner Trustee, any payments received from the Indenture Trustee other than as
specified in Section 4.01(d) hereof and any other amount received as part of
the Trust Estate and for the application or distribution of which no provision
is made herein, shall be distributed forthwith upon receipt by the Owner
Trustee in the following order of priority: first, so much of such payment as
shall be required to reimburse the Owner Trustee for any expenses not otherwise
reimbursed as to which the Owner Trustee is entitled to be so reimbursed
pursuant to the provisions hereof shall be retained by the Owner Trustee;
second, so much of the remainder for which provision as to the application
thereof is contained in the Lease or any of the other Operative Documents shall
be applied and distributed in accordance with the terms of the Lease or such
other Operative Document; and third, the balance, if any, shall be paid to the
Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from time to
time distributable by the Indenture Trustee to the Owner Participant pursuant
to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by
the Owner Trustee to the Owner Participant in accordance with the provisions of
Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to (i) the Owner Participant
pursuant to this Article IV by transferring by wire transfer the amount to be
distributed to such account or accounts of the Owner Participant as the Owner
Participant may designate from time to time in writing to the Owner Trustee
(and the Owner Trustee shall use best efforts to cause such funds to be
transferred by wire transfer on the same day as received, but in any case not
later than the next succeeding Business Day), and (ii) the Indenture Trustee
pursuant to this Article IV by paying the amount to be distributed to the
Indenture Trustee in the manner specified in the Indenture; provided that the
Owner Trustee shall invest overnight, for the benefit of the Owner Participant,
in investments that would be permitted by Section 22 of the Lease (but only to
the extent funds are received on or prior to 1:00 P.M. (Eastern Time) and such
investments are available and, if such investments are not available to the
Owner Trustee in investments which, after consultation with the Owner
Participant, the Owner Participant shall direct) all funds not transferred by
wire transfer on the same day as they were received. Notwithstanding the
foregoing but subject always to the provisions of, and the Lien created by the
Indenture, the Owner Trustee will, if so requested by the Owner Participant by
written notice, pay in immediately available funds any and all amounts payable
by the Owner Trustee hereunder to the Owner Participant as directed by the
Owner Participant. Notwithstanding the foregoing, the Owner Trustee will, if
so requested by the Owner Participant in writing, pay any or all amounts
payable to the Owner Participant pursuant to this Article IV either (i) by
crediting such amount or amounts to an account or accounts maintained by the
Owner Participant with the Owner Trustee in its individual capacity in
immediately available funds, (ii) by payment at the Trust Office of the Owner
Trustee, in immediately available funds, or
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(iii) by mailing an official bank check or checks in such amount or amounts
payable to the Owner Participant at such address as the Owner Participant shall
have designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have
knowledge of a Lease Event of Default or Indenture Event of Default (or an
event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the Owner Participant prompt telephonic or telecopy
notice thereof followed by prompt confirmation thereof by certified mail,
postage prepaid, provided that (i) in the case of an event which with the
passage of time would constitute an Indenture Event of Default referred to in
paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no
event be furnished later than ten (10) days after the Owner Trustee shall first
have knowledge of such event and (ii) in the case of a misrepresentation by the
Owner Trustee which with the passage of time would constitute an Indenture
Event of Default referred to in paragraph (d) of Section 4.02 of the Trust
Indenture, such notice shall in no event be furnished later than ten (10) days
after the Owner Trustee shall first have knowledge of such event. Subject to
the terms of Section 5.03 hereof, the Owner Trustee shall take such action or
shall refrain from taking such action, not inconsistent with the provisions of
the Trust Indenture, with respect to such Lease Event of Default, Indenture
Event of Default or other event as the Owner Trustee shall be directed in
writing by the Owner Participant, provided that the Owner Trustee shall have no
duty to take any (and shall take no) action whatsoever in the absence of
written instructions from the Owner Participant. For all purposes of this
Trust Agreement, the Lease and the other Operative Documents, in the absence of
actual knowledge by an officer of FSBU in the Corporate Trust Department, the
Owner Trustee shall not be deemed to have knowledge of a Lease Event of
Default, Indenture Event of Default or other event referred to in this Section
5.01 unless notified in writing by the Indenture Trustee, the Owner Participant
or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Section
5.03 hereof, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take or refrain from taking such
action, not inconsistent with the provisions of the Trust Indenture, as may be
specified in such instructions:
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to
take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless the Owner Trustee shall have been
indemnified by the Owner Participant, in manner and form satisfactory to the
Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to
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take any such action or refrain from taking any action, the Owner Participant
agrees to furnish such indemnity as shall be required and, in addition, to the
extent not otherwise paid or payable pursuant to the provisions of the Lease or
of the Participation Agreement, to pay the reasonable compensation of the Owner
Trustee for the services performed or to be performed by it pursuant to such
direction and any fees and disbursements of counsel or agents employed by the
Owner Trustee in connection therewith. The Owner Trustee shall not be required
to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall
reasonably determine, or shall have been advised by counsel, that such action
is contrary to the terms of any of the Operative Documents to which the Owner
Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in written instructions from the
Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and
no implied duties or obligations shall be read into this Trust Agreement
against the Owner Trustee. FSBU agrees that it will, in its individual
capacity and at its own cost or expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01 hereof) promptly take
such action as may be necessary to duly discharge and satisfy in full all
Lessor Liens which it is required to discharge pursuant to Section 8(h) of the
Participation Agreement and otherwise comply with the terms of said Section
binding on it. FSBU agrees to indemnify, protect, save and keep harmless the
Owner Participant from and against any loss, cost or expense (including the
legal fees and expenses) incurred by the Owner Participant, as a result of the
imposition or enforcement of any such Lessor's Lien against the Aircraft, any
interest therein or on the Trust Estate or the Trust Indenture Estate resulting
from Lessor's Liens attributable to FSBU.
Notwithstanding anything herein to the contrary, the Owner Trustee shall
not be authorized and shall have no power to "vary the investment" of the Owner
Participant within the meaning of Treasury Regulations Sections
301.7701-4(c)(1), it being understood that the Owner Trustee shall have the
power and authority to fulfill its obligations under Section 4.02 hereof and
Section 22 of the Lease.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to
the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the
Participation Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not have any power, right or authority to, and the
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Owner Trustee agrees that it will not, manage, control, use, sell, dispose of
or otherwise deal with the Aircraft or any other part of the Trust Estate
except (i) as expressly required by the terms of any of the Operative Documents
to which the Owner Trustee is a party, (ii) as expressly provided by the terms
hereof, or (iii) as expressly provided in written instructions from the Owner
Participant pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts
hereby created and agrees to perform the same but only upon the terms hereof
applicable to it. The Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. FSBU shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence (in its
individual capacity or as trustee), (b) for performance of the terms of the
last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's
failure to use ordinary care to receive, handle or disburse funds and (d) for
liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease
or in Section 8(c), 8(d) and 8(v) of the Participation Agreement.
SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and
the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU
shall have any duty (i) to see to any recording or filing of any Operative
Document or of any supplement to any thereof or to see to the maintenance of
any such recording or filing or any other filing of reports with the Federal
Aviation Administration or other governmental agencies, except that FSBU, in
its individual capacity, shall comply with the reporting requirements set forth
in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee
shall, to the extent that information for that purpose is supplied by Lessee
pursuant to any of the Operative Documents, complete and timely submit (and
furnish the Owner Participant with a copy of) any and all reports relating to
the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto,
other than to forward to the Owner Participant copies of all reports and other
written information which the Owner Trustee receives from Lessee pursuant to
Section 11(c) of the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and
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the Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Owner Trustee under the Lease or any other
Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS.
NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A)
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH
RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity
warrants that on the Delivery Date the Owner Trustee shall have received
whatever title was conveyed to it by Lessee and that the Aircraft shall during
the Term be free of Lessor Liens attributable to it and that the Owner Trustee
shall comply with the last sentence of Section 5.04, or (b) any representation
or warranty as to the validity, legality or enforceability of this Trust
Agreement or any Operative Document to which the Owner Trustee is a party, or
any other document or instrument, or as to the correctness of any statement
contained in any thereof except to the extent that any such statement is
expressly made herein or therein as a representation by FSBU in its individual
capacity or by the Owner Trustee and except that FSBU in its individual
capacity hereby represents and warrants that this Trust Agreement has been, and
(assuming due authorization, execution and delivery by the Original Owner
Participant of this Trust Agreement) the Operative Documents to which it or the
Owner Trustee is a party have been (or at the time of execution and delivery of
any such instrument by it or the Owner Trustee hereunder or pursuant to the
terms of the Participation Agreement that such an instrument will be) duly
executed and delivered by one of its officers who is or will be, as the case
may be, duly authorized to execute and deliver such instruments on behalf of
itself or the Owner Trustee, as the case may be.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as
provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. In the
absence of bad faith on its part the Owner Trustee shall incur no liability to
anyone in acting in reliance upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or
other document or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. Unless other
evidence in respect thereof is specifically prescribed herein, any request,
direction, order or demand of the Owner Participant, Lessee or the Indenture
Trustee mentioned herein or in any of the Operative Documents to which the
Owner Trustee is a party shall be sufficiently evidenced by written instruments
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president
or a managing director and in the name of the Owner Participant or Lessee, as
the case may be.
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The Owner Trustee may accept a copy of a resolution of the Board of Directors
or Executive Committee of Lessee, certified by the secretary or any assistant
secretary of such party as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president
or a managing director of such party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
Whenever in the administration of this Agreement the Owner Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder or under any of the other Operative
Agreements, the Owner Trustee (unless other evidence be herein or therein
specifically prescribed), absent actual knowledge of an officer of the Owner
Trustee to the contrary, may rely in good faith upon a certificate in writing,
delivered to the Owner Trustee and signed by any of the Chairman of the Board,
the President, any Vice President, the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary of Lessee, the Owner Participant, or the
Indenture Trustee and notice of such need for such proof or establishment shall
be delivered to the Owner Participant, who may advise the Owner Trustee in
respect of such matter and the Owner Trustee shall act in conformity with such
advice. In the administration of trusts hereunder, the Owner Trustee may
execute any of the trusts or powers hereof and perform its powers and duties
hereunder directly or through agents or attorneys and may, at the expense of
the Trust Estate, consult with counsel, accountants and other skilled persons
to be selected and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled persons and
the Owner Trustee shall not be liable for the negligence of any such agent,
attorney, counsel, accountant or other skilled person appointed by it with due
care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the
Owner Trustee acts solely as trustee and not in its individual capacity except
as otherwise expressly provided herein; and, subject to the terms of the
Participation Agreement and the Trust Indenture, all persons, other than the
Owner Participant, as provided herein, having any claim against the Owner
Trustee by reason of the transactions contemplated hereby shall look only to
the Trust Estate for payment or satisfaction thereof except to the extent
provided in the last sentence of Section 6.01.
SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or
7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the
keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner
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Participant shall be responsible for causing to be prepared and filed all
income tax returns required to be filed by the Owner Participant. The Owner
Trustee, upon request, will furnish the Owner Participant with all such
information as may be reasonably required or necessary from the Owner Trustee
in connection with the preparation of such tax returns and in connection with
any other filing or audit and related litigation obligations. The Owner
Trustee shall be responsible for causing to be prepared, at the request and
expense of the Owner Participant, all income tax returns required to be filed
with respect to the trust created hereby and shall execute and file such
returns; provided, however, that the Owner Trustee shall send a completed copy
of each such return to the Owner Participant not more than 60 nor less than 30
days prior to the due date of such return; provided that the Owner Trustee
shall have timely received all necessary information to complete and deliver to
the Owner Participant such return. The Owner Participant or the Owner Trustee,
as the case may be, upon request, will furnish the Owner Trustee or the Owner
Participant, as the case may be, with all such information as may be reasonably
required from the Owner Participant or the Owner Trustee, as the case may be,
in connection with the preparation of such income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner
Participant hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless FSBU in its individual capacity and its
successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by FSBU in its individual capacity on or measured
by any compensation received by FSBU in its individual capacity for its
services hereunder or in connection with the transactions contemplated by the
Operative Documents), claims, actions, suits, costs, expenses or disbursements
(including, without limitation, reasonable ongoing fees of the Owner Trustee,
reasonable legal fees and expenses, and including without limitation any
liability of an owner, any strict liability and any liability without fault) of
any kind and nature whatsoever which may be imposed on, incurred by or asserted
against FSBU in its individual capacity in any way relating to or arising out
of this Trust Agreement or any of the Operative Documents or the enforcement of
any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark or
copyright infringement), or in any way relating to or arising out of the
administration of the Trust Estate or the action or inaction of the Owner
Trustee or FSBU in its individual capacity hereunder, except (a) in the case of
willful misconduct or gross negligence on the part of the Owner Trustee or FSBU
in its individual capacity in the performance or non-performance of its duties
hereunder or (b) those resulting from the inaccuracy of any representation or
warranty of FSBU in its individual capacity (or from the failure of FSBU in its
individual capacity to
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perform any covenant) hereunder, in Sections 4.01 and 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its
individual capacity of its covenants in the second sentence of Section 5.04
hereof or (d) in the case of the failure to use ordinary care on the part of
the Owner Trustee or FSBU in its individual capacity in the receiving,
handling, investing and disbursing of funds or (e) Taxes, fees, or other
charges on, based on, or measured by, any fees, commissions or compensation
received by FSBU in connection with the transactions contemplated by the Lease,
the Indenture and this Agreement or (f) Taxes excluded from indemnification
pursuant to Section 7(b)(ii) of the Participation Agreement (disregarding for
the purposes of this Section 7.01, subsection 8 of Section 7(b)(ii) of the
Participation Agreement) or (g) Expenses excluded from indemnification pursuant
to the proviso in Section 7(c) of the Participation Agreement (disregarding for
the purposes of this Section 7.01, subsections I and J with respect to Section
7(c) of the Participation Agreement) or (h) any liability on the part of the
Owner Trustee arising out of its negligence or willful or negligent misconduct
in connection with its obligations under Sections 5.01, 5.02 and 9.02 hereof or
Section 4.01(c) of the Indenture; provided that, before asserting any right to
payment or indemnification hereunder, FSBU shall first demand (but need not
exhaust or pursue any further its remedies with respect to) its corresponding
right to payment or indemnification from the Lessee pursuant to the
Participation Agreement. The indemnities contained in this Section 7.01 extend
to FSBU only in its individual capacity and shall not be construed as
indemnities of the Trust Indenture Estate or the Trust Estate (except to the
extent, if any, that FSBU in its individual capacity has been reimbursed by the
Trust Indenture Estate or the Trust Estate for amounts covered by the
indemnities contained in this Section 7.01). The indemnities contained in this
Section 7.01 shall survive the termination of this Trust Agreement. In
addition, if necessary, FSBU in its individual capacity shall have a lien on
the Trust Estate, subject to the Lien of the Trust Indenture, to secure the
payment of any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, fee, expense or disbursement indemnified against pursuant
to this Section 7.01, which shall be prior to any interest therein of the Owner
Participant. Except with respect to Transaction Costs referred to in Section
16 of the Participation Agreement, each of FSBU and the Owner Trustee (in its
individual capacity or as trustee, as the case may be) agrees that it shall
have no right against (except as provided in this Section 7.01) the Owner
Participant or (subject to the provisions of the Indenture) the Trust Indenture
Estate for any fee as compensation for its services hereunder. The payor of
any indemnity under this Article VII shall be subrogated to any right of the
person indemnified in respect of the matter as to which such indemnity was
paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of
the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis
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mutandis, in this Section 8.01) be applicable to any assignment, conveyance or
other transfer by any Owner Participant of its right, title or interest in and
to the Participation Agreement, the Trust Estate or this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a)
Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i)
shall resign if required to do so pursuant to Section 8(c) of the Participation
Agreement and (ii) may resign at any time without cause by giving at least
sixty (60) days' prior written notice to the Owner Participant, the Indenture
Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such resignation to
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b) hereof. In addition, the Owner Participant may at any
time remove the Owner Trustee without cause by a notice in writing delivered to
the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust
Indenture has not been fully discharged) and Lessee (so long as the Lease is in
effect), such removal to be effective upon the acceptance of appointment by the
successor Owner Trustee under Section 9.01(b) hereof. In the case of the
resignation or removal of the Owner Trustee, the Owner Participant may appoint
a successor Owner Trustee by an instrument signed by the Owner Participant. If
a successor Owner Trustee shall not have been appointed within thirty (30) days
after such notice of resignation or removal, the Owner Trustee, the Owner
Participant, Lessee or the Indenture Trustee may apply to any court of
competent jurisdiction to appoint a successor Owner Trustee to act until such
time, if any, as a successor shall have been appointed as above provided. Any
successor Owner Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Owner Trustee appointed as
above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Owner Participant an instrument accepting such appointment in
form and substance acceptable to the Owner Participant, and thereupon such
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trusts of the predecessor Owner
Trustee in the trusts hereunder with like effect as if originally named the
Owner Trustee herein; but nevertheless, upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers and trusts
of such predecessor Owner Trustee, and such predecessor Owner Trustee shall
duly assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed. Upon the appointment of any successor Owner Trustee
hereunder, the predecessor Owner Trustee will execute such documents as are
provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such
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successor Owner Trustee as are reasonably required to cause registration of the
Aircraft included in the Trust Estate to be transferred upon the records of the
Federal Aviation Administration, or other governmental authority having
jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed, shall
be a Citizen of the United States without making use of a voting trust, voting
powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be
such an institution willing, able and legally qualified to perform the duties
of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall
be necessary or prudent in order to conform to any law of any jurisdiction in
which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee and the Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or
proper to constitute another bank or trust company or one or more persons (any
and all of which shall be a Citizen of the United States without making use of
a voting trust, voting powers agreement or similar arrangement) approved by the
Owner Trustee and the Owner Participant, either to act as co-trustee, jointly
with the Owner Trustee, or to act as separate trustee hereunder (any such
co-trustee or separate trustee being herein sometimes referred to as an
"ADDITIONAL TRUSTEE").
Every additional trustee hereunder shall, to the extent permitted by law,
be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of
monies, the Aircraft or documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the
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extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (including the holding of title to the Trust
Estate) the Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of, the Trust Indenture or affect the interests
of the Indenture Trustee or the holders of the Secured Certificates in
the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Owner Participant. Subject to Section 10.02 hereof and the first sentence of
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other modification of this Trust Agreement or of any
other Operative Document to which the Owner Trustee is a party which it is
requested to execute by the Owner Participant, except that the Owner Trustee
shall not execute any such amendment, supplement or other modification which,
by the express provisions of any of the above documents, requires the consent
of any other party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A signed
copy of each amendment or supplement referred to in Section 10.01(a) hereof
shall be delivered by the Owner Trustee to the Owner Participant, Indenture
Trustee and each holder of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect
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that the execution of such document is authorized hereunder. If in the opinion
of the Owner Trustee any such document adversely affects any right, duty,
immunity or indemnity in favor of the Owner Trustee hereunder or under any
other Operative Document to which the Owner Trustee is a party, the Owner
Trustee may in its discretion decline to execute such document.
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant
to such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by
the Owner Trustee of any document entered into pursuant to Section 10.01
hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST
SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust
Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and
the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest execution
of this Trust Agreement by any party hereto; otherwise this Trust Agreement and
the trusts created hereby shall continue in full force and effect in accordance
with the terms hereof.
SECTION 11.02. TERMINATION AT OPTION OF THE OWNER PARTICIPANT.
Notwithstanding Section 11.01 hereof, this Agreement and trust created hereby
shall terminate and the Trust Estate shall be distributed to the Owner
Participant, and this Agreement shall be of no further force and effect, upon
the election of the Owner Participant by notice to the Owner Trustee, if such
notice shall be accompanied by the written agreement (in form and substance
satisfactory to the Owner Trustee) of the Owner Participant assuming all
obligations
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<PAGE> 17
of the Owner Trustee under or contemplated by the Operative Documents or
incurred by it as trustee hereunder and releasing the Owner Trustee therefrom;
provided, however, that such notice may be given only after the time the Lien
of the Trust Indenture is discharged under Section 10.01 of the Trust Indenture
and after the Lease shall no longer be in effect.
SECTION 11.03 DISTRIBUTION OF TRUST ESTATE UPON TERMINATION. Upon any
termination of this trust pursuant to the provisions of Section 11.01 hereof,
the Owner Trustee shall convey the Trust Estate (subject to all obligations, if
any, of the Owner Trustee then existing under the Operative Documents to which
the Owner Trustee is a party) to such purchaser or purchasers or the Owner
Participant, as the case may be, and for such amount and on such terms as shall
be specified in written instructions from the Owner Participant delivered to
the Owner Trustee prior to the date of termination; provided that in the event
such written instructions are not delivered to the Owner Trustee on or before
the date of termination, the Owner Trustee shall transfer title to the Trust
Estate to the Owner Participant. Upon making such transfer or sale accounting
for all funds which have come into its hands, the Owner Trustee shall be
entitled to receipt of any sums due and owing to the Owner Trustee for expenses
incurred pursuant hereto as set forth in Section 4.01(b) hereof.
SECTION 11.04. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The
Owner Participant shall not have legal title to any part of the Trust Estate.
No transfer, by operation of law or otherwise, of any right, title and interest
of the Owner Participant in and to the Trust Estate hereunder shall operate to
terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
SECTION 11.05. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale,
transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
SECTION 11.06. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY.
Except for the terms of Section 8(n) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in
Articles IX and X hereof, nothing herein, whether expressed or implied, shall
be construed to give any Person other than the Owner Trustee and the Owner
Participant any legal or equitable right, remedy or claim under or in respect
of this Trust Agreement; but this Trust Agreement shall be held to be for the
sole and exclusive benefit of the Owner Trustee and the Owner Participant.
SECTION 11.07. NOTICES; CONSENT TO JURISDICTION. (a) 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
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registered or certified mail, postage prepaid, or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 11.05(a). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 11.05(a), notices, demands, instructions
and other communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan
Participants, the Indenture Trustee or the Owner Participant, to the respective
addresses set forth below the signatures of such parties on the signature page
of the Participation Agreement, or (B) if to a Subsequent Owner Participant,
addressed to such Subsequent Owner Participant at such address as such
Subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the secured certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the
transactions contemplated hereby or thereby brought by any party or parties
thereto, or their successors or assigns, and (B) hereby waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that the Participation Agreement,
the Lease, the Tax Indemnity Agreement or any other Operative Document or the
subject matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts.
SECTION 11.08. SEVERABILITY. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.09. WAIVERS, ETC. No term or provision hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
entered into in compliance with the terms of Article X hereof; and any waiver
of the terms hereof shall be effective only in the specific instance and for
the specific purpose given.
SECTION 11.10. COUNTERPARTS. This Trust 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.
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<PAGE> 19
SECTION 11.11. BINDING EFFECT, ETC. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII hereof, its assigns.
Any request, notice, direction, consent, waiver or other instrument or action
by the Owner Participant shall bind its successors and assigns. Any Owner
Participant which shall cease to have any Ownership Interest shall thereupon
cease to be a party hereto or an Owner Participant for any reason and shall
have no further obligations hereunder.
SECTION 11.12. HEADINGS; REFERENCES. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.13. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
[OWNER PARTICIPANT]
By ______________________________________
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By ______________________________________
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 B]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1996 B], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly stated herein, but solely as
Owner Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 B] dated as of
April 24, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into
the Trust Agreement and Indenture Supplement [NW 1996 B] (the "SUPPLEMENT")
dated April 30, 1996 to the Original Indenture, (iii) the Original Indenture and
the Supplement were recorded by the Federal Aviation Administration on May 3,
1996 and were assigned Conveyance No. E21284 and (iv) the Lease Agreement [NW
1996 B] dated as of even date with the Original Indenture between the Owner
Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 B] were recorded by
the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance
No. E21283 and (v) pursuant to the Original Indenture, the Owner Trustee issued
and sold to the Loan Participants Secured Certificates (as defined in the
Original Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participant pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines and
all replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire title as provided herein and in the Lease), all
as more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the lien of this
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable
by Lessee to the Owner Trustee under the Participation Agreement and all rights
of the Owner Trustee to enforce payments of any such amounts thereunder;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder; and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture
Estate all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee delivered to the Indenture Trustee the original executed
counterpart of the Lease and the Lease Supplement No. 1 (to each of which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, and the Purchase Agreement Assignment with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, and its successors and assigns, in trust for the
benefit and security of the Certificate Holders, except as provided in Section
2.15 and Article III hereof without any preference, distinction or priority of
any one Secured Certificate over any other by reason of priority of time of
issue, sale, negotiation, date of maturity thereof or otherwise for any reason
whatsoever, and for the uses and purposes and in all cases and as to all
property specified in paragraphs (1) through (8) inclusive above, subject to the
terms and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to any of the Indenture Agreements to which
it is a party, or, except as herein expressly provided, to make any payment, or
to make any inquiry as to the nature or sufficiency of any payment received by
it, or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, granted for good
and valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such
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<PAGE> 5
purchaser, and to perform all other necessary or appropriate acts with respect
to any such purchase, and in its discretion to file any claim or take any other
action or proceedings, either in its own name or in the name of the Owner
Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement any amounts distributed to it by the Indenture Trustee under this
Trust Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants and agrees that it will not
assign or pledge, so long as the assignment hereunder shall remain in effect,
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its right, title or interest hereby assigned, to anyone other
than the Indenture Trustee and its predecessor(s) in this transaction, and that
it will not, except as otherwise provided in this Trust Indenture and except
with respect to Excluded Payments to which it is entitled, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any
payment of Rent (other than Excluded Payments),
including Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease prior
to the date for the payment thereof provided for by
the Lease or assign, transfer or hypothecate (other
than to the Indenture Trustee hereunder) any payment
of Rent, including Interim Rent, Basic Rent,
Stipulated Loss Value, Termination Value or any other
payment to be made pursuant to Section 9 or 10 of the
Lease, then due or to accrue in the future under the
Lease in respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor owner
trustee, sell, mortgage, transfer, assign or
hypothecate (other than to
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<PAGE> 6
the Indenture Trustee hereunder) its interest in the
Airframe and Engines or any part thereof or in any
amount to be received by it from the use or
disposition of the Airframe and Engines, other than
amounts distributed to it pursuant to Article III
hereof.
It is hereby further agreed that any and all property
described or referred to in the granting clauses hereof which is hereafter
acquired by the Owner Trustee shall ipso facto, and without any further
conveyance, assignment or act on the part of the Owner Trustee or the Indenture
Trustee, become and be subject to the Lien herein granted as fully and
completely as though specifically described herein, but nothing contained in
this paragraph shall be deemed to modify or change the obligations of the Owner
Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and
does hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any
Principal Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be
redeemed shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in
Section 22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time
of one or more Secured Certificates.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of the Owner Trustee located at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or
such other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of
the Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest Rate" in
Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments).
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section
4.03 hereof.
"Event of Default" shall have the meaning specified in Section
4.02 hereof.
"Excess Amount" shall have the meaning specified in Section
2.03(b) hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease plus
all reasonable expenses incurred by the Owner Trustee and the Owner Participant
in connection with such assumption, as applicable, (vii) any payment of the
foregoing under the Guarantee, (viii) interest accrued on any of the above, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
"Government Entity" means (a) any federal, state, provincial
or similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government
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<PAGE> 8
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 Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b) of
the Trust Indenture or (ii) the Indenture Trustee has taken action or notified
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 B],
dated as of April 24, 1996, entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of the Original Trust Indenture, as
said Lease Agreement has been, or may from time to time be, supplemented or
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of this Indenture. The term "Lease" shall also
include each Lease Supplement from time to time entered into pursuant to the
terms of the Lease.
"Lease Default" shall mean any event or condition that with
the giving of notice or the lapse of time or both would become a Lease Event of
Default.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation
Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the
Purchase Agreement Assignment and each other agreement between Lessee and any
other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than a majority
in aggregate unpaid Principal Amount of all Secured Certificates outstanding as
of such date (excluding any Secured Certificates held by the Owner Trustee or
the Owner Participant or any interests of the Owner Participant therein by
reason of subrogation pursuant to Section 4.03 hereof (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment banker
selected by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of such
Secured Certificate computed by discounting each such payment on a semiannual
basis from its respective Payment Date (assuming a 360-day year of twelve 30-
day months) using a discount rate equal to the Treasury Yield (plus, in the case
of Series C Secured Certificates, 75 basis points) exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "TREASURY YIELD" at the time of
determination with respect to any Secured Certificate
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<PAGE> 9
means the interest rate (expressed as a semiannual equivalent and as a decimal
and, in the case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Secured Certificate and trading in the public securities market either
as determined by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading in the
public securities markets, (A) one maturing as close as possible to, but earlier
than, the Average Life Date of such Secured Certificate and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such
Secured Certificate, in each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Secured Certificate is reported on the
most recent H.15(519), such weekly average yield to maturity as published in
such H.15(519). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable redemption date and the "MOST
RECENT H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ]
New York corporation, so long as such party shall have any interest in the Trust
Estate, and transferees thereof as permitted by Section 8 of the Participation
Agreement.
"PA Amendment No. 1" shall mean the First Amendment to
Participation Agreement [NW 1996 B], dated as of the Refinancing Date, among
Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the
Subordination Agent and State Street Bank and Trust Company, in its individual
capacity and as Indenture Trustee.
"Participants" shall mean and include the Loan Participants
and the Owner Participant.
"Participation Agreement" shall mean that certain
Participation Agreement [NW 1996 B], dated as of April 24, 1996, among the Owner
Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the
PA Amendment No. 1, as the same may from time to time be supplemented or further
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2,
commencing on January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Secured Certificates have been
paid in full.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in accordance
with the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 5.06 hereof.
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<PAGE> 10
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee,
a responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Holder" shall have the meaning specified in Section
2.15(c) hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a
supplement to the Trust Agreement and to this Indenture, in substantially the
form of Exhibit A hereto, which shall particularly describe the Aircraft, and
any Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust
Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this
Amended and Restated Trust Indenture and Security Agreement [NW 1996 B] as it
may from time to time be supplemented or amended as herein provided, including
supplementing by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties referred to in
the Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes
of this Trust Indenture the terms used but not defined herein are used as
defined in the Lease.
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ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form
set forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 B] DATED AS OF APRIL 24, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N538US.
No. Date: [ ]
------- ------,---
$------------------
INTEREST RATE MATURITY DATE
------------- -------------
[ ] [ ]
-------- --------,-------
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 B], dated as of
April 24, 1996, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the
Amended and Restated Trust Indenture and Security Agreement [NW 1996 B], dated
as of the Refinancing Date, between the Owner Trustee and State Street Bank and
Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this Secured
Certificate and not defined herein shall have the respective meanings assigned
in the Trust Indenture.
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<PAGE> 12
This Secured Certificate shall bear interest, payable on
demand, at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest and any other amounts payable hereunder which are overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount,
if any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for
the purpose of registering transfers and exchanges of Secured Certificates at
the Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at the
Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the
Trust Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Secured Certificate, except
that in the case of any final payment with respect to this Secured Certificate,
the Secured Certificate shall be surrendered promptly thereafter by the
Indenture Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured
Certificate, agrees that, except as provided in the Trust Indenture, each
payment received by it hereunder shall be applied, first, to the payment of
accrued interest on this Secured Certificate (as well as any interest on any
overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, second, to the payment of the Principal Amount of this
Secured Certificate then due, third, to the payment of Make-Whole Amount, if
any, and any other amount due hereunder or under the Trust Indenture, and
fourth, the balance, if any, remaining thereafter, to the payment of Principal
Amount of this Secured Certificate remaining unpaid in the inverse order of
their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all
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<PAGE> 13
of which terms and conditions in the Trust Indenture and the Participation
Agreement each holder hereof agrees by its acceptance of this Secured
Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided
in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to
the extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates] P6Q this Secured Certificate is issued subject to such provisions.
The Certificate Holder of this Secured Certificate, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Indenture Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Secured Certificate shall not be entitled to any benefit under the Trust
Indenture or be valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- --------
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By
-----------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By
-----------------------------------
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
--------------------------- ----------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series A, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Certificate Holders
under this Trust Indenture, each Certificate Holder, by its acceptance of a
Secured Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate
Holders have expressly reserved all their rights and remedies against the Trust
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the Principal Amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Secured Certificate within the
periods provided for in Section 4.02(b) hereof, or upon the occurrence and
continuation of any other Event of Default under this Trust Indenture, to
foreclose upon this Trust Indenture, and/or to receive the proceeds from the
Trust Indenture Estate and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner
Participant from personal liability, or constitute a covenant not to sue the
Owner Participant, for any breach by it of any of its covenants, representations
or warranties contained in the Participation Agreement or for any of the
payments it has agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the Owner Trustee
for any breach by it of any representations, warranties or covenants of the
Owner Trustee contained in the Operative Documents or (z) release the Owner
Trustee in its individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity for any breach
by it of any representations, warranties or covenants of the Owner Trustee made
in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee,
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directly or indirectly (other than the recourse liability of the Owner Trustee
(in its individual capacity), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture and (iii) any Certificate Holder or
the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means
the amount by which such payment exceeds the amount that would have been
received by a Certificate Holder or the Indenture Trustee if the Owner Trustee
(in its individual capacity) or the Owner Participant had not become subject to
the recourse liability referred to in clause (ii) above. Nothing contained in
this Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee
from enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Trustee (in its individual capacity) or the Owner
Participant under the Participation Agreement or this Trust Indenture (and any
exhibits or annexes hereto or thereto) or by separate agreement or from
retaining any amount paid by Owner Participant under Section 2.14 or 4.03
hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount,
if any, and other amounts due under each Secured Certificate or hereunder will
be payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a registered Certificate
Holder, all payments to it shall be made to the account of such Certificate
Holder specified in Schedule I thereto and otherwise in the manner provided in
or pursuant to the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) unless it shall have specified
some other account or manner of payment by notice to the Indenture Trustee
consistent with this Section 2.04.
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(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Secured Certificate(s) held by
such holder is made (but prior to the making of such payment), or in either of
the two preceding calendar years, and has not notified the Indenture Trustee of
the withdrawal or inaccuracy of such form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate), the Indenture Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of
Principal Amount, Make-Whole Amount, if any, and interest or other amounts due
thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
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Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE
ESTATE.
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture Estate when and
if the Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
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made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff),
13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and
warranted (except as provided above), and covenanted, to the parties to the
Participation Agreement as to the matters represented, warranted and covenanted
by the original Loan Participant in the Participation Agreement. Subject to
compliance by the Certificate Holder and its transferee (if any) of the
requirements set forth in this Section 2.07, the Indenture Trustee and the Owner
Trustee shall use all reasonable efforts to issue new Secured Certificates upon
transfer or exchange within 10 Business Days of the date a Secured Certificate
is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed,
lost or stolen, the Owner Trustee shall, upon the written request of the holder
of such Secured Certificate, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new Secured Certificate,
payable in the same Principal Amount dated the same date and captioned as issued
in connection with the Aircraft. If the Secured Certificate being replaced has
become mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder
for any registration of transfer or exchange of Secured Certificates, but the
Indenture Trustee, as Secured Certificate Registrar, may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or exchange in connection
with the consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured
Certificates surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Secured Certificates.
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SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to
Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect
to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
Any or all of the Secured Certificates may be redeemed by the
Owner Trustee in connection with a transaction described in, and subject to the
terms and conditions of, Section 17 of the Participation Agreement upon at least
30 days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Secured Certificates to be redeemed or purchased
on the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office
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or agency maintained for such purposes pursuant to Section 2.07, and from and
after such redemption date (unless there shall be a default in the payment of
the redemption price) any such Secured Certificates then outstanding shall cease
to bear interest. Upon surrender of any such Secured Certificate for redemption
or purchase in accordance with said notice, such Secured Certificate shall be
redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation
Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall
assume (on a full recourse basis) all of the obligations of the Owner Trustee
hereunder, under the Secured Certificates and all other Operative Documents by
supplemental indenture satisfactory to the Indenture Trustee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and
12 of the Lease and (ii) other provisions necessary or advisable to effectuate
such assumption), then upon delivery of such supplemental indenture, payment by
Lessee of all expenses (including reasonable fees and expenses of counsel) for
the Owner Trustee and the Owner Participant, delivery by the Guarantor of a
guarantee of the Secured Certificates and other amounts owing to the Certificate
Holders substantially in the form of the Guarantee, and delivery of an opinion
of counsel for Lessee that such assumption has been duly and validly effected,
the Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
Either the Owner Trustee or the Owner Participant may, upon
the events and subject to the terms and conditions and for the price set forth
in this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind except as to its title to the
Secured Certificates and except against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Trust Indenture Estate, this Trust
Indenture and the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant upon any of the
following events, and, in any such event, the purchase price thereof shall equal
for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus
accrued and unpaid interest thereon to the date of purchase and all other
amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Participation Agreement to the
holder thereof. Such option to purchase the Secured Certificates may be
exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall
have occurred and be continuing a Lease Event of Default, provided that if such
option is exercised pursuant to this clause (ii) at a time when there shall have
occurred and be continuing for less than 120 days a Lease Event of Default, the
purchase price thereof shall equal the price provided in the preceding sentence
plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant giving written notice of
its election of such option to the Indenture Trustee, which notice shall specify
a date for such purchase not more than 30 days or less than 15 days after the
date of such notice. The Indenture Trustee shall not exercise any of the
remedies hereunder or, without the consent of the Owner Trustee or the Owner
Participant, under the Lease, during the period from the time that a notice of
exercise by the Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur pursuant to the terms
of the preceding sentence. Such election to purchase the Secured Certificates
shall
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become irrevocable upon the sixteenth day preceding the date specified in
the written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Certificate Holders will comply with
all the provisions of Section 2.07 to enable new Secured Certificates to be
issued to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured
Certificates of any Series, each Certificate Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any
Series (other than Series A), each Certificate Holder of such Series agrees that
in the event that such Certificate Holder, in its capacity as a Certificate
Holder, shall receive any payment or distribution on any Secured Obligations in
respect of such Series which it is not entitled to receive under this Section
2.15 or Article III hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER"
shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A
Secured Certificates shall be distributed to the
Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all
Series A Secured Certificates;
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(ii) after giving effect to paragraph (i) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the
Certificate Holders of Series B ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series B Secured Certificate bears to the
aggregate amount of the payments then due under all
Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the
Certificate Holders of Series C ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series C Secured Certificate bears to the
aggregate amount of the payments then due under all
Series C Secured Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee
as part of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever
of the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which
event such balance shall be distributed as provided
in this clause "Second" without reference to this
proviso, (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be
distributed in accordance with the provisions of such
Section 3.03, or (iii) the 120th day after the
receipt of such payment in which case such payment
shall be distributed as provided in this clause
"Second" without reference to this proviso.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY
TERMINATION; REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee (i) with respect to the Aircraft as
the result of an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the
Certificate Holders for any reasonable costs or
expenses incurred in connection with such redemption
for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents
and then (b) to pay any other amounts then due to the
Indenture Trustee and the Certificate Holders under
this Trust Indenture, the Participation Agreement or
the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series A Secured Certificates;
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(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series C Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 15 of the Lease or Article IV hereof) after
both an Event of Default shall have occurred and be continuing and the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b)
hereof, as well as all payments or amounts then held by the Indenture Trustee as
part of the Trust Indenture Estate, shall be promptly distributed by the
Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other
loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents,
revenues, issues, products and profits of, the property
included in the Trust Indenture Estate (all such property
being herein called the "MORTGAGED PROPERTY") pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to
the extent not previously reimbursed), the expenses of any
sale, taking or other proceeding, reasonable attorneys' fees
and expenses, court costs, and any other expenditures incurred
or expenditures or advances made by the Indenture Trustee or
the Certificate Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee or any Certificate Holder,
liquidated or otherwise, upon such Event of Default shall be
applied by the Indenture Trustee as between itself and the
Certificate Holders in reimbursement of such expenses and any
other expenses for which the Indenture Trustee or the
Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be
so distributed is insufficient to pay as aforesaid, then
ratably, without priority of one over the other, in proportion
to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate
Holders for payments made pursuant to Section 5.03 hereof (to
the extent not previously reimbursed) shall be distributed to
such then existing or prior Certificate Holders ratably,
without priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Certificate Holder pursuant to said Section
5.03 hereof;
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THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount
of all Series A Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be distributed
to the Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series A Secured Certificates
held by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount
of all Series A Secured Certificates held by all such holders
plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series B
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series B Secured Certificates to the date of
distribution, shall be distributed to the Certificate Holders
of Series B, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series B Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series B Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series C Secured Certificates to the date of
distribution, shall be distributed to the Certificate Holders
of Series C, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series C Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which
no provision as to the application thereof is made in this Trust Indenture and
for which such provision is made in the Lease, the Participation Agreement or
any other Operative Document shall be applied forthwith to the purpose for which
such
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payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or Lessee in
respect of (i) the Indenture Trustee in its individual capacity, (ii) any
Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider,
and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
entitled thereto. Any payment received by the Indenture Trustee under clause (b)
of the third paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the Intercreditor
Agreement, and any payment received by the Indenture Trustee under clause (c) of
the third paragraph of Section 2.02 shall be distributed directly to the Persons
entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to
the contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
FIRST, to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated
to indemnify against thereunder, in the manner provided in
clause "First" of Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03
hereof. Further, and except as otherwise provided in Sections
3.02, 3.03 and 3.04 hereof, all payments received and amounts
realized by the Indenture Trustee under the Lease or otherwise
with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft
after the termination of the Lease with respect thereto), to
the extent received or realized at any time after payment in
full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of
priority specified in clause (ii) of the immediately preceding
sentence of this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to
the Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be
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designated by notice from the Owner Trustee to the Indenture Trustee from time
to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and
until the Indenture Trustee receives notice to the contrary from the Owner
Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause
"Second" of Section 3.01 hereof shall be distributed by wire transfer of funds
of the type received by the Indenture Trustee to the Owner Participant's account
(within the time limits contemplated by Section 2.04(a)) specified in Schedule I
to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants
and agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Secured Certificates and hereunder in
accordance with the terms of the Secured Certificates and this Trust
Indenture and all amounts, if any, payable by it to the Certificate
Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge
of an Event of Default, a Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Event of Default,
Default or Event of Loss to the Indenture Trustee, each Certificate
Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each report
or notice received pursuant to Section 9(a) and 11(c) of the Lease to
the extent that the same shall not have been furnished to the Indenture
Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the
consent of the Indenture Trustee (acting pursuant to instructions given
in accordance with Section 9.01 hereof), the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
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(f) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the
leasing thereof to Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever
the reason for such Event of Default and whether such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease
Event of Default caused solely by a failure of Lessee to pay to the
Owner Trustee or the Owner Participant when due any amount that is
included in the definition of Excluded Payments shall not constitute an
Event of Default unless notice is given by the Owner Trustee to the
Indenture Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, interest on, Make-Whole Amount, if any,
or other amount due and payable under any Secured Certificate or
hereunder (other than any such failure arising by virtue of a tax
withheld pursuant to Section 2.04(b) hereof or as a result of a Lease
Event of Default or a Lease Default) and such failure shall have
continued unremedied for ten Business Days in the case of any payment
of Principal Amount or interest or Make-Whole Amount, if any, thereon
and, in the case of any other amount, for ten Business Days after the
Owner Trustee or the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee,
in its trust capacity pursuant to Section 8(h) of the Participation
Agreement, or by the Owner Participant pursuant to Section 8(h) of the
Participation Agreement shall remain undischarged for a period of 30
days after the Owner Trustee and the Owner Participant shall have
received written notice from the Indenture Trustee or any Certificate
Holder of such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee (but not in any manner relating to its
individual capacity) herein, in the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement)
or in any certificate furnished by the Owner Participant or the Owner
Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Participant
as soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any
failure by the Owner Trustee or Owner Participant to observe or perform
any other covenant or obligation of the Owner Trustee or Owner
Participant, as the case may be, for the benefit of the Indenture
Trustee or the Certificate Holders contained in the Participation
Agreement, the Secured Certificates or this Trust Indenture which is
not remedied within a period of 60 days after notice thereof has been
given to the Owner Trustee and the Owner Participant; or
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(f) if at any time when the Aircraft is registered under the
laws of the United States, the Owner Participant shall not be a Citizen
of the United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f) unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary
case or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
a final non-appealable order, judgment or decree shall be entered in
such case or proceeding by a court or a trustee, custodian, receiver or
liquidator, to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g).
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the
Owner Trustee and the Owner Participant prompt written notice of any Event of
Default of which the Indenture Trustee has Actual Knowledge and, if any such
Event of Default results from a Lease Event of Default, shall give the
Certificate Holders, the Owner Trustee and the Owner Participant not less than
ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on
or after which the Indenture Trustee may commence and consummate the exercise of
any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in
respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the
Lease, the Indenture Trustee shall have insufficient funds to make any payment
of Principal Amount and interest on any Secured Certificate on the day it
becomes due and payable, the Owner Trustee or the Owner Participant may, but
shall not be obligated to, pay the Indenture Trustee prior to the Enforcement
Date, in the manner provided in Section 2.04 hereof, for application in
accordance with Section 3.01 hereof, an amount equal to the portion of the
Principal Amount and interest (including interest, if any, on any overdue
payments of such portion of Principal Amount and interest) then due and payable
on the Secured Certificates, and, unless the Owner Trustee has cured Events of
Default in respect of payments of Basic Rent on each of the three immediately
preceding Basic Rent payment dates, or on the Commencement Date and each of the
two immediately succeeding Basic Rent payment dates in respect of payment of
Interim Rent, or the Owner Trustee
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has cured six previous Events of Default in respect of payments of Interim Rent
and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes
of this Trust Indenture be deemed to cure any Event of Default which would
otherwise have arisen on account of the nonpayment by Lessee of such installment
of Interim Rent or Basic Rent (but not any other Default or Event of Default
which shall have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has
occurred, the Owner Trustee or the Owner Participant may, but shall not be
obligated to, cure such Event of Default prior to the Enforcement Date as is
necessary to accomplish the observance or performance of the defaulted covenant,
condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Interim Rent or Basic Rent which was overdue at the time of such
payment and interest payable by Lessee on account of its being overdue and any
Supplemental Rent in respect of the reimbursement of amounts paid by Owner
Trustee pursuant to the immediately preceding paragraph (but in either case
shall have no rights as a secured party hereunder), and thereafter, the Owner
Trustee or the Owner Participant, as the case may be, shall be entitled to
receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the
case may be, and interest thereon upon receipt thereof by the Indenture Trustee
(and shall be entitled to bring an action against Lessee to enforce such
payment); provided, however, that (i) if the Principal Amount and interest on
the Secured Certificates shall have become due and payable pursuant to Section
4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest
on, Make-Whole Amount, if any, and all other amounts due with respect to all
Secured Certificates shall have been paid in full, be subordinate to the rights
of the Indenture Trustee and the Certificate Holders in respect of such payment
of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and
(ii) the Owner Trustee shall not be entitled to seek to recover any such payment
(or any payment in lieu thereof) except pursuant to the foregoing right of
subrogation by demand or suit for damages.
SECTION 4.04. REMEDIES.
(a) Subject to the provisions of Section 2.14 hereof, if an
Event of Default shall have occurred and be continuing and so long as the same
shall continue unremedied, then and in every such case the Indenture Trustee
may, subject to the second paragraph of this Section 4.04(a), on and after the
Enforcement Date if such Event of Default results from a Lease Event of Default,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft or to foreclose the Lien of this Indenture.
Without limiting any of the foregoing, it is understood and agreed that the
Indenture Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall not
have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Indenture Trustee shall not be entitled to exercise any
remedy hereunder as a result of an Event of Default which arises solely by
reason of one or more events or circumstances which constitute a Lease Event of
Default unless the Indenture Trustee as security assignee of the Owner Trustee
shall have exercised or concurrently be exercising one or more of the remedies
provided for in Section 15 of the Lease to terminate the Lease or take
possession and/or sell the Aircraft; provided,
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however, that such requirement to exercise one or more of such remedies under
the Lease shall not apply in circumstances where the Indenture Trustee is, and
has been, for a continuous period in excess of 60 days or such other period as
may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or
other period being the "SECTION 1110 PERIOD"), involuntarily stayed or
prohibited by applicable law or court order from exercising such remedies under
the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the
requirement to exercise one or more of such remedies under the Lease shall
nonetheless be applicable during a Continuous Stay Period subsequent to the
expiration of the Section 1110 Period to the extent that the continuation of
such Continuous Stay Period subsequent to the expiration of the Section 1110
Period (A) results from an agreement by the trustee or the debtor-in-possession
in such proceeding during the Section 1110 Period with the approval of the
relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of
the Bankruptcy Code and continues to perform as required by Section
1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section
1110 Period with the consent of the Indenture Trustee pursuant to Section
1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during
the Section 1110 Period with the approval of the relevant court of the Lease
pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the
Indenture Trustee's own failure to give any requisite notice to any Person. In
the event that the applicability of Section 1110 of the Bankruptcy Code to the
Aircraft is being contested by Lessee in judicial proceedings, so long as the
Indenture Trustee fails to participate in such proceedings, the Owner Trustee
shall have the right (without affecting in any way any rights or remedy of the
Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to
the immediately preceding paragraph, the inability, described in such
paragraphs, of the Indenture Trustee to exercise any right or remedy under the
Lease shall in no event and under no circumstances prevent the Indenture Trustee
from exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Indenture Trustee may (and shall,
upon receipt of a written demand therefor from a Majority in Interest of
Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery
of written notice or notices to the Owner Trustee and the Owner Participant,
declare all the Secured Certificates to be due and payable, whereupon the unpaid
Principal Amount of all Secured Certificates then outstanding, together with
accrued but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition
that, if at any time after the Principal Amount of the Secured Certificates
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Secured Certificates and all other amounts payable
under the Secured Certificates (except the Principal Amount of the Secured
Certificates which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Certificate Holders may (but shall not
be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee's declaration and its consequences; but
no such rescission or annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to credit against any
purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Trust Indenture (but only to the extent that such purchase price would have been
paid to such Certificate Holder pursuant to Article III hereof if such purchase
price were paid in cash and the foregoing provisions of this subsection (c) were
not given effect).
(d) In the event of any sale of the Trust Indenture Estate, or
any part thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Trust Indenture,
the unpaid Principal Amount of all Secured Certificates then outstanding,
together with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
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(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be
continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the
Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Mortgaged Property included in the Trust
Indenture Estate to which the Indenture Trustee shall at the time be entitled
hereunder. If the Owner Trustee shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee hereby specifically consents to the fullest
extent permitted by applicable law, and (ii) pursue all or part of such
Mortgaged Property wherever it may be found and, in the event that a Lease Event
of Default has occurred and is continuing, may enter any of the premises of
Lessee wherever such Mortgaged Property may be or be supposed to be and search
for such Mortgaged Property and take possession of and remove such Mortgaged
Property. All expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the Lien of this Trust
Indenture.
(b) Upon every such taking of possession, the Indenture
Trustee may, from time to time, at the expense of the Mortgaged Property, make
all such expenditures for maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modifications or alterations to and
of the Mortgaged Property, as it may deem proper. In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, insure,
lease, control, manage, dispose of, modify or alter the Mortgaged Property and
to carry on the business and to exercise all rights and powers of the Owner
Participant and the Owner Trustee relating to the Mortgaged Property, as the
Indenture Trustee shall deem best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation, storage,
insurance, leasing, control, management, disposition, modification or alteration
of the Mortgaged Property or any part thereof as the Indenture Trustee may
determine, and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Mortgaged Property and every part thereof, except Excluded
Payments, without prejudice, however, to the right of the Indenture Trustee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Indenture Trustee hereunder. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, improvement,
modification or alteration of the Mortgaged Property and of conducting the
business thereof, and to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Mortgaged Property or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trustee), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Trust Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee, and of all persons
properly engaged and employed by the Indenture Trustee with respect hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Trust Indenture shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and
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in such order as may be deemed expedient by the Indenture Trustee, and the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy. No delay or omission by the Indenture Trustee
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of the Owner Trustee or Lessee or to be an acquiescence
therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Indenture Trustee, then and in every such case the Owner Trustee, the
Indenture Trustee and Lessee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Mortgaged Property, and all rights, remedies and powers of the
Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such
proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of
Certificate Holders, the Indenture Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such Default shall cease
to exist and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Trust Indenture, but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon;
provided, that in the absence of written instructions from all the Certificate
Holders, the Indenture Trustee shall not waive any Default (i) in the payment of
the Principal Amount, Make-Whole Amount, if any, and interest and other amounts
due under any Secured Certificate then outstanding, or (ii) in respect of a
covenant or provision hereof which, under Article IX hereof, cannot be modified
or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee thereof) for all or any part of the Mortgaged Property,
whether such receivership be incidental to a proposed sale of the Mortgaged
Property or the taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Mortgaged
Property shall be entitled to exercise all the rights and powers of the
Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee
the true and lawful attorney-in-fact of the Owner Trustee in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Indenture Trustee or any purchaser, the
Owner Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing and delivering to the Indenture Trustee or such purchaser
all bills of sale, assignments, releases and other proper instruments to effect
such ratification and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this Trust Indenture,
the right of any Certificate Holder to receive payment of principal of, and
premium, if any, and interest on a Secured Certificate on or after the
respective due dates expressed in such Secured Certificate, or to bring suit for
the enforcement of any such payment on or after
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such respective dates in accordance with the terms hereof, shall not be impaired
or affected without the consent of such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay Rent, the
Indenture Trustee shall give prompt written notice thereof to the Owner Trustee,
the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms
of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture Trustee, which failure
shall constitute knowledge of a Default) unless notified in writing by Lessee,
the Owner Trustee, the Owner Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a),
4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from
time to time of a Majority in Interest of Certificate Holders, the Indenture
Trustee shall, subject to the terms of this Section 5.02, take such of the
following actions as may be specified in such instructions: (i) give such notice
or direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided, that
anything contained in this Trust Indenture, the Lease or the other Operative
Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or to give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the
rights referred to in this clause (1) shall not be deemed to
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include the exercise of any remedies provided for in Section 15 of the
Lease other than the right to proceed by appropriate court action,
either at law or in equity, to enforce payment by Lessee or the
Guarantor of such amounts included in Excluded Payments or performance
by Lessee or the Guarantor of such insurance covenant, or to recover
damages for the breach thereof or for specific performance of any
covenant of Lessee or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event
shall have occurred and be continuing and subject to the provisions of
clauses (4) and (6) below, the Indenture Trustee shall not, without the
consent of the Owner Trustee, which consent shall not be withheld if no
right or interest of the Owner Trustee or the Owner Participant shall
be diminished or impaired thereby, (i) enter into, execute and deliver
amendments, modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
provided that, subject to the Indenture Trustee's right to exercise
remedies under Section 15 of the Lease without the consent of the Owner
Trustee, whether or not an Event of Default shall have occurred and be
continuing, no amendment, modification, waiver or consent in respect of
the Lease shall materially adversely affect the Owner Participant or
the Owner Trustee;
(3) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee and
the Owner Participant shall have the right, together with the Indenture
Trustee, (i) to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel and other documents and all information
which any thereof is permitted or required to give or furnish to the
Owner Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on Lessor
or the Owner Participant, (iv) to exercise, to the extent necessary to
enable it to exercise its rights under Section 4.03 hereof, the rights
of Lessor under Section 21 of the Lease and (v) to give notices of
default under Section 14 of the Lease;
(4) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee shall
have the right to the exclusion of the Indenture Trustee to adjust
Rent, Stipulated Loss Values and Termination Values as provided in
Section 3(d) of the Lease and to select counsel with respect to any
opinion relating to tax matters to be delivered solely to the Owner
Participant;
(5) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee may,
without the consent of the Indenture Trustee, (i) solicit and make bids
with respect to the Aircraft under Section 9 of the Lease in respect of
a termination of the Lease by Lessee pursuant to Section 9 thereof,
(ii) determine "fair market sales value" and "fair market rental value"
under Section 19 of the Lease for all purposes except following an
Event of Default pursuant to Section 15 of the Lease, and (iii) make an
election pursuant to and in accordance with the provisions of Section
9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, all rights of the "Lessor" under the Lease shall be
exercised by the Owner Trustee to the exclusion of the Indenture
Trustee including, without limitation, the right to (i) exercise all
rights with respect to Lessee's use and operation, modification or
maintenance of the Aircraft and any Engine which the Lease specifically
confers on Lessor, and (ii) consent to and approve any assignment
pursuant to Section 13 of the Lease; provided that the foregoing shall
not limit (A) any rights separately granted to the Indenture Trustee
under the Operative Documents or (B) the right of the Indenture Trustee
to receive any funds to be delivered to the "Lessor" under the Lease
(except with respect to Excluded Payments) and under the Purchase
Agreement.
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Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to
take any action under this Trust Indenture and nothing herein or therein shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
the risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE
OR INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
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SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they
will not use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Indenture Estate
except (i) as required by the terms of the Lease or (ii) in accordance with the
powers granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Trust Indenture and in accordance with the
express terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of
Lessee stating the following:
A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to
be received (including the manufacturer,
model, FAA registration number (or other
applicable registration information) and
manufacturer's serial number) as
consideration for the Airframe to be
released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Airframe the Owner Trustee will
be the legal owner of such Replacement
Airframe free and clear of all Liens except
as are permitted by Section 6 of the Lease,
that such Replacement Airframe will on such
date be in good working order and condition,
and that such Replacement Airframe has been
or, substantially concurrently with such
withdrawal, will be duly registered in the
name of the Owner Trustee under the Federal
Aviation Act or under the law then
applicable to the registration of the
Airframe and that an airworthiness
certificate has been duly issued under the
Federal Aviation Act (or such other
applicable law) with respect to such
Replacement Airframe, and that such
registration and certificate
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is in full force and effect, and that Lessee
will have the full right and authority to
use such Replacement Airframe;
(iv) the existence of the insurance required by
Section 11 of the Lease with respect to such
Replacement Airframe and the payment of all
premiums then due thereon;
(v) that the Replacement Airframe is of the same
or an improved model as the Airframe
requested to be released from this
Indenture;
(vi) the fair market value of the Replacement
Airframe as of the date of such certificate
(which in the judgment of Lessee shall be
not less than the then fair market value of
the Airframe requested to be released
(assuming such Airframe was in the condition
and repair required to be maintained under
the Lease));
(vii) the fair market value of the Airframe
immediately prior to the date the Airframe
suffered an Event of Loss (assuming such
Airframe was in the condition and repair
required to be maintained under the Lease);
(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or
both, would become a Lease Event of Default,
has occurred which has not been remedied or
waived, and that Lessee will not be in
default, by the making and granting of the
request for release and the addition of a
Replacement Airframe, in the performance of
any of the terms and covenants of the Lease;
and
(ix) that the release of the Airframe so to be
released will not be in contravention of any
of the provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
(ii) a description of the Replacement Engine
(including the manufacturer's name and
serial number) as consideration for the
Engine to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be
the legal owner of such Replacement Engine
free and clear of all Liens except as are
permitted by Section 6 of the
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Lease, that such Replacement Engine
will on such date be in good working order
and condition and that such Replacement
Engine is substantially the same as the
Engine to be released (or as improved
model);
(iv) the fair market value of the Replacement
Engine as of the date of such certificate
(which value shall not be less than the then
fair market value of the Engine to be
released (assuming such Engine was in the
condition and repair required to be
maintained under the Lease));
(v) the fair market value of the Engine to be
released (immediately prior to any Event of
Loss suffered by such Engine and assuming
that such Engine was in the condition and
repair required to be maintained under the
Lease);
(vi) that each of the conditions specified in
Section 10(b) of the Lease with respect to
such Replacement Engine have been satisfied
and that Lessee will not be in default, by
the making and granting of the request for
release and the addition of the Replacement
Engine, in the performance of any of the
terms and covenants of the Lease;
(vii) that, with respect to the replacement of an
Engine pursuant to Section 9(d) of the
Lease, no Lease Event of Default and no
Lease Default has occurred which has not
been remedied or waived; and
(viii) that the release of the Engine so to be
released will not be in contravention of any
of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the Lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture Trustee
to protect the lien under the Indenture in the Replacement Engine.
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(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments
and/or property which have been or are therewith
delivered to and deposited with the Indenture Trustee
conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the
property so sold or disposed of may be lawfully
released from the Lien of this Indenture and all
conditions precedent herein provided for relating to
such release have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has
been validly subjected to the Lien of this Indenture
and covered by the Lease, the instruments subjecting
such Replacement Airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the
case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law
then applicable to the registration of the Aircraft,
and no further action, filing or recording of any
document is necessary or advisable in order to
establish and perfect the right, title, estate and
interest of the Owner Trustee to and the Lien of this
Indenture on such Replacement Aircraft or Replacement
Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of
this Trust Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced,
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Indenture.
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SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE
TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the
Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of
the Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
(6) ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or inaction of the other or of the Owner Participant.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance
with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to
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confirm, verify or inquire into the failure to receive any financial
statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain
or inquire as to the performance or observance of any of Lessee's covenants
under the Lease with respect to the Aircraft. The Owner Participant shall not
have any duty or responsibility hereunder, including, without limitation, any of
the duties mentioned in clauses (i) through (v) above; provided, that nothing
contained in this sentence shall limit any obligations of the Owner Participant
under the Participation Agreement or relieve the Owner Participant from any
restriction under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT
OR DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE
UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO
HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Owner Trustee made
in its individual capacity and the representations and warranties of the
Indenture Trustee, in each case expressly made in this Trust Indenture or in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement). The Loan Participants, the Certificate Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee
pursuant to any provision hereof and not then required to be distributed to the
Certificate Holders, Lessee or the Owner Trustee as provided in Article III
hereof need not be segregated in any manner except to the extent required by Law
or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Indenture Trustee shall not be liable for any interest thereon (except that the
Indenture Trustee shall invest all monies held as directed by Lessee so long as
no Lease Event of Default or Lease Default has occurred and is continuing (or in
the absence of such direction, by the Majority In Interest of Certificate
Holders) in Cash Equivalents; provided, however, that any payments received, or
applied hereunder, by the Indenture Trustee shall be accounted for by the
Indenture Trustee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall
incur any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary
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thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to the aggregate unpaid Principal Amount of Secured Certificates
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Indenture Trustee. As to any fact or matter relating to
Lessee the manner of ascertainment of which is not specifically described
herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof
rely on a certificate, signed by a duly authorized officer of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee and the Indenture Trustee for any action taken or omitted to be
taken by them in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trustee is
authorized by the Trust Agreement to enter into this Trust Indenture and to take
all action to be taken by it pursuant to the provisions hereof, and shall not
inquire into the authorization of the Owner Trustee with respect thereto. In the
administration of the trusts hereunder, the Owner Trustee and the Indenture
Trustee each may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may at
the expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein
and in the Trust Agreement provided, and not in its individual capacity, except
as otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the reasonable
fees and expenses of counsel), for all services rendered hereunder and shall, on
and subsequent to an Event of Default hereunder, have a priority claim on the
Trust Indenture Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely
as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding
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any taxes payable by the Indenture Trustee on or measured by any
compensation received by the Indenture Trustee for its services under this Trust
Indenture), claims, actions, suits, costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on, incurred by or asserted against the Indenture Trustee (whether or
not also indemnified against by any other Person under any other document) in
any way relating to or arising out of this Trust Indenture or any other
Operative Document to which it is a party or the enforcement of any of the terms
of any thereof, or in any way relating to or arising out of the manufacture,
purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of the
Aircraft or any Engine (including, without limitation, latent or other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, to the extent not reimbursed by Lessee. Without limiting the
foregoing, the Indenture Trustee agrees that, prior to seeking indemnification
from the Trust Indenture Estate, it will demand, and take such action as it may
in its discretion determine to be reasonable to pursue, indemnification
available to the Indenture Trustee under the Lease or the Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Expenses to the extent relating to or
arising from the willful misconduct or gross negligence (or negligence in the
case of handling funds) of the Indenture Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any representation or
warranty of the Indenture Trustee (in its individual capacity) referred to in
Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last
sentence of Section 5.04 hereof, or as otherwise excluded by the terms of
Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities
under such Sections. In addition, if necessary, the Indenture Trustee shall be
entitled to indemnification from the Trust Indenture Estate for any liability,
obligation, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate. The Owner Trustee
shall be subrogated to any right of the Indenture Trustee in respect of any
matter as to which such indemnity is paid by the Owner Trustee.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner
Trustee pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign
at any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act
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until such time, if any, as a successor shall have been appointed as above
provided. The successor Indenture Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having its principal place of business in the Borough
of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Indenture Trustee and the Indenture Trustee under this Trust Indenture without
further act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary
or desirable in order to conform to any law of any jurisdiction in which all or
any part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform
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any such supplemental indenture, or any such instrument, as may be required for
the appointment of any such additional or separate trustee or for the
clarification of, addition to or subtraction from the rights, powers, duties or
obligations theretofore granted to any such additional or separate trustee. In
case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon the
Indenture Trustee in respect of the custody, investment and payment of monies
and all monies received by any such additional or separate trustee from or
constituting part of the Trust Indenture Estate or otherwise payable under any
Operative Document to the Indenture Trustee shall be promptly paid over by it to
the Indenture Trustee. All other rights, powers, duties and obligations
conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Indenture Trustee and such additional or separate trustee
jointly except to the extent that applicable Law of any jurisdiction in which
any particular act is to be performed renders the Indenture Trustee incompetent
or unqualified to perform such act, in which event such rights, powers, duties
and obligations (including the holding of title to all or part of the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed by
such additional or separate trustee. No additional or separate trustee shall
take any discretionary action except on the instructions of the Indenture
Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the
consequences of its lack of reasonable care in selecting, and Indenture
Trustee's own actions in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section 8.03 shall be
subject to, and shall have the benefit of Articles IV through VIII and Article X
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 8.03 shall not
in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no
longer necessary or desirable in order to conform to any such law or take any
such action or shall be advised by such counsel that it is no longer so
necessary or desirable in the interest of the Certificate Holders, or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Certificate Holders, the Indenture Trustee and,
upon the written request of the Indenture Trustee, the Owner Trustee, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Indenture Trustee may act on behalf of the Owner Trustee under this Section
8.03(c) when and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or modification of, or consent under, the
terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified, amended, changed or
waived in such manner as shall be agreed to by the Owner Participant and Lessee
and (ii) the Owner Trustee and Lessee may enter into amendments of or additions
to the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments,
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modifications and changes do not and would not affect the time of, or reduce the
amount of, Rent payments until after the payment in full of all Secured
Obligations or otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Section 5.02(a)(2) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely effect the Certificate
Holders, but subject to Section 5.02(a)(2), upon the written request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall from
time to time enter into any such supplement or amendment, or execute and deliver
any such waiver, modification or consent, as may be specified in such request
and as may be (in the case of any such amendment, supplement or modification),
to the extent such agreement is required, agreed to by the Owner Trustee and
Lessee or, as may be appropriate, the Manufacturer; provided, however, that,
without the consent of each holder of an affected Secured Certificate then
outstanding, no such amendment of or supplement to this Trust Indenture, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee or the Participation Agreement or waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11,
2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an
Event of Default) of the Lease, the definitions of "Event of Default",
"Default", "Lease Event of Default", "Lease Default", "Majority in Interest of
Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the
percentage of Certificate Holders required to take or approve any action
hereunder, (ii) reduce the amount, or change the time of payment or method of
calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or
interest with respect to any Secured Certificate, or alter or modify the
provisions of Article III hereof with respect to the order of priorities in
which distribution thereunder shall be made as among the Certificate Holders,
the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in
favor of the Certificate Holders, (iv) consent to any change in the Trust
Indenture or the Lease which would permit redemption of Secured Certificates
earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the
Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify
any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or
supplement the Lease or consent to any assignment of the Lease, in either case
releasing Lessee from its obligations in respect of the payment of Interim Rent,
Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
altering the absolute and unconditional character of the obligations of Lessee
to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part thereof other
than Permitted Liens or deprive any Certificate Holder of the benefit of the
Lien of this Trust Indenture on the Trust Indenture Estate, except as provided
in connection with the exercise of remedies under Article IV hereof. So long as
no Lease Event of Default has occurred and is continuing, without the consent of
Lessee no amendment or supplement to this Trust Indenture or waiver or
modification of the terms hereof shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to
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add to the rights of the Certificate Holders; and (vii) to include on the
Secured Certificates any legend as may be required by law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee
under the Trust Agreement or the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 9.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 9.01 hereof,
the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR
TRUST AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal
Amount of, Make-Whole Amount, if any, and interest on and all other amounts due
under all Secured Certificates and provided that there shall then be no other
Secured Obligations due to the Certificate Holders and the Indenture Trustee
hereunder or under the Participation Agreement, the Owner Trustee shall direct
the Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to
any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
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SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS
BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or
any part thereof (including any part thereof or interest therein), by the
Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind
the Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied,
shall be construed to give any person other than the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders,
any legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to
any Participant, Lessee or any Certificate Holder, addressed to such party at
such address as such party shall have furnished by notice to the Owner Trustee
and the Indenture Trustee, or, until an address is so furnished, addressed to
the address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Secured Certificate Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any Participant or the
Indenture Trustee or any Certificate Holder or Lessee to any of the other of
them, such notice shall be deemed given and such requirement satisfied when such
notice is received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request,
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notice, direction, consent, waiver or other instrument or action by any
Certificate Holder shall bind the successors and assigns of such holder. This
Trust Indenture and the Trust Indenture Estate shall not be affected by any
amendment or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except that each reference in this
Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended
and supplemented from time to time to the extent permitted hereby, thereby and
by the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and
in the table of contents hereto are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a
vote of a Majority in Interest of Certificate Holders, except as otherwise
provided herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture
or the Trust Agreement to the contrary, neither the Indenture Trustee nor the
Owner Trustee will take any action contrary to Lessee's rights under
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the Lease, including the right to possession and use of, and the quiet enjoyment
of, the Aircraft, except in accordance with provisions of the Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee, as
Owner Trustee
By:
-----------------------------------
Name:
-----------------------------------
Title:
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By:
-----------------------------------
Name:
-----------------------------------
Title:
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---------------------------------------------
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
---------------------------------------------
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 B]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 B],
dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under
that certain Trust Agreement [NW 1996 B] dated as of April 24, 1996 (the "TRUST
AGREEMENT"), between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 B], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and
Engines described below, and a counterpart of the Trust Indenture is attached
hereto and made a part hereof and this Trust Indenture Supplement, together with
such counterpart of the Trust Indenture, is being filed for recordation on the
date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth
that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on
the Trust Indenture Estate covers all of Owner Trustee's right, title and
interest in and to the following described property:
<PAGE> 56
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
----------------- ------- -------------- ----------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
----------------- -------------------- ----------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which
are from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest
in and to all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Certificate Holders, in the trust
created by the Trust Indenture, all of the right, title and interest of the
Owner Trustee in, to and under the Lease Supplement [of even date herewith]
covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment
shall constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity
EXHIBIT A-2
<PAGE> 57
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and subject to the terms and provisions set forth in the Trust Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Indenture Supplement is being delivered in the
State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 58
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee, Owner
Trustee
By:
-----------------------------------
Name:
Title:
EXHIBIT A-4
<PAGE> 59
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
------------------ ---------------
<S> <C> <C>
Series A . . . . . . $25,335,450 7.67%
Series B . . . . . . $ 8,272,800 8.07%
Series C . . . . . . $ 4,150,365 8.97%
</TABLE>
<PAGE> 60
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N538US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
---------------- ------------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 2.04081633%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.04081633%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.04081633%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.04081633%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.04081633%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.04081633%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.04081633%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.04081633%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.04081633%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.04081633%
Jul 2, 2007 0.00000000%
Jan 2, 2008 2.04081633%
Jul 2, 2008 0.00000000%
Jan 2, 2009 2.04081633%
Jul 2, 2009 0.00000000%
Jan 2, 2010 4.83155026%
Jul 2, 2010 0.00000000%
Jan 2, 2011 25.94002475%
Jul 2, 2011 0.00000000%
Jan 2, 2012 17.29802313%
Jul 2, 2012 0.00000000%
Jan 2, 2013 16.67037688%
Jul 2, 2013 0.00000000%
Jan 2, 2014 10.77022907%
</TABLE>
<PAGE> 61
SERIES B
AIRCRAFT: N538US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.08333333%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.08333333%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.08333333%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.08333333%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.08333333%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.08333333%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.08333333%
Jul 2, 2005 0.00000000%
Jan 2, 2006 7.96189924%
Jul 2, 2006 0.00000000%
Jan 2, 2007 6.30140944%
Jul 2, 2007 0.00000000%
Jan 2, 2008 12.96235857%
Jul 2, 2008 0.00000000%
Jan 2, 2009 14.06979499%
Jul 2, 2009 0.00000000%
Jan 2, 2010 22.14449763%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 16.96840248%
Jul 2, 2014 5.00830432%
</TABLE>
<PAGE> 62
SERIES C
AIRCRAFT: N538US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 7.00837155%
Jul 2, 1999 0.00000000%
Jan 2, 2000 7.84726163%
Jul 2, 2000 0.00000000%
Jan 2, 2001 9.96603913%
Jul 2, 2001 0.00000000%
Jan 2, 2002 12.14736535%
Jul 2, 2002 0.00000000%
Jan 2, 2003 14.53888995%
Jul 2, 2003 0.00000000%
Jan 2, 2004 17.14432345%
Jul 2, 2004 0.00000000%
Jan 2, 2005 19.98460376%
Jul 2, 2005 0.00000000%
Jan 2, 2006 11.36314517%
</TABLE>
<PAGE> 63
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 B]
This LEASE AGREEMENT [NW 1996 B], dated as of April 24, 1996, between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee
under the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement [NW 1996 B] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Administrative Agent" means [___________], a [____________]
banking corporation, as administrative agent pursuant to the
Participation Agreement, and any successor acting as administrative
agent.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this
definition, "control" (including "controlled by" and "under common
control with") shall mean 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 or
by contract or otherwise.
"After-Tax Basis" means an amount, which, after deduction of
all Federal, state, local and foreign taxes required to be paid by
or on behalf of the recipient in respect of the receipt or
realization of such amount, is equal to the payment required under
the provisions of any Operative Document that requires payments to
be made on an After-Tax Basis.
"Aircraft" means the Airframe to be delivered and leased
hereunder (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) hereof) together with the two
Engines initially leased hereunder (or any engine substituted for
either of such Engines pursuant to the terms hereof), whether or
not any of such initial or substituted Engines may from time to
time be installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
<PAGE> 2
"Airframe" means: (i) the Boeing 757-251 aircraft (except
Engines or engines from time to time installed thereon) specified
in the initial Lease Supplement, which aircraft shall be leased by
Lessor to Lessee hereunder and under such Lease Supplement, and any
aircraft (except Engines or engines from time to time installed
thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed
thereon) pursuant to clause (ii) of the first paragraph of Section
10(a); and (ii) any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft (except
Engines or engines from time to time installed thereon), or (B) so
long as title thereto shall remain vested in Lessor in accordance
with the terms of Section 8 after removal from such aircraft
(except Engines or engines from time to time installed thereon);
provided, however, that at such time as an aircraft (except Engines
or engines from time to time installed thereon) shall be deemed
part of the property leased hereunder in substitution for the
Airframe pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then
outstanding and, if no Secured Certificates shall be outstanding,
the Base Rate.
"Assumed Interest Rate" has the meaning set forth in Section
3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Base Rate" means the rate of interest announced publicly by
The Bank of New York in New York, New York from time to time as its
prime rate.
"Basic Rent" means, for the Basic Term, the rent payable for
the Aircraft pursuant to Section 3(c) as adjusted as provided in
Section 3(d) but subject always to the provisions of Section
3(d)(v) hereof and, for any Renewal Term, Basic Rent determined
pursuant to Section 19.
"Basic Term" means the term for which the Aircraft is leased
hereunder pursuant to Section 3(a) hereof commencing on the
Commencement Date and ending on January 2, 2019, or such earlier
date as this Lease may be terminated in accordance with the
provisions hereof.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated
the Delivery Date, specifically referring to the Airframe and each
Engine, which Bill of Sale shall contain, among other things, a
statement that such Bill of Sale thereby conveys to the Owner
Trustee good title to the Airframe and each Engine described in
- 2 -
<PAGE> 3
such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6
of the Lease.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to
close in New York, New York; Boston, Massachusetts; Salt Lake City,
Utah; or Minneapolis, Minnesota and, in connection with any payment
of Rent and so long as any Secured Certificate is a Eurodollar Loan
(as defined in the Trust Indenture), such day is also a day for
trading by and between banks in the interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as defined in
the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49,
United States Code, for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo or that otherwise is
certified or registered to the extent required to fall within the
purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan Participant or of
the Owner Participant, as the case may be, to finance the Owner
Trustee's payment of Lessor's Cost for the Aircraft.
"Consent and Agreement" means the Consent and Agreement [NW
1996 B], dated as of the date hereof, executed by the Manufacturer,
as the same may be amended, modified or supplemented from time to
time in accordance with the applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated as of
November 2, 1995, among Lessee, the banks, financial institutions
and other institutional
- 3 -
<PAGE> 4
lenders listed on the signature pages thereof, [_______________],
as documentation agent, [_______________], as administrative
agent, and [______________], as syndication agent, as the
same may be amended, supplemented or otherwise modified from time
to time.
"Debt Rate" has the meaning set forth in the Trust Indenture.
"Default" means any event which with the giving of notice or
the lapse of time or both would become an Event of Default.
"Delivery Date" means the date of the initial Lease Supplement
for the Aircraft, which date shall be the date the Aircraft is
leased by Lessor to Lessee and accepted by Lessee hereunder.
"Depreciation Period" means the period commencing on the
Delivery Date and ending on December 31, 2003.
"Documentation Agent" means [_______________], a bank
organized under the laws of [____________], as documentation agent
pursuant to the Participation Agreement, and any successor acting
as documentation agent.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of the two Pratt & Whitney Model
PW2037 engines listed by manufacturer's serial number in the
initial Lease Supplement, whether or not from time to time
thereafter installed on the Airframe or installed on any other
airframe or on any other aircraft; and (ii) any engine which may
from time to time be substituted, pursuant to the terms hereof, for
either of such two engines, together in each case with any and all
Parts incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall remain
vested in Lessor in accordance with the terms of Section 8 after
removal from such Engine; provided, however, that at such time as
an engine shall be deemed part of the property leased hereunder in
substitution for an Engine pursuant to the applicable provisions
hereof, the replaced Engine shall cease to be an Engine hereunder.
The term "Engines" means, as of any date of determination, all
Engines then leased hereunder.
"Event of Default" has the meaning specified in Section 14
hereof.
"Event of Loss" with respect to the Aircraft, 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 uneconomic or which renders such property
- 4 -
<PAGE> 5
permanently unfit for normal use by Lessee for any reason
whatsoever; (ii) any damage to such property which results in an
insurance settlement with respect to such property on the basis of
a total loss, or a constructive or compromised total loss; (iii)
the theft or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of,
such property (other than a requisition for use by the United
States Government or any other government of registry of the
Aircraft which is a member of OECD, or any agency or
instrumentality of any thereof) which in the case of any event
referred to in this clause (iii) (other than a requisition of
title) shall have resulted in the loss of possession of such
property by Lessee for a period in excess of 180 consecutive days
or, if earlier, at the end of the Term or, in the case of a
requisition of title, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of title
or, if earlier, at the end of the Term; (iv) as a result of any
law, rule, regulation, order or other action by the Federal
Aviation Administration or other governmental body of the
government of registry of the Aircraft having jurisdiction, the use
of such property in the normal course of the business of air
transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of such
180 day period, shall have undertaken and shall be diligently
carrying forward all steps which are necessary or desirable to
permit the normal use of such property by Lessee, but in any event
if such use shall have been prohibited for a period of two
consecutive years, provided that no Event of Loss shall be deemed
to have occurred if such prohibition has been applicable to
Lessee's entire U.S. registered fleet of Boeing Model 757-200
aircraft and Lessee, prior to the expiration of such two-year
period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order
or other action and commenced regular commercial use of the same in
such jurisdiction and shall be diligently carrying forward, in a
manner which does not discriminate against the Aircraft in so
conforming the Aircraft, all steps which are necessary or desirable
to permit the normal use of the Aircraft by Lessee, but in any
event if such use shall have been prohibited for a period of three
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States Government
or any other government of registry of the Aircraft which is a
member of OECD or any instrumentality or agency of any thereof,
which shall have occurred during the Basic Term (or the Interim
Term or any Renewal Term) and shall have continued for thirty (30)
days beyond the Term, provided, however, that no Event of Loss
pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section 10(d)
hereof; and (vi) any divestiture of title to or interest in an
Engine treated as an Event of Loss pursuant to Section 7(b) hereof.
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
Airframe.
- 5 -
<PAGE> 6
"Excess Amount" for the Transition Date means an amount equal
to the amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit B hereto under the heading "Excess
Amount" opposite the Transition Date; provided, however, that, to
the extent that the aggregate amount of interest due and payable on
the Transition Date on the Secured Certificates relating to the
period from and including the Delivery Date to but excluding the
Transition Date is less than the aggregate amount of interest on
the Secured Certificates that would have been due and payable on
the Transition Date if such Secured Certificates had borne interest
at the Assumed Interest Rate for such period, the corresponding
percentage set forth in Exhibit B shall be decreased by the amount
which when multiplied by Lessor's Cost will equal such
differential.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC
Form 8050-2 or such other form as may be approved by the Federal
Aviation Administration on the Delivery Date for the Aircraft,
executed by Lessee in favor of the Owner Trustee and dated the
Delivery Date.
"Federal Aviation Act" means that portion of the United States
Code comprising those provisions formerly referred to as the
Federal Aviation Act of 1958, as amended, or any subsequent
legislation that amends, supplements or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to their
functions.
"Funding Loss Amount" has the meaning assigned to that term in
the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 B], dated as of the
date hereof, made by the Guarantor in favor of the Parties, as such
Guarantee may be amended or supplemented from time to time pursuant
to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of their
respective
- 6 -
<PAGE> 7
Affiliates, successors, permitted assigns, directors, officers,
employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under the
Trust Indenture, and any entity which may from time to time be
acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as a
result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust
Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to
take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture
Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation
Agreement pursuant to said Section 7, or (D) claims against the
Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents
other than a transfer of the Aircraft pursuant to Section 9, 10 or
19 of the Lease or Article IV or V of the Trust Indenture, or a
transfer of the Aircraft pursuant to Section 15 of the Lease while
an Event of Default is continuing and prior to the time that the
Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"Initial Installment" has the meaning set forth in Section
19(d) hereof.
"Interest Period" means Interest Period as defined in the
Trust Indenture.
"Interim Rent" means the rent payable for the Aircraft for the
Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the Delivery
Date and ending on and including the day immediately preceding the
Commencement Date unless earlier terminated in accordance with the
provisions hereof.
"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Lease Agreement [NW 1996 B] as originally executed
or as modified, amended or supplemented pursuant to the applicable
provisions hereof and in accordance with the Trust Agreement and
the Trust Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant to
the applicable provisions hereof.
- 7 -
<PAGE> 8
"Lease Period" means each of the consecutive semi-annual
periods throughout the Basic Term and any Renewal Term ending on a
Lease Period Date, the first such period commencing on and
including the Commencement Date.
"Lease Period Date" means July 2, 1997 and each succeeding
January 2 and July 2, to and including the last such date in the
Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A hereto, to be entered into between Lessor and
Lessee on the Delivery Date for the purpose of leasing the Aircraft
under and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with the
terms hereof.
"Lessee Documents" means the Participation Agreement, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement (insofar as it relates to the Aircraft), the FAA Bill of
Sale, the Bill of Sale, the Purchase Agreement Assignment and the
Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title or
interest affecting or in respect of the Aircraft, the Airframe, any
Engine, this Lease or the Trust Estate arising as a result of (i)
claims against Lessor, First Security Bank of Utah, National
Association, in its individual capacity, or the Owner Participant
not related to the transactions contemplated by the Operative
Documents, (ii) any act or omission of the Owner Participant,
Lessor, or First Security Bank of Utah, National Association, in
its individual capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the
Owner Participant, Lessor, or First Security Bank of Utah, National
Association, in its individual capacity, with respect to Taxes or
Expenses against which Lessee is not required to indemnify the
Owner Participant, Lessor or First Security Bank of Utah, National
Association, in its individual capacity, pursuant to Section 7 of
the Participation Agreement or (iv) claims against Lessor or the
Owner Participant arising out of any transfer by Lessor or the
Owner Participant of all or any portion of the respective interests
of Lessor or the Owner Participant in the Aircraft, the Trust
Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement,
the transfer pursuant to the Trust Indenture or a transfer of the
Aircraft pursuant to Section 9, 10 or 19 hereof or pursuant to the
exercise of the remedies set forth in Section 15 hereof, provided,
however, that any Lien which is attributable solely to First
Security Bank of Utah, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder
shall not constitute a Lessor Lien hereunder so long as (1) the
existence of such Lien poses no material risk of the sale,
forfeiture or loss of the Aircraft, (2) the existence of such Lien
does not interfere in any way with the use, possession, operation,
or
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<PAGE> 9
quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Trust
Indenture, (4) First Security Bank of Utah, National Association or
the Owner Participant, as appropriate, is diligently contesting
such Lien and (5) the existence of such Lien does not pose a
material threat of interference with the payment of Rent (other
than Excluded Payments in favor of First Security Bank of Utah,
National Association or the Owner Participant, as appropriate).
"Lessor's Cost" for the Aircraft means the amount denominated
as such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim, lease,
sublease, sub-sublease, security interest, or encumbrance of any
kind.
"Loan Participant" means each institution executing the
Participation Agreement as a Loan Participant, and its respective
successors and assigns, and any Certificate Holder; at any time
when there is only one Certificate Holder, "each Loan Participant"
shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a)
hereof.
"Majority in Interest of Certificate Holders" has the meaning
assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement and the
Consent and Agreement.
"Net Economic Return" shall have the meaning ascribed to such
term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net present value, as
of the Delivery Date, of Basic Rent set forth in Exhibit B hereto,
Special Purchase Price and Remaining Installments, discounted at an
annual interest rate of 12.0 percent on a semi-annual basis.
"OECD" means the Organization for Economic Cooperation and
Development.
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<PAGE> 10
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Lease, the Trust Indenture, the
Trust Agreement, an acceptance certificate covering the Aircraft in
the form agreed to by the Participants and Lessee, the Tax
Indemnity Agreement, the Lease Supplement covering the Aircraft,
the Trust Supplement covering the Aircraft, the Secured
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Guarantee,
the Purchase Agreement Assignment and the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated
by the Operative Documents.
"Owner Participant" means the corporation executing the
Participation Agreement as the Owner Participant and any person to
which such corporation transfers all or any portion of its right,
title and interest in and to the Trust Agreement, the Trust Estate
and the Participation Agreement, to the extent permitted by Section
8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor
Owner Trustee pursuant to Section 9.01 of the Trust Agreement, and
references to a predecessor Owner Trustee in its individual
capacity by name in the Operative Documents shall include such
successor Owner Trustee in its individual capacity from and after
such succession.
"Owner Trustee Documents" means the Participation Agreement,
the Trust Agreement, the Trust Supplement covering the Aircraft,
the Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Trust Indenture and the Secured
Certificates.
"Participants" means and includes the Loan Participants and
the Owner Participant.
"Participation Agreement" means that certain Participation
Agreement [NW 1996 B], dated as of the date hereof, among Lessee,
the Loan Participants, the Indenture Trustee, the Owner Participant
and Owner Trustee, as such Participation Agreement may be amended
or supplemented from time to time pursuant to the applicable
provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and
the Participants.
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<PAGE> 11
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines, (b)
any items leased by Lessee from a third party (other than Lessor)
and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any
Engine or so long as title thereto shall remain vested in Lessor in
accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be
paid by the Indenture Trustee to the Loan Participants, or the
holders of any outstanding Secured Certificates, the "Past Due
Rate" as defined in the Trust Indenture and (ii) with respect to
the remaining portion of any payment of Rent (and the entire amount
of any payment of Rent after the satisfaction and discharge of the
Trust Indenture), a rate per annum equal to 1% over the Base Rate.
"Permitted Lien" means any Lien referred to in clauses (i)
through (viii) of Section 6 hereof.
"Permitted Sublessee" means any manufacturer of airframes or
aircraft engines, any Affiliate of a manufacturer of airframes or
aircraft engines, or any foreign air carrier domiciled in a country
listed in Exhibit B to the Participation Agreement and regularly
engaged in the transportation of passengers or property by aircraft
or the transportation of mail by aircraft.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Prepaid Rent" has the meaning assigned in Section 3(g)
hereof.
"Purchase Agreement" means the Purchase Agreement No. 1631,
dated December 1, 1989, between the Manufacturer and Lessee
relating to the purchase by Lessee of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1996 B], dated as of the date hereof, between Lessee
and Lessor, as the same may be amended, supplemented or modified
from time to time, with a form of Consent and Agreement to be
executed by the Manufacturer attached thereto.
"Reimbursement Amount" has the meaning set forth in Section
3(g) hereof.
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<PAGE> 12
"Remaining Installments" has the meaning set forth in Section
19(d) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 hereof.
"Rent" means Interim Rent, Basic Rent and Supplemental Rent,
collectively.
"Rent Differential Amount" has the meaning set forth in
Section 3(c) hereof.
"Secured Certificates" has the meaning assigned to that term
in the Trust Indenture.
"Special Purchase Price" shall mean the amount denominated as
such in Exhibit B hereto.
"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including January 2, 2019, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit C hereto opposite the Stipulated
Loss Value Date with respect to which the amount is determined (as
such Exhibit C may be adjusted from time to time as provided in
Section 3(d) hereof and in Section 7 of the Tax Indemnity
Agreement). To the extent that the actual amount of interest paid
and to be paid on the Secured Certificates during the Interim Term
or the Lease Period in which such Stipulated Loss Value Date occurs
up to and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage set
forth in Exhibit C with respect to such Stipulated Loss Value Date
on account of such interest, the corresponding percentage set forth
in Exhibit C shall be adjusted appropriately to compensate for such
differential. "Stipulated Loss Value" as of any date after January
2, 2019 shall be the amount determined as provided in Section 19(a)
hereof.
"Stipulated Loss Value Date" means the 2nd calendar day of
each calendar month during the Interim Term, Basic Term and any
Renewal Term.
"Sublease" means any sublease permitted by the terms of
Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so long, as
such Person is in possession of the Airframe and/or any Engine
pursuant to the terms of a Sublease which is then in effect
pursuant to Section 7(b)(x) hereof.
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<PAGE> 13
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Interim Rent and Basic Rent) which Lessee
assumes or agrees to pay to Lessor or others hereunder, under the
Participation Agreement, under the Tax Indemnity Agreement or under
any of the other Operative Documents. The parties acknowledge that
Supplemental Rent is a general category and, accordingly, agree
that any provision of any Operative Document which calls for the
payment of Supplemental Rent and also calls for the payment of
specific items which are includable in Supplemental Rent is not to
be interpreted as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, the Loan
Participants and each other Certificate Holder, and each of their
respective Affiliates, successors and permitted assigns and, in the
case of the Owner Participant, directors, officers, employees,
servants and agents of the Owner Participant.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1996 B], dated as of the date hereof, between the
Owner Participant and Lessee, as originally executed or as
modified, amended or supplemented pursuant to the applicable
provisions thereof.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes
(including, without limitation, net income, gross income, gross
receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of
any nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a "TAX").
"Term" means the Interim Term, Basic Term and, if actually
entered into, any Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a)
hereof.
"Termination Value" with respect to the Aircraft as of any
date through and including January 2, 2019, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit D hereto opposite the Termination
Date with respect to which the amount is determined (as such
Exhibit D may be adjusted from time to time as provided in Section
3(d) hereof and in Section 7 of the Tax Indemnity Agreement). In
the event that the Termination Date with respect to which
Termination Value is determined is a date on which Basic Rent is
payable in advance as indicated on Exhibit B, to the extent that
the actual amount of interest paid and to be paid on the Secured
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<PAGE> 14
Certificates during the Lease Period ending on such Termination
Date is greater or less than the amount included in calculating the
corresponding percentage set forth in Exhibit D with respect to
such Termination Date on account of such interest, the
corresponding percentage set forth in Exhibit D shall be adjusted
appropriately to compensate for such differential.
"Transaction Expenses" means: (i) the reasonable and actual
fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP,
special counsel for the Indenture Trustee, such information to be
furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker,
special counsel for the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, (3) Vedder,
Price, Kaufman & Kammholz, special counsel to the Loan
Participants, such information to be furnished by the Documentation
Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee
and Guarantor, such information to be furnished by Lessee, and (5)
Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees, taxes
and other charges payable in connection with the recording or
filing of instruments and financing statements, such information to
be furnished by Lessee, (iii) the initial fee and reasonable and
actual disbursements of the Owner Trustee under the Trust
Agreement, such information to be furnished by the Owner Trustee,
(iv) the initial fee and reasonable and actual disbursements of the
Indenture Trustee under the Trust Indenture, such information to be
furnished by the Indenture Trustee, (v) the fee of BK Associates,
Inc. (or of such other appraiser as shall be acceptable to Lessee
and the Owner Participant) with respect to the appraisals of the
Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix) of the
Participation Agreement, such information to be furnished by the
Owner Participant, (vi) the reasonable and actual fees, expenses
and disbursements of Fulbright & Jaworski L.L.P., special counsel
to the Owner Participant, such information to be furnished by the
Owner Participant, (vii) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation, such
information to be furnished by Lessee, and (viii) the fee payable
to the Loan Participants on the Delivery Date.
"Transition Date" means the date designated as such in Exhibit
B hereto.
"Trust Agreement" means that certain Trust Agreement [NW 1996
B], dated as of the date hereof, between the Owner Participant and
First Security Bank of Utah, National Association, in its
individual capacity, as originally executed or as modified, amended
or supplemented pursuant to the applicable provisions thereof,
including, without limitation, supplementation thereof by one or
more Trust Supplements entered into pursuant to the applicable
provisions thereof.
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<PAGE> 15
"Trust Estate" means the Trust Estate as that term is defined
in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1996 B], dated as of the date hereof,
between Lessor and the Indenture Trustee, as originally executed or
as modified, amended or supplemented in accordance with the
provisions thereof.
"Trust Supplement" means a supplement to the Trust Agreement
and the Trust Indenture, substantially in the form of Exhibit A to
the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier as to
which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the Federal Aviation
Act, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or
in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee (or any
Sublessee) agrees to furnish the Airframe and Engines or engines
installed thereon to a third party pursuant to which such Airframe
and Engines or engines (i) shall be operated solely by regular
employees of Lessee (or any Sublessee) possessing all current
certificates and licenses that would be required under the Federal
Aviation Act or, if the Aircraft is not registered in the United
States, all certificates and licenses required by the laws of the
jurisdiction of registry, for the performance by such employees of
similar functions within the United States of America or such other
jurisdiction of registry (it is understood that cabin attendants
need not be regular employees of Lessee (or any Sublessee)) and
(ii) shall be maintained by Lessee (or any Sublessee) in accordance
with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreemen to accept the transfer of title from and simultaneously to lease to
Lessee henderunder, and Lessee hereby agrees (subject to satisfaction of the
condition set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term. The
Interim Term shall commence on the Delivery Date and end on and include the day
immediately preceding the Commencement Date unless earlier terminated pursuant
to the provisions hereof. The Basic Term shall commence on the Commencement
Date and on January 2019, or such earlier date as this Lease may be terminated
in accordance with the provisions hereof.
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<PAGE> 16
(b) Interim Rent. Lessee shall pay Interim Rent on the Commencement
Date in an amount equal to Lessor's Cost multiplied by the percentage specified
in Exhibit B hereto for Interim Rent on the Commencement Date.
Although the Interim Rent percentage set forth in Exhibit B hereto has
been compd on the assumption that the rate of interest on the Secured Certifica
will be the Assumed Interest Rate, Lessor and Lessee recognize that the ual
rate of interest on the Secured Certificates may be a rate from time to t which
may be greater or less than the Assumed Interest Rate and that the ated basis
upon which interest on the Secured Certificates will be computed l be as
provided in the Trust Indenture. Accordingly, the Interim Rent paya on the
Commencement Date shall be increased or decreased (but not below zerby the
difference between (i) the aggregate amount of interest due and payable on the
Secured Certificates on the Commencement Date relating to the period from the
Transition Date to but excluding the Commencement Date and (ii) the aggregate
amount of interest on the Secured Certificates that would have been due and
payable on the Secured Certificates on the Commencement Date relating the
period from the Transition Date to the Commencement Date if such Secured
Certificates had borne interest at the Assumed Interest Rate. If the
amount determined in accordance with clause (i) of the preceding sentence shall
be greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Interim Rent payable on the Commencement Date shall be
increased by such difference. If the amount determined in accordance with
clause (i) of the preceding sentence shall be less than the amount determined
accordance with clause (ii) of such sentence, the amount of Interim Rent pay-
able on the Commencement Date shall be decreased (but not below zero) by such
difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect to each Lease
Period during the Basic Term on each Lease Period Date during the Basic Term, in
consecutive installments in the amounts as provided in the next sentence, each
such installment to cover the Lease Period specified in Exhibit B. Each such
installment of Basic Rent shall be equal to Lessor's Cost multiplied by the
percentage for the applicable Lease Period Date specified in Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B hereto have
been computed on the assumption that the rate of interest on the Secured
Certificates throughout the Term will be 6.50% per annum, computed on the basis
of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor
and Lessee recognize that the actual rate of interest on the Secured
Certificates may be a rate from time to time which may be greater or less than
the Assumed Interest Rate and that the related basis upon which interest on the
Secured Certificates will be computed will be as provided in the Trust
Indenture. Accordingly, each installment of Basic Rent shall be increased or
decreased (but not below zero), as the case may be, by the Rent Differential
Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT"
shall mean, as of any Lease Period Date with respect to the Basic Term, the
difference between (i) the aggregate amount of interest due and payable on such
Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of
interest on the Secured Certificates that would have been due and payable on
such Lease Period Date if
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<PAGE> 17
such Secured Certificates had borne interest at the Assumed Interest Rate, in
each case for the period from and including the Lease Period Date (or the
Commencement Date in the case of the first Lease Period) next preceding
such Lease Period Date to but excluding such Lease Period Date. If, as of any
Lease Period Date, the amount determined in accordance with clause (i) of the
immediately preceding sentence shall be greater than the amount determined in
accordance with clause (ii) of such sentence, the amount of Basic Rent payable
on such Lease Period Date shall be increased by the Rent Differential Amount.
If, as of any Lease Period Date, the amount determined in accordance with such
clause (ii) shall exceed the amount determined in accordance with such clause
(i), the amount of Basic Rent due on such Lease Period Date shall be decreased
(but not below zero) by the Rent Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs other than
on April 30, 1996, or (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are determined
to be other than 1.0% of Lessor's Cost, then in each case the Basic Rent
percentages set forth in Exhibit B and Stipulated Loss Value percentages
set forth in Exhibit C, the Termination Value percentages set forth in
Exhibit D, the Special Purchase Price (subject to clause (vii) below),
the Initial Installment and the Remaining Installments shall be
recalculated by the Owner Participant, on or prior to November 15, 1996
using the same methods and assumptions used to calculate original Basic
Rent, Stipulated Loss Value and Termination Value percentages, the
Special Purchase Price, the Initial Installment and the Remaining
Installments, in order to: (1) maintain the Owner Participant's Net
Economic Return and (2) minimize the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing as contemplated by
Section 17 of the Participation Agreement, then the Basic Rent
percentages set forth in Exhibit B and Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value percentages
set forth in Exhibit D, the Special Purchase Price, the Initial
Installment and the Remaining Installments shall be recalculated
(upwards or, subject to clause (vii) below, downwards) by the Owner
Participant as contemplated by such Section to (1) maintain the Owner
Participant's Net Economic Return and (2) to the extent possible
consistent with clause (1) hereof, minimize the Net Present Value of
Rents to Lessee and (B) in the event that Lessee elects to satisfy any
indemnity obligation under the Tax Indemnity Agreement pursuant to
Section 4(e)(ii) of the Tax Indemnity Agreement, then the Basic Rent
percentages set forth in Exhibit B and the Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value percentages
set forth in Exhibit D, the Special Purchase Price, the Initial
Installment and the Remaining Installments shall be recalculated
(upwards or, subject to clause (vii) below, downwards) by Owner
Participant, using the same methods and assumptions (except to the
extent such assumptions shall be varied
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<PAGE> 18
to take into account the Loss or Foreign Tax Credit Loss (as each such
term is defined in the Tax Indemnity Agreement) that is the subject of
such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Basic Rent percentages, the
Stipulated Loss Value percentages and the Termination Value percentages,
the Special Purchase Price, the Initial Installment and the Remaining
Installments on the Delivery Date, in order to (1) maintain the Owner
Participant's Net Economic Return and (2) to the extent possible
consistent with clause (1) hereof, minimize the Net Present Value of
Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant to this
Section 3(d), the Owner Participant shall redetermine the Excess Amount
set forth in Exhibit B in a manner consistent with such recalculation.
In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value
or Termination Value percentages made pursuant to this Section 3(d)
shall take into account any decrease in the Excess Amount with respect
to the Transition Date required by the proviso to the definition of
"Excess Amount", (Y) after January 2, 1997 but prior to July 2, 1997,
the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss
Value percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated to take into
account any decrease in Excess Amount with respect to the Transition
Date that has not theretofore been taken into account in accordance with
clause (X) of this sentence, and (Z) at the time of any payment of
Stipulated Loss Value or Termination Value, the Stipulated Loss Value
percentage set forth in Exhibit C or the Termination Value percentage
set forth in Exhibit D, by reference to which the amount of such payment
is determined shall be recalculated to take into account any decrease in
the Excess Amount with respect to the Transition Date that has not
theretofore been taken into account in accordance with clause (X) or
clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess Amount,
Stipulated Loss Value and Termination Value percentages, Special
Purchase Price, Initial Installment and Remaining Installments pursuant
to this Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in Exhibit E
hereto. Such recalculated Basic Rent, Excess Amount, Stipulated Loss
Value and Termination Value percentages, Special Purchase Price, Initial
Installment and Remaining Installments shall be set forth in a Lease
Supplement or an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this
Lease to the contrary notwithstanding, each installment of Interim Rent
and Basic Rent payable hereunder, whether or not adjusted in accordance
with this Section 3(d), shall, together with the amount of the Excess
Amount in respect of the date on which such installment is payable, and
each payment of Termination Value and Stipulated Loss Value, whether or
not adjusted in accordance with this Section
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<PAGE> 19
3(d), shall, together with all other amounts (including an amount equal
to the premium, if any, payable by Lessor on the Secured Certificates)
payable simultaneously by Lessee pursuant to this Lease, in each case
be, under any circumstances and in any event, in an amount at least
sufficient to pay in full, on the date on which such amount of Rent is
due, any payments then required to be made on account of the principal
of, premium, if any, and interest on the Secured Certificates. It is
agreed that no installment of Interim Rent, Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased or
adjusted by reason of (i) any attachment or diversion of Rent on account
of Lessor Liens, (ii) any modification of the payment terms of the
Secured Certificates made without the prior written consent of Lessee or
(iii) the acceleration of any Secured Certificate or Secured
Certificates due to the occurrence of an "Event of Default" (as defined
in the Trust Indenture) which does not constitute an Event of Default
hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d)
shall be (A) in compliance with the tax law as then in effect,
including, without limitation, Rev. Proc. 75-28 as amended and then in
effect (or any successor thereto) and no such adjustment shall cause the
Lease to constitute a "disqualified leaseback or long-term agreement"
within the meaning of Section 467 of the Internal Revenue Code of 1986,
as amended, and any regulations thereunder, except to the extent that on
the Delivery Date the Lease constituted a "disqualified leaseback or
long-term agreement" under Section 467 of the Code on the Delivery Date
or was not in compliance with Rev. Proc. 75-28 and without regard to any
adjustments to Basic Rent occurring after such date and (B) subject
to verification pursuant to Exhibit E.
(vii) Notwithstanding the foregoing, no adjustment effected
pursuant to this Section 3(d) shall result in the Special Purchase
Price being decreased below $27,536,250.00.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid) promptly
to Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental
Rent constituting Stipulated Loss Value, Termination Value or Special Purchase
Price as the same shall become due and owing and all other amounts of
Supplemental Rent within five days after demand or within such other relevant
period as may be provided in any Operative Document, and in the event of any
failure on the part of Lessee to pay any Supplemental Rent when due, Lessor
shall have all rights, powers and remedies provided for herein or in any other
Operative Document or by law or equity or otherwise in the case of nonpayment of
Basic Rent. Lessee shall pay as Supplemental Rent when due any amount of
premium payable when due under the Trust Indenture and shall pay amounts equal
to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust
Indenture, as and when the same shall become due and payable. Lessee also will
pay to Lessor, or to whomsoever shall be entitled thereto, on demand, as
Supplemental Rent, to the extent permitted by applicable law, interest at the
Past Due Rate on any part of any installment of Interim Rent and Basic Rent not
paid when due for any period
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<PAGE> 20
for which the same shall be overdue and on any payment of Supplemental Rent not
paid when due for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made directly by
Lessee (whether or not any Sublease shall be in effect) by wire transfer of
immediately available funds prior to 10:30 A.M., New York time, on the date of
payment, to Lessor at its account at First Security Bank of Utah, National
Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1996 B (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby
irrevocably directs and Lessee agrees, that, unless the Indenture Trustee shall
otherwise direct, all Rent payable to Lessor and assigned to the Indenture
Trustee pursuant to the Trust Indenture shall be paid prior to 10:30 A.M., New
York time, on the due date thereof in funds of the type specified in this
Section 3(f) directly to the Indenture Trustee at its account at State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA
No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department,
Reference: Northwest/NW 1996 B (or such other account of the Indenture Trustee
in the continental United States as the Indenture Trustee shall direct in a
notice to Lessee at least 10 Business Days prior to the date such payment of
Rent is due). All payments of Supplemental Rent owing to the Indenture Trustee
or to a Loan Participant or any other Certificate Holder pursuant to the
Participation Agreement shall be made in Dollars in immediately available funds
prior to 10:30 A.M., New York time, on the due date thereof at the office of the
Indenture Trustee or at such other office of such other financial institution
located in the continental United States as the party entitled thereto may so
direct at least 10 Business Days prior to the due date thereof. All payments of
Supplemental Rent payable to the Owner Participant, to the extent that such
amounts constitute Excluded Payments (as defined in the Trust Indenture), shall
be made in Dollars in immediately available funds prior to 10:30 A.M., New York
time, on the due date thereof, to the account of the Owner Participant specified
in Schedule I to the Participation Agreement (or to such other account as may be
specified in writing by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if any date
on which a payment of Rent becomes due and payable is not a Business Day, then
such payment shall not be made on such scheduled date but shall be made on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if any, that
there shall not have been received by the Indenture Trustee to its account and
in funds of the type specified in Section 3(f) hereof by 10:30 A.M., New York
time, on the Transition Date from Lessor an amount equal to the Excess Amount
for such date, Lessee shall on the Transition Date, prepay on the Transition
Date a portion of Basic Rent equal to the Excess Amount not
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<PAGE> 21
so paid (the amount of such Basic Rent to be prepaid by Lessee being herein
called "PREPAID RENT"); provided that Lessee shall, under all circumstances and
whether or not an Event of Default shall be continuing on the Transition Date,
pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount
equal to the excess, if any, of the interest on the Secured Certificates
relating to the period from and including the Delivery Date to but excluding the
Transition Date over the Excess Amount payable on the Transition Date; provided,
further, that Lessee will also pay to the Indenture Trustee, on demand, as
Supplemental Rent, to the extent permitted by applicable law, interest at the
Past Due Rate in effect from time to time on any part of any Prepaid Rent and on
the amount, if any, payable pursuant to the immediately preceding proviso not
paid when due for any period for which the same shall be overdue. Lessor agrees
to reimburse Lessee in the manner provided in the following sentence for (x) the
Prepaid Rent so paid by Lessee, plus (y) any Supplemental Rent paid with respect
to Prepaid Rent by Lessee pursuant to this Section 3(g), plus (z) accrued
interest on the unreimbursed portion thereof at a rate equal to the Base Rate as
in effect from time to time plus 5% per annum from the date such amount is paid
by Lessee to but not including the date of each such reimbursement (such amounts
to be reimbursed being herein called the "REIMBURSEMENT AMOUNT"). Lessor shall
pay to Lessee, in funds of the type specified in Section 3(f) hereof, within
five days after Lessor, the Owner Participant and the Indenture Trustee shall
have received written notice from Lessee demanding payment, the Reimbursement
Amount. In addition, if, for any reason, Lessor shall fail to pay to Lessee the
Reimbursement Amount as above provided, Lessee shall be entitled to offsets
(without duplication) against each succeeding payment (other than as limited by
the proviso to this sentence) due from Lessee to Persons other than the Loan
Participants, the Indenture Trustee and the Owner Trustee in its individual
capacity (including, without limitation, Basic Rent, payments due under Section
9, 10, 15 and 19 hereof, payments due under the Tax Indemnity Agreement and
payments due to Persons other than the Loan Participants, the Indenture Trustee
and Lessor in its individual capacity under Section 7 of the Participation
Agreement), until Lessee has been fully reimbursed for the Reimbursement Amount;
provided, however, that in the case of any payment due from Lessee which is
distributable under the terms of the Trust Indenture, Lessee's right of offset
shall be limited to amounts distributable to Lessor thereunder. No such offset
or aggregate combined effect of separate offsets shall reduce the amount of any
installment of Interim Rent or Basic Rent to an amount insufficient, together
with the Excess Amount and all other amounts payable simultaneously by Lessee,
to pay in full the payments then required to be made on account of the principal
of and interest on (and premium, if any, due with respect to) the Secured
Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR LEASES AND
LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS." LESSEE HAS
SELECTED THE AIRCRAFT AND THE MANUFACTURER THEREOF AND NEITHER LESSOR, THE
INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR
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<PAGE> 22
A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
PART THEREOF, except that First Security Bank of Utah, National Association, in
its individual capacity, (i) represents and warrants that on the Delivery Date,
Lessor shall have received whatever title to the Aircraft was conveyed to it by
Lessee, (ii) represents and warrants that on the Delivery Date the Aircraft
shall be free of Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens) attributable
to it, (iii) covenants that it will not, through its own actions or inactions,
interfere in Lessee's quiet enjoyment of the Aircraft during the Term, (iv)
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine or any portion of the Trust Estate and (v) represents and warrants
that it is a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement, and agrees that if at any time
it shall cease to be a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement it will promptly
resign as Owner Trustee (if and so long as such citizenship is necessary under
the Federal Aviation Act as in effect at such time or, if it is not necessary,
if and so long as the Owner Trustee's citizenship would have any material
adverse effect on the Loan Participants, the Owner Participant or Lessee),
effective upon the appointment of a successor Owner Trustee in accordance with
Section 9.01 of the Trust Agreement. None of the provisions of this Lease shall
be deemed to amend, modify or otherwise affect the representations, warranties
or other obligations (express or implied) of the Manufacturer, any subcontractor
or supplier of the Manufacturer with respect to the Airframe, the Engines or any
Parts, or to release the Manufacturer, or any such subcontractor or supplier,
from any such representation, warranty or obligation. Lessor covenants that
during the Term (so long as this Lease shall not have been declared (or deemed
to be declared) in default pursuant to Section 15 hereof) it will not, through
its own actions or inactions, interfere in the quiet enjoyment of the Aircraft
in accordance with the terms hereof by Lessee or any Sublessee and agrees that
it will not directly or indirectly create, incur, assume or suffer to exist any
Lessor Lien attributable to it on or with respect to the Airframe or any
Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return. Unless
purchased by Lessee pursuant to Section 19 hereof, upon the termination of this
Lease at the end of the Basic Term or any Renewal Term or pursuant to Section
9(c) or 15, Lessee, at its own expense, will return the Airframe to Lessor at a
major airport in one of the forty-eight contiguous states of the United States
chosen by Lessee and reasonably acceptable to Lessor, and Lessee will give
Lessor at least fifteen (15) days' prior written notice of the place of such
return; provided, however, that if Lessor shall have made the request for
storage pursuant to Section 5(d) hereof, Lessee shall return the Airframe to
Lessor at the site of the storage at the end of the storage period, provided
that the return conditions shall be satisfied on the date the Aircraft is placed
in storage. At the time of such return, Lessee will, unless otherwise
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<PAGE> 23
requested by Lessor at least ninety (90) days prior to the return hereunder,
cause the Aircraft, if it is not then so registered, to be registered under the
laws of the United States with the Federal Aviation Administration in the name
of the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if such registration is prohibited by reason of
the failure of Lessor or its designee to be eligible on such date to own an
aircraft registered with the Federal Aviation Administration; the Airframe will
be fully equipped with the Engines (or other Pratt & Whitney Model PW2037
engines or two engines of the same or another manufacturer of not less than
equivalent utility, value and remaining useful life, and suitable for
installation and use on the Airframe without impairing the value, utility or
remaining useful life of the Aircraft; provided that both engines shall be of
the same make and model) duly installed thereon. Also, at the time of such
return, such Airframe and Engines or engines (i) shall be certified (or, if not
then registered under the Federal Aviation Act, shall be eligible for
certification) as an airworthy aircraft by the Federal Aviation Administration
consistent with use in domestic passenger service in the United States, (ii)
shall be free and clear of all Liens (other than Lessor Liens (including for
this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens)) and rights of third parties under pooling,
interchange, overhaul, repair or other similar agreements or arrangements,
(iii) shall be in as good an operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, or, in the case of any such engines
owned by Lessee, shall have a value, utility and remaining useful life at least
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit F.
During the last six (6) months of the Term (unless Lessee shall have
elected to purchase the Aircraft or renew this Lease in accordance with the
terms of this Lease), with reasonable notice, Lessee will cooperate, and cause
any Sublessee to cooperate, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating thereto, provided that such cooperation shall not interfere with the
operation or maintenance of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
to Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
title) bill of sale including as to the absence of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) with respect to each such engine, in form and
substance satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose
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<PAGE> 24
Liens that would be Lessor Liens but for the proviso in the definition of Lessor
Liens), by Lessor to Lessee or its designee of all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft but not
installed on the Airframe at the time of the return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any termination
of this Lease in accordance with paragraph (a) of this Section 5, (i) Lessor
shall pay Lessee, as compensation for any fuel or oil contained in the fuel or
oil tanks of such Airframe, the value of such fuel or oil at the price paid by
Lessee for such fuel or oil, as the case may be, and (ii) Lessee shall deliver
or cause to be delivered to Lessor all logs, manuals and data and inspection,
modification and overhaul records required to be maintained with respect thereto
under applicable rules and regulations of each country under the laws of which
the Aircraft has been registered during the period of operation thereof.
(d) Storage Upon Return. If, at least thirty (30) days prior to
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with (i) free parking facilities for the
Aircraft (maintenance costs and other out-of-pocket costs other than parking
fees to be for the account of Lessor) for a period not exceeding thirty (30)
days commencing on the date of such termination and (ii) parking facilities for
the Aircraft (maintenance costs, other out-of-pocket costs and parking fees to
be for the account of Lessor) for a period not exceeding an additional thirty
(30) days commencing at the end of such initial thirty (30) day period, in each
case at a location in the continental United States selected by Lessee used as a
location for the parking or storage of aircraft; provided that Lessee shall have
no obligation to move the Aircraft from such location during the storage
periods. Lessee will maintain insurance for the Aircraft during such period not
exceeding sixty (60) days and be reimbursed by Lessor for the premiums thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Aircraft, title
thereto or any interest therein or in this Lease, except (i) the respective
rights of Lessor as owner of the Aircraft and Lessee as herein provided, the
Lien of the Trust Indenture, and any other rights existing pursuant to the
Operative Documents, (ii) the rights of others under agreements or arrangements
to the extent permitted by the terms of Sections 7(b) and 8(b) hereof, (iii)
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Loan Participant Liens, and
Indenture Trustee's Liens, (iv) Liens for taxes of Lessee (or any Sublessee)
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve any material risk of the sale,
forfeiture or loss of the Airframe or any Engine or any interest therein or, so
long as any Secured Certificates shall be outstanding, adversely affect the Lien
of the Trust Indenture, (v) materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising in the ordinary course of Lessee's (or,
if a Sublease is then in effect, the Sublessee's) business (including those
arising under maintenance agreements entered into in the ordinary course of
business) securing obligations that are not overdue for a period of more than
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<PAGE> 25
forty-five (45) days or are being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or any interest therein
or, so long as any Secured Certificates shall be outstanding, adversely affect
the Lien of the Trust Indenture, (vi) Liens arising out of any judgment or award
against Lessee (or any Sublessee), unless the judgment secured shall not, within
forty-five (45) days after the entry thereof, have been discharged, vacated,
reversed or execution thereof stayed pending appeal or shall not have been
discharged, vacated or reversed within forty-five (45) days after the expiration
of such stay so long as such judgment does not involve any material risk of the
sale, forfeiture or loss of the Aircraft, or any Engine or any interest therein,
and (vii) any other Lien with respect to which Lessee (or any Sublessee) shall
have provided a bond, cash collateral or other security adequate in the
reasonable opinion of Lessor. Lessee will promptly, at its own expense, take (or
cause to be taken) such actions as may be necessary duly to discharge any such
Lien not excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION AND
SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) forthwith upon
the delivery thereof hereunder, cause the Aircraft to be duly registered in the
name of Lessor, and, subject to the second paragraph of this Section 7(a) and
Section 8(f) of the Participation Agreement, to remain duly registered in the
name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and Lessee shall
cause the Trust Indenture to be duly recorded and maintained of record as a
first mortgage on the Aircraft; (ii) maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) the Aircraft so as to
keep the Aircraft in as good an operating condition as delivered to Lessee
hereunder, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Boeing
757-200 aircraft powered by engines of the same type as those with which the
Airframe shall be equipped at the time of such grounding and registered in the
United States have been grounded by the FAA (although such certification need
actually be maintained only during such periods as the Aircraft is registered in
the United States), or the applicable laws of any other jurisdiction in which
the Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, utilizing, except during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by Lessee with respect to similar aircraft operated by
Lessee in similar circumstances and utilizing, during any period that a Sublease
is in effect, the same manner and standard of maintenance, service, repair or
overhaul used by the Sublessee with respect to similar aircraft operated by the
Sublessee in similar circumstances and without in any case discriminating
against the Aircraft by reason of its leased status; provided, however, that in
all circumstances the Aircraft shall be
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<PAGE> 26
maintained by Lessee (or any Sublessee) in accordance with maintenance standards
required by, or substantially equivalent to those required by, the FAA or the
central civil aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom; (iii) maintain or cause to be maintained all
records, logs and other materials required to be maintained in respect of the
Aircraft by the FAA or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered (which records, logs
and other materials, as between Lessor and Lessee and all parties claiming
through Lessee, shall be the property of Lessor but shall be maintained by
Lessee during the Term and shall become the property of Lessee upon Lessee's
purchase of the Aircraft pursuant to the terms of this Lease or upon the
occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof);
and (iv) promptly furnish or cause to be furnished to Lessor and the Owner
Participant such information as may be required to enable Lessor to file any
reports required to be filed by Lessor or the Owner Participant with any
governmental authority because of Lessor's ownership of the Aircraft. (II)
Operation. Lessee will not maintain, use, service, repair, overhaul or operate
the Aircraft (or permit any Sublessee to maintain, use, service, repair,
overhaul or operate the Aircraft) in violation of any law or any rule,
regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Lessor or its right, title and interest in the
Aircraft or, so long as any Secured Certificates shall be outstanding, the first
priority Lien of the Trust Indenture and does not involve any material risk of
sale, forfeiture or loss of the Aircraft or any material risk of civil liability
or any risk of criminal liability being imposed on Lessor or the Owner
Participant. Lessee will not operate the Aircraft, or permit any Sublessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 11; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in the
ordinary course of the regular operations of Lessee (or any Sublessee) and in
each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon compliance with
all of the terms of Section 8(f) of the Participation Agreement, shall, at the
request and sole expense of Lessee, cooperate with Lessee to take all actions
required to change the registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a) or 14(e) or Event of Default shall have occurred and be continuing
at the time of such sublease, delivery, transfer or relinquishment of
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<PAGE> 27
possession or installation or such Wet Lease and no Default of the type
referred to in Section 14(b) shall have occurred and be continuing at the time
of such sublease, and so long as the action to be taken shall not deprive the
Indenture Trustee of the perfected first priority lien of the Trust Indenture
on the Airframe or (subject to the further proviso (B) to clause (i) of this
Section 7(b)) any Engine, and so long as Lessee (or any Sublessee) shall comply
with the provisions of Sections 7(a) and 11 hereof, Lessee may, without the
prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines then
installed thereon to normal interchange agreements or any Engine to
normal pooling or similar arrangements, in each case customary in
the airline industry and entered into by Lessee (or any Sublessee)
in the ordinary course of its business; provided that (A) no such
agreement or arrangement contemplates, requires or results in the
transfer of title to the Airframe, (B) if Lessor's title to any
Engine shall be divested under any such agreement or arrangement,
such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause Sublessee
to) comply with Section 10(b) hereof in respect thereof, and (C)
any interchange agreement to which the Airframe may be subject
shall be with a U.S. Air Carrier or a foreign air carrier domiciled
in a country listed on Exhibit B to the Participation Agreement, in
either case not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such interchange agreement is entered into;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service,
repair, maintenance or overhaul work on the Airframe or Engine or
any part of any thereof or for alterations or modifications in or
additions to such Airframe or Engine to the extent required or
permitted by the terms of Section 8(c) hereof;
(iii) install an Engine on an airframe owned by Lessee (or any
Sublessee) free and clear of all Liens, except: (A) Permitted
Liens and those which apply only to the engines (other than
Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety),
(B) the rights of third parties under interchange agreements which
would be permitted under clause (i) above, provided that Lessor's
title to such Engine and, if any Secured Certificates shall be
outstanding, the first priority Lien of the Trust Indenture shall
not be divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards this
clause (C)) such mortgage liens or other security interests
effectively provide that such Engine shall not become subject to the
lien of such mortgage or security interest, notwithstanding the
installation thereof on such airframe;
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<PAGE> 28
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x)
such airframe is free and clear of all Liens, except: (A) the
rights of the parties to the lease or conditional sale or other
security agreement covering such airframe, or their assignees, and
(B) Liens of the type permitted by subparagraph (iii) of this
paragraph (b) and (y) such lease, conditional sale or other
security agreement effectively provides that such Engine shall not
become subject to the lien of such lease, conditional sale or other
security agreement, notwithstanding the installation thereof on
such airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and
removed from the Airframe or any Engine to any pooling arrangement
referred to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program
and transfer (or permit any Sublessee to transfer) possession of
the Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine
to the Civil Reserve Air Fleet Program in any contract year and
provide Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States
Air Force to whom notice must be given pursuant to Section 15
hereof, and (B) promptly notify Lessor upon transferring possession
of the Airframe or any Engine to the United States of America or
any agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be
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<PAGE> 29
given prior to entering into such Wet Lease, if practicable, but in
any event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by the Owner
Participant and the Indenture Trustee, in their sole discretion, or
(3) after the Depreciation Period, any Permitted Sublessee if (A)
in any such case, the Sublessee under such sublease is not subject
to a proceeding or final order under applicable bankruptcy,
insolvency or reorganization laws on the date such sublease is
entered into, (B) in the event that the Sublessee under such
sublease is a foreign air carrier or Person based in a country
other than the United States (other than a foreign air carrier
principally based in Taiwan), the United States maintains
diplomatic relations with the country in which such proposed
Sublessee is principally based at the time such sublease is entered
into (or, in the case of a sublease to a proposed Sublessee
principally based in Taiwan, maintains diplomatic relations at
least as good as those in effect on the Delivery Date) and (C) in
the event that the Sublessee under such sublease is a foreign air
carrier or Person based in a country other than the United States,
prior to the effectiveness of such sublease Lessor and the
Indenture Trustee shall have received an opinion (in form and
substance reasonably acceptable to Lessor) of counsel to Lessee
(reasonably acceptable to Lessor) to the effect that (I) the terms
of the proposed sublease will be legal, valid, binding and (subject
to customary exceptions) enforceable against the proposed Sublessee
in the country in which the proposed Sublessee is principally
based, (II) there exist no possessory rights in favor of the
Sublessee under such Sublease under the laws of such Sublessee's
country of domicile that would, upon bankruptcy or insolvency of or
other default by Lessee and assuming at such time such Sublessee is
not insolvent or bankrupt, prevent the return or repossession of
the Aircraft in accordance with the terms of this Lease, (III) the
laws of such Sublessee's country of domicile require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of
use of the Aircraft in the event of the requisition by such
government of such use, (IV) the laws of such Sublessee's country
of domicile would give recognition to Lessor's title to the
Aircraft, to the registry of the Aircraft in the name of Lessor (or
Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as
appropriate) and to the Lien of the Trustee Indenture, and (V) all
filings, if any, required to be made in such jurisdiction in
connection with the execution of such sublease in order to protect
the interest of Lessor in the Aircraft have been made, provided,
however, that no sublease entered into pursuant to this clause (x)
shall extend beyond the expiration of the Basic Term
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<PAGE> 30
or any Renewal Term then in effect unless Lessee shall have
irrevocably committed to purchase the Aircraft.
The rights of any Sublessee or other transferee who receives possession
by reason of a transfer permitted by this paragraph (b) (other than the
transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the
covenants contained in Section 7(a) hereof and Lessor's rights to repossession
pursuant to Section 15 hereof and to avoid such Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and the terms of any such Sublease shall
not permit any Sublessee to take any action not permitted to be taken by Lessee
in this Lease with respect to the Aircraft. No pooling agreement, sublease or
other relinquishment of possession of the Airframe or any Engine or Wet Lease
shall in any way discharge or diminish any of Lessee's obligations to Lessor
hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any
sublease permitted under Section 7(b) shall expressly prohibit any further
sub-sublease by the Sublessee. Lessor agrees, for the benefit of Lessee (and
any Sublessee) and for the benefit of any mortgagee or other holder of a
security interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee
(or any Sublessee) and any conditional vendor of any engine (other than an
Engine) purchased by Lessee (or any Sublessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that none of Lessor,
its successors or assigns will acquire or claim, as against Lessee (or any
Sublessee) or any such mortgagee, lessor or conditional vendor or other holder
of a security interest or any successor or assignee of any thereof, any right,
title or interest in such engine as the result of such engine being installed
on the Airframe; provided, however, that such agreement of Lessor shall not be
for the benefit of any lessor or secured party of any airframe (other than the
Airframe) leased to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security agreement or for the
benefit of any mortgagee of or any other holder of a security interest in an
airframe owned by Lessee (or any Sublessee), unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against Lessor, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Sublease to a
U.S. Air Carrier hereunder (such notice to be given not later than five days
prior to entering into such Sublease, if practicable, but in any event promptly
after entering into any such Sublease) and written notice of any Sublease to a
Permitted Sublessee hereunder (such notice to be given not later than ten (10)
days prior to entering into such Sublease) and (ii) a copy of each Sublease
which has a term of more than three months. Lessee shall pay all reasonable
fees and expenses of Lessor and the Owner Participant (including its counsel)
in connection with any sublease or proposed sublease under Section 7(b)(x).
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<PAGE> 31
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be placed on the Airframe or on any
Engine as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Lessee (or any Sublessee)
from placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS
AND ADDITIONS. (a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace or cause to be replaced all Parts which may from time to
time be incorporated or installed in or attached to the Airframe or any Engine
and which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use
for any reason whatsoever, except as otherwise provided in paragraph (c) of this
Section 8 or if the Airframe or an Engine to which a Part relates has suffered
an Event of Loss. In addition, Lessee (or any Sublessee) may, at its own cost
and expense, remove in the ordinary course of maintenance, service, repair,
overhaul or testing, any Parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use, provided that Lessee (or any Sublessee), except as otherwise
provided in paragraph (c) of this Section 8, will, at its own cost and expense,
replace such Parts as promptly as practicable. All replacement Parts shall be
free and clear of all Liens (except for Permitted Liens and pooling arrangements
to the extent permitted by paragraph (b) of this Section 8 and except in the
case of replacement property temporarily installed on an emergency basis) and
shall be in as good operating condition as, and shall have a value and utility
at least equal to, the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof. Except as
otherwise provided in paragraph (c) of this Section 8, all Parts at any time
removed from the Airframe or any Engine shall remain the property of Lessor, no
matter where located, until
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<PAGE> 32
such time as such Parts shall be replaced by Parts which have been
incorporated or installed in or attached to the Airframe or such Engine and
which meet the requirements for replacement Parts specified above. Immediately
upon any replacement part becoming incorporated or installed in or attached to
the Airframe or any Engine as above provided, without further act (subject only
to Permitted Liens and any pooling arrangement to the extent permitted by
paragraph (b) of this Section 8 and except in the case of replacement property
temporarily installed on an emergency basis), (i) title to such replacement Part
shall thereupon vest in Lessor, (ii) such replacement Part shall become subject
to this Lease and be deemed part of the Airframe or such Engine for all purposes
hereof to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine, and (iii) title to the replaced Part
shall thereupon vest in Lessee (or, if a Sublease is then in effect, any
Sublessee), free and clear of all rights of Lessor, and shall no longer be
deemed a Part hereunder. Lessee represents and warrants that on the Delivery
Date no appliance, part, instrument, appurtenance, accessory, furnishing or
other equipment on the Aircraft which is necessary for navigation of the
Aircraft has been leased from any Person other than Lessor.
(b) Pooling of Parts. Any Part removed from the Airframe or any Engine
as provided in paragraph (a) of this Section 8 may be subjected by Lessee (or
any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee)
is a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or Engine a further replacement
Part owned by Lessee (or any Sublessee) free and clear of all Liens except
Permitted Liens (other than pooling arrangements) and by causing title to such
further replacement Part to vest in Lessor in accordance with such paragraph
(a).
(c) Alterations, Modifications and Additions. Lessee, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any applicable regulatory agency
or body of any other jurisdiction in which the Aircraft may then be registered
as permitted by Section 8(f) of the Participation Agreement regardless of upon
whom nominally imposed; provided, however, that Lessee (or, if a Sublease is
then in effect, any Sublessee) may, in good faith, contest the validity or
application of any such law, rule, regulation or order in any reasonable manner
which does not materially adversely affect Lessor or its right, title and
interest in the Aircraft or, so long as any Secured Certificates are
outstanding, the Indenture Trustee and does not involve any material risk of
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<PAGE> 33
sale, forfeiture or loss of the Aircraft or any material risk of civil liability
or any risk of criminal liability being imposed on Lessor; provided further,
that no appliance, part, instrument, appurtenance, accessory, furnishing or
other equipment of whatever nature relating to such alteration, modification or
addition may be leased from any Person other than Lessor. In addition, Lessee
(or any Sublessee), at its own expense, may from time to time add further parts
or accessories and make such alterations and modifications in and additions to
the Airframe or any Engine as Lessee (or any Sublessee) may deem desirable in
the proper conduct of its business, including, without limitation, removal of
Parts which Lessee (or any Sublessee) has determined in its reasonable judgment
to be obsolete or no longer suitable or appropriate for use on the Airframe or
such Engine (such parts, "OBSOLETE PARTS"); provided that no such alteration,
modification or addition shall diminish the value, utility or remaining useful
life of the Airframe or such Engine below the value, utility or remaining
useful life thereof immediately prior to such alteration, modification or
addition, assuming the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Lease, except that the value (but
not the utility or remaining useful life) of the Airframe or any Engine may be
reduced by the value of Obsolete Parts which shall have been removed so long as
the aggregate original cost of all Obsolete Parts which shall have been removed
and not replaced shall not exceed $400,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (the "ADDITIONAL PARTS") shall,
without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such Additional Part (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or substitution for, any such
Part, (ii) is not required to be incorporated or installed in or attached or
added to the Airframe or any Engine pursuant to the terms of Section 7 hereof or
the first sentence of this paragraph (c) and (iii) can be removed from the
Airframe or such Engine without diminishing or impairing the value, utility or
remaining useful life which the Airframe or such Engine would have had at the
time of removal had such alteration, modification or addition not occurred,
assuming that such Airframe or Engine was in the condition and repair required
to be maintained by the terms hereof. Upon the removal by Lessee (or
Sublessee) of any Part as provided above, title thereto shall, without further
act, vest in Lessee (or any Sublessee, as the case may be) and such Part shall
no longer be deemed part of the Airframe or Engine from which it was removed.
Any Part not removed by Lessee (or any Sublessee) as above provided prior to the
return of the Airframe or Engine to Lessor hereunder shall remain the property
of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on any
Lease Period Date occurring on or after the fifth anniversary of the Delivery
Date if Lessee shall have made the good faith determination, which shall be
evidenced by a resolution duly adopted by its Board of Directors (or the
Executive Committee thereof), that the Aircraft is obsolete or surplus to its
needs.
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<PAGE> 34
(3) Lessee shall give to Lessor at least ninety (90) days' and no more
than 365 days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) that Lessee has determined that the Aircraft is obsolete or surplus to its
needs. Any Termination Notice shall become irrevocable ten (10) days prior to
the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee shall have
exercised its right to terminate this Lease under Section 9(a)(2), then during
the period from the giving of the notice referred to in Section 9(a)(3) until
the proposed Termination Date (unless Lessee shall have revoked the Termination
Notice specifying such proposed Termination Date), Lessee, as agent for Lessor
and at no expense to Lessor, shall use its best efforts to obtain bids in the
worldwide market for the purchase of the Aircraft and, in the event it receives
any bid, Lessee shall, within five Business Days after receipt thereof and at
least ten Business Days prior to the proposed Termination Date, certify to
Lessor in writing the amount and terms of such bid, and the name and address of
the party or parties (who shall not be Lessee or any Affiliate of Lessee or any
Person with whom Lessee or any such Affiliate has an arrangement or
understanding regarding the future use of the Aircraft by Lessee or any such
Affiliate but who may be the Owner Participant, any Affiliate thereof or any
Person contacted by the Owner Participant) submitting such bid. After Lessee
shall have certified to Lessor all bids received, the Owner Participant, any
Affiliate thereof or any Person contacted by the Owner Participant may submit a
further bid or bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date). Subject to the
next succeeding sentence, on or before the Termination Date, subject to the
release of all mortgage and security interests with respect to the Aircraft
under the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
Aircraft to be delivered, to the bidder(s), if any, which shall have submitted
the highest bid therefor at least ten (or, in the case of the Owner Participant,
any Affiliate thereof, or Person contacted by the Owner Participant, five)
Business Days prior to such Termination Date, in the same manner and in the same
condition and otherwise in accordance with all the terms of this Lease as if
delivery were made to Lessor pursuant to Section 5, and shall duly transfer to
Lessor title to any engines not owned by Lessor all in accordance with the terms
of Section 5, (2) Lessor shall comply with the terms of the Trust Indenture
relating to the release of the Aircraft from the Lien of the Trust Indenture and
shall, without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), subject to prior or concurrent payment by
Lessee of all amounts due under clause (3) of this sentence, sell all of
Lessor's right, title and interest in and to the Aircraft for cash in Dollars to
such bidder(s), the total sales price realized at such sale to be retained by
Lessor, and (3) Lessee shall simultaneously pay or cause to be paid to Lessor in
funds of the type specified in Section 3(f) hereof, an amount equal to the sum
of (A) the excess, if any, of (i) the Termination Value for the Aircraft,
computed as of the Termination Date, over (ii) the
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<PAGE> 35
net sale price of the Aircraft sold by Lessor after deducting the reasonable
expenses incurred by Lessor and the Owner Participant in connection with such
sale, and (B) all unpaid Basic Rent with respect to the Aircraft due prior to
such Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect to
the Aircraft, including, without limitation, the premium and Funding Loss
Amount, if any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Without duplication of any
amounts otherwise paid or withheld pursuant to the preceding sentence in the
event of a sale, Lessee agrees to pay all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable counsel fees and
disbursements) of Lessor and the Owner Participant in connection therewith.
Notwithstanding the second preceding sentence, Lessor may, if Lessee has not
revoked the Termination Notice, elect to retain title to the Aircraft. If
Lessor so elects, Lessor shall give to Lessee written notice of such election at
least five Business Days prior to the Termination Date accompanied by an
irrevocable undertaking by the Owner Participant to make available to the Lessor
for payment to the Indenture Trustee on the Termination Date the amount required
to pay in full the unpaid principal amount of the Secured Certificates
outstanding on the Termination Date plus interest accrued thereon through the
Termination Date and, without affecting the obligations of Lessee in respect of
such amounts under the second following sentence, together with the premium and
Funding Loss Amount, if any, due on the Secured Certificates. Upon receipt of
notice of such an election by Lessor and the accompanying undertaking by the
Owner Participant, Lessee shall cease its efforts to obtain bids as provided
above and shall reject all bids theretofore or thereafter received. On the
Termination Date, Lessor shall pay in full the unpaid principal amount of the
Secured Certificates outstanding on the Termination Date plus interest accrued
thereon through the Termination Date together with all premium and Funding Loss
Amount, if any, due on the Secured Certificates and, so long as the Secured
Certificates are paid as aforesaid, Lessee shall deliver the Airframe and
Engines or engines to Lessor in accordance with Section 5 and shall pay all
Basic Rent due prior to the Termination Date and, if such Basic Rent is payable
in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all Supplemental Rent (other than Termination Value) due
on or prior to the Termination Date, including Supplemental Rent of the type
described in the second sentence of Section 3(e). If no sale shall have
occurred on the Termination Date and Lessor has not made the payment
contemplated by the preceding sentence and thereby caused this Lease to
terminate or if Lessee revokes its Termination Notice, this Lease shall continue
in full force and effect as to the Aircraft, Lessee shall pay the reasonable
costs and expenses (including reasonable counsel fees and disbursements)
incurred by the Owner Participant, the Indenture Trustee and Lessor (unless such
failure to terminate the Lease is a consequence of the failure of Lessor or the
Owner Participant without due cause to make, or cause to be made, the payment
referred to in the immediately preceding sentence, in which case Lessee shall
pay only the reasonable costs and expenses of the Indenture Trustee), if any, in
connection with preparation for such sale and Lessee may give one or more
additional Termination Notices in accordance with Section 9(a)(2), subject
to the last
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<PAGE> 36
sentence of this Section 9(c). In the event of any such sale or such retention
of the Aircraft by Lessor and upon compliance by Lessee with the provisions of
this paragraph, the obligation of Lessee to pay Basic Rent or any other amounts
hereunder (but without affecting the provisions of Section 7(b), 7(c) or 15(b)
of the Participation Agreement) shall cease to accrue and this Lease shall
terminate. Lessor may, but shall be under no duty to, solicit bids, inquire
into the efforts of Lessee to obtain bids or otherwise take any action in
connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft,
against receipt of the payments provided herein. Lessee may revoke a
Termination Notice given pursuant to Section 9(a)(2) no more than two times
during the Term.
(d) Termination as to Engines. So long as no Event of Default shall
have occurred and be continuing, Lessee shall have the right at its option at
any time during the Term, on at least thirty (30) days' prior written notice, to
terminate this Lease with respect to any Engine. In such event, and prior to
the date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine and shall indemnify the Owner
Participant for any adverse tax consequences resulting from such substitution,
and Lessor shall transfer such right, title and interest as it may have to the
replaced Engine as provided in Section 5(b). No termination of this Lease with
respect to any Engine as contemplated by this Section 9(d) shall result in any
reduction of Interim Rent or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of Loss
with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) the third Business Day following the receipt of
insurance proceeds in respect of such occurrence (but not earlier
than thirty (30) days after such occurrence) (the "LOSS PAYMENT
DATE") Lessee shall pay or cause to be paid to Lessor in funds of
the type specified in Section 3(f) hereof, an amount equal to the
Stipulated Loss Value of the Aircraft corresponding to the
Stipulated Loss Value Date occurring on or immediately following
the Loss Payment Date; provided, however, that if the Commencement
Date or a Lease Period Date shall occur prior to the Loss Payment
Date with respect to which Stipulated Loss Value is determined,
Lessee shall pay on the Commencement Date or such Lease Period Date
an amount equal to the Interim Rent or Basic Rent that would have
been due on the
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<PAGE> 37
Commencement Date or such Lease Period Date if such Event of Loss
had not occurred, or
(ii) so long as no Default of the type referred to in Section
14(a), 14(b) or 14(e) or Event of Default shall have occurred and
be continuing, substitute an aircraft or an airframe or an airframe
and one or more engines, as the case may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor on the
Business Day next succeeding the 120th day following the occurrence of such
Event of Loss the amount specified in clause (i) above.
At such time as Lessor shall have received the amounts specified in
subparagraph (i) above, together with all other amounts that then may be due
hereunder (including, without limitation, all Basic Rent due on or before the
Stipulated Loss Value Date by reference to which the Stipulated Loss Value is
calculated for the Loss Payment Date (excluding Basic Rent payable in advance on
such Stipulated Loss Value Date) and all Supplemental Rent, including of the
type described in the second sentence of Section 3(e)), under the Participation
Agreement and under the Tax Indemnity Agreement, (1) the obligation of Lessee to
pay the installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
Termination Value shall cease to accrue (but without affecting the provisions of
Section 7(b), 7(c) or 15(b) of the Participation Agreement), (2) this Lease
shall terminate, (3) Lessor will comply with the terms of the Trust Indenture
relating to the release of the Aircraft from the Lien of the Trust Indenture and
transfer to or at the direction of Lessee, without recourse or warranty (except
as to the absence of Lessor Liens, including for this purpose Liens that would
be Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to the Airframe and any Engines
subject to such Event of Loss, as well as any Engines not subject to such Event
of Loss, and furnish to or at the direction of Lessee a bill of sale in form and
substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such
transfer, and (4) Lessee will be subrogated to all claims of Lessor, if any,
against third parties, for damage to or loss of the Airframe and any Engines
which were subject to such Event of Loss to the extent of the then insured value
of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, a Boeing model
aircraft (or a Boeing model airframe or a Boeing model airframe and one or more
engines which, together with the Engines constituting a part of the Aircraft but
not installed thereon at the time of such Event of Loss constitute the Aircraft)
free and clear of all Liens (other than Permitted Liens) and having a value,
utility and remaining useful life at least equal to the Aircraft subject to such
Event of Loss assuming that the Aircraft had been maintained in accordance with
this Lease; provided that any aircraft, airframe or engine so substituted
hereunder shall be of the same or improved model as those initially leased
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<PAGE> 38
hereunder and (B) prior to or at the time of any such substitution, Lessee (or
any Sublessee), at its own expense, will (1) furnish Lessor with a full warranty
bill of sale and a Federal Aviation Administration bill of sale, in form and
substance reasonably satisfactory to Lessor, evidencing such transfer of title,
(2) cause a Lease Supplement and a Trust Supplement to be duly executed by
Lessee and filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in which the
Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (3) cause a financing statement or statements with
respect to such substituted property to be filed in such place or places as are
deemed necessary or desirable by Lessor to perfect its and the Indenture
Trustee's interest therein and herein, (4) furnish Lessor with such evidence of
compliance with the insurance provisions of Section 11 with respect to such
substituted property as Lessor may reasonably request, (5) furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture in form and substance reasonably
satisfactory to Lessor, and Lessor simultaneously will comply with the terms of
the Trust Indenture relating to the release of the Aircraft from the Lien of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to Lessee
(or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion
of counsel (which shall be Cadwalader, Wickersham & Taft and, if not, other
counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the substitute aircraft, provided that such
opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, (7) furnish Lessor with an opinion of counsel (which
may be the General Counsel or an Associate General Counsel of Lessee, or other
counsel chosen by Lessee and reasonably acceptable to Lessor) to the effect that
the full warranty bill of sale referred to in clause (1) constitutes an
effective instrument for the conveyance of title to the replacement aircraft,
airframe, engine or engines, (8) furnish Lessor (at Lessor's sole cost and
expense) with a certificate of an independent aircraft appraiser reasonably
acceptable to Lessor certifying that such replacement aircraft, airframe, engine
or engines complies with the value, utility and remaining useful life
requirements set forth above in this sentence, (9) furnish Lessor with an
opinion of tax counsel chosen by the Owner Participant and reasonably acceptable
to Lessee as to the federal income tax consequences (without any requirement as
to the nature of such federal income tax consequences) to Lessor and the Owner
Participant of such substitution, and shall indemnify the Owner Participant for
any adverse tax consequences resulting from such substitution, and (10) Lessee
will be subrogated to all claims of Lessor, if any, against third parties for
damage to or loss of the Airframe and any Engine which were subject to such
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<PAGE> 39
Event of Loss to the extent of the then insured value of the Aircraft. For all
purposes hereof, the property so substituted shall after such transfer be deemed
part of the property leased hereunder and shall be deemed an "Aircraft",
"Airframe" and "Engine", as the case may be, as defined herein. No Event of
Loss with respect to the Airframe or the Airframe and the Engines or engines
then installed thereon for which substitution has been elected pursuant to
Section 10(a)(ii) hereof shall result in any reduction in Interim Rent or
Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of an
Event of Loss with respect to an Engine under circumstances in which there has
not occurred an Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event, within fifteen days after such occurrence) give
Lessor written notice thereof and shall, within sixty (60) days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
replacement for the Engine with respect to which such Event of Loss occurred,
title to another Pratt & Whitney Model PW2037 engine (or engine of the same or
another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; provided that both Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine, (ii)
cause a Lease Supplement and Trust Supplement to be duly executed by Lessee and
to be filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in which the
Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture in form and substance reasonably acceptable
to Lessor and (iv) furnish Lessor with an opinion of counsel (which may be the
General Counsel or an Associate General Counsel of Lessee, or other counsel
chosen by Lessee and reasonably acceptable to Lessor) to the effect that the
bill of sale referred to in clause (i) above constitutes an effective instrument
for the conveyance of title to the replacement engine, and Lessor will comply
with the terms of the Trust Indenture relating to the release of the Aircraft
from the Lien of the Trust Indenture and transfer to or at the direction of
Lessee without recourse or warranty (except as to absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) all of Lessor's right, title and interest, if
any, in and to (A) the Engine with respect to which such Event of Loss occurred
and furnish to or at the direction of Lessee a bill of sale in form and
substance reasonably satisfactory to Lessee, evidencing such transfer and (B)
all claims, if any, against third parties, for damage to or loss of the Engine
subject to such Event of Loss, and such Engine shall thereupon cease to be the
Engine leased hereunder. For all purposes hereof, each such replacement engine
shall, after such conveyance, be deemed part of the property leased hereunder,
and shall be deemed an
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<PAGE> 40
"ENGINE". No Event of Loss with respect to an Engine under the circumstances
contemplated by the terms of this paragraph (b) shall result in any
reduction in Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine or engines then installed thereon), (A)
unless the same are replaced pursuant to the last paragraph of Section
10(a), after reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) for reasonable costs and expenses, so much of such
payments remaining as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a), shall be
applied in reduction of Lessee's obligation to pay Stipulated Loss
Value, if not already paid by Lessee, or, if already paid by Lessee,
shall be applied to reimburse Lessee for its payment of Stipulated Loss
Value, and following the foregoing application, the balance, if any, of
such payments will be paid over to, or retained by Lessee, provided that
Lessor shall be entitled to so much of the excess, if any, of such
payment over the greater of (x) the Stipulated Loss Value and (y) the
fair market value of the Aircraft as Lessor shall demonstrate to
Lessee's reasonable satisfaction is attributable to compensation for
loss of Lessor's interest in the Aircraft as distinguished from the loss
of use of the Aircraft; or (B) if such property is replaced pursuant to
the last paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee; provided that Lessee shall have fully
performed or, concurrently therewith, will fully perform the terms of
the last paragraph of Section 10(a) with respect to the Event of Loss
for which such payments are made; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by Section 10(b) hereof, so much of
such payments remaining after reimbursement of Lessor (as provided for
in Section 7.01 of the Trust Agreement) for reasonable costs and
expenses shall be paid over to, or retained by, Lessee, provided that
Lessee shall have fully performed, or concurrently therewith will
perform, the terms of Section 10(b) with respect to the Event of
Loss for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States Government
or the Government of Registry of the Aircraft Which is a Member of OECD . In
the event of the requisition for use of the Airframe and the Engines or engines
installed on the Airframe during the Term by the United States Government or any
other government of registry of the Aircraft which is a member of OECD or any
instrumentality or agency of any thereof, Lessee shall promptly notify Lessor of
such requisition, and all of Lessee's obligations under this Lease Agreement
with respect to the Aircraft shall continue to the same extent as if such
requisition
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<PAGE> 41
had not occurred, provided that if such Airframe and Engines or engines
installed thereon are not returned by such government prior to the end of the
Term, Lessee shall be obligated to return the Airframe and such Engines or
engines to Lessor pursuant to, and in all other respects in compliance with the
provisions of, Section 5 promptly on the date of such return by such
government. Unless an Event of Loss shall be deemed to have occurred pursuant
to the next sentence or Lessor shall have given Lessee the written notice
specified in the next sentence, Lessee shall pay to Lessor for each day (but
not to exceed 30 days) beyond the scheduled expiration of the Term during which
the Aircraft is not returned to Lessor by reason of such requisition an amount
equal to the average daily Basic Rent payable by Lessee during the Term. If,
in the event of any such requisition, Lessee shall fail to return the Aircraft
on or before the thirtieth day beyond the end of the Term, such failure shall
constitute an Event of Loss which shall be deemed to have occurred on the last
day of the Term and in such event Lessee shall make the payment contemplated by
Section 10(a)(i) in respect of such Event of Loss; provided, however, that
Lessor may notify Lessee in writing on or before the twentieth day prior to the
last day of the Term that, in the event Lessee shall fail by reason of such
requisition to return the Airframe and such Engines or engines on or before the
thirtieth day beyond the end of the Term, such failure shall not be deemed an
Event of Loss. Upon the giving of such notice and such failure to return by
the thirtieth day beyond the end of the Term, Lessee shall be relieved of all
of its obligations pursuant to the provisions of Section 5 (including Exhibit
F) (except that Lessee shall deliver to Lessor all logs, manuals and data and
inspection, modification and overhaul records in regard to the Aircraft then in
its possession) but not under any other Section, except that if any engine not
owned by Lessor shall then be installed on the Airframe, Lessee will, at no
cost to Lessor, furnish, or cause to be furnished, to Lessor a full warranty
(as to title) bill of sale including as to the absence of Liens other than
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) with respect to each such
engine, in form and substance reasonably satisfactory to Lessor (together with
an opinion of counsel to the effect that such full warranty bill of sale has
been duly authorized and delivered and is enforceable in accordance with its
terms and that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), Loan Participant Liens and
Indenture Trustee Liens), against receipt from Lessor of a bill of sale
evidencing the transfer, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens that would be Lessor Liens
but for the proviso in the definition of Lessor Liens), by Lessor to Lessee or
its designee of all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft but not then installed on the Airframe. All
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines during the Term shall be paid over to, or
retained by, Lessee (or, if directed by Lessee, any Sublessee); and all
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines after the end of the Term shall be paid over
to, or retained by, Lessor unless Lessee shall have exercised its purchase
option hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States Government or
the Government of Registry of the Aircraft Which is a Member of OECD. In the
event of the
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<PAGE> 42
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft which is a member of OECD or any agency
or instrumentality of any thereof (other than in the circumstances contemplated
by subsection (d)), Lessee shall replace such Engine hereunder by complying (or
causing any Sublessee to comply) with the terms of Section 10(b) to the same
extent as if an Event of Loss had occurred with respect thereto, and, upon
compliance with Section 10(b) hereof, any payments received by Lessor or Lessee
from such government with respect to such requisition shall be paid over to,
or retained by, Lessee.
(f) Application of Payments During Existence of Event of Default. Any
amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention a Default of the type
specified in Section 14(a), 14(b) or 14(e) or an Event of Default shall have
occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Default or Event of Default, such amount
shall be paid to Lessee (or such Sublessee) to the extent not previously applied
in accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by Lessee (or any Sublessee) with respect to
other aircraft owned or leased, and operated by Lessee (or such Sublessee) on
the same routes) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an
amount not less than the greater of (x) the amount of public liability and
property damage insurance from time to time applicable to aircraft owned or
operated by Lessee of the same type as the Aircraft and (y) such amount per
occurrence as may have been agreed to on the Delivery Date by the Owner
Participant and (ii) cargo liability insurance, in the case of both clause (i)
and clause (ii), (A) of the type and covering the same risks as from time to
time applicable to aircraft operated by Lessee of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name Lessor, in its individual capacity
and as owner trustee, the Indenture Trustee and the Owner Participant (but
without imposing on any such parties liability to pay the premiums for such
insurance) (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds as their respective
interests may appear, (B) shall provide that in respect of the respective
interests of Lessor, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if any Sublease is then in effect, any Sublessee) or
any other Person and shall insure Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) regardless of any
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<PAGE> 43
breach or violation of any warranty, declaration or condition contained in such
policies by Lessee (or, if any Sublease is then in effect, any Sublessee), (C)
may provide for self-insurance to the extent permitted by Section 11(d) and (D)
shall provide that if the insurers cancel such insurance for any reason whatever
or if any material change is made in such insurance which adversely affects the
interest of Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), or such insurance shall lapse for non-payment of premium, such
cancellation, lapse or change shall not be effective as to Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease) for thirty (30) days (seven (7)
days in the case of war risk and allied perils coverage) after issuance to
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease),
respectively, of written notice by such insurers of such cancellation, lapse or
change; provided, however, that if any notice period specified above is not
reasonably obtainable, such policies shall provide for as long a period of prior
notice as shall then be reasonably obtainable. Each liability policy (1) shall
be primary without right of contribution from any other insurance which is
carried by Lessor, the Indenture Trustee or the Owner Participant
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), (2) shall expressly provide that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured, and (3) shall waive any
right of the insurers to any set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of Lessor or
the Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) to the extent
of any moneys due to Lessor, the Indenture Trustee or the Owner Participant
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except as
provided in clause (II) of this Section 11(b), Lessee shall maintain or cause to
be maintained in effect, at its or any Sublessee's expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, any Sublessee) with respect to
other aircraft owned or operated by Lessee (or such
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<PAGE> 44
Sublessee) on the same routes, except that Lessee (or such Sublessee) shall
maintain war risk and governmental confiscation and expropriation (other than
by the government of registry of the Aircraft) and hijacking insurance if the
Aircraft is operated on routes where the custom is for major international air
carriers flying comparable routes to carry such insurance) which is of the type
as from time to time applicable to aircraft owned by Lessee of the same type as
the Aircraft; provided that such insurance shall at all times while the
Aircraft is subject to this Lease be for an amount (subject to self-insurance
to the extent permitted by Section 11(d)) not less than the Stipulated Loss
Value for the Aircraft. Any policies carried in accordance with this paragraph
(b) covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Lessor, as owner trustee, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) as additional
insureds, as their respective interests may appear (but without imposing on any
such party liability to pay premiums with respect to such insurance), (ii) may
provide for self-insurance to the extent permitted in Section 11(d), (iii)
shall provide that (A) in the event of a loss involving proceeds in excess of
$3,500,000 (or, if the Aircraft is then under a Sublease, in excess of
$2,000,000), the proceeds in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so long
as the Trust Indenture shall not have been discharged, the Indenture Trustee)
(except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be
held for the account of Lessor (or, so long as the Trust Indenture shall not
have been discharged, the Indenture Trustee) whether such payment is made to
Lessee (or any Sublessee) or any third party), it being understood and agreed
that in the case of any payment to Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, Lessor (or the Indenture Trustee) shall,
upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,500,000 (or, if the Aircraft is then under a Sublease, of $2,000,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless a Default of
the type specified in Section 14(a), 14(b) or 14(e) or an Event of Default
shall have occurred and be continuing and the insurers have been notified
thereof by Lessor or the Indenture Trustee, (iv) shall provide that if the
insurers cancel such insurance for any reason whatever, or such insurance
lapses for non-payment of premium or if any material change is made in the
insurance which adversely affects the interest of Lessor, the Indenture Trustee
or the Owner Participant, such cancellation, lapse or change shall not be
effective as to Lessor, the Indenture Trustee or the Owner Participant (or, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) for thirty (30) days (seven (7) days in the case of hull war risk and
allied perils coverage) after issuance to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), respectively, of written notice by
such insurers of such cancellation, lapse or change, provided, however, that if
any notice period specified above is not reasonably obtainable, such policies
shall provide for as long a period of prior notice as shall then be reasonably
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<PAGE> 45
obtainable, (v) shall provide that in respect of the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) in
such policies the insurance shall not be invalidated by any action or inaction
of Lessee (or, if a Sublease is then in effect, any Sublessee) or any other
Person and shall insure the respective interests of Lessor, the Indenture
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if a Sublease is then in effect, any
Sublessee), (vi) shall be primary without any right of contribution from any
other insurance which is carried by Lessor, the Owner Participant or the
Indenture Trustee (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), (vii) shall waive any right of
subrogation of the insurers against Lessor, the Owner Participant and the
Indenture Trustee (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor, the Indenture
Trustee, the Owner Participant or Lessee (or any Sublessee) to the extent of any
moneys due to Lessor, the Indenture Trustee or the Owner Participant. In the
case of a loss with respect to an engine (other than an Engine) installed on the
Airframe, Lessor shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of Lessee or any other third party that is
entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance payments
received as the result of the occurrence of an Event of Loss will be applied as
follows:
(x) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), (i) unless
such property is replaced pursuant to the last paragraph of Section
10(a), so much of such payments remaining, after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement) for
reasonable costs and expenses, as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a)
hereof shall be applied in reduction of Lessee's obligation to pay
such Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee for
its payment of such Stipulated Loss Value, and the balance, if any,
of such payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee); or
(ii) if such property is replaced pursuant to the last paragraph of
Section 10(a), such payments shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided that
Lessee shall have fully performed or, concurrently therewith, will
fully perform the terms of the last paragraph of Section 10(a) with
respect to the Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so
much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, shall be paid over to, or
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<PAGE> 46
retained by, Lessee (or if directed by Lessee, any Sublessee),
provided that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any property
damage loss to the Airframe or any engine not constituting an Event of Loss with
respect thereto will be applied in payment for repairs or for replacement
property in accordance with the terms of Sections 7 and 8, if not already paid
for by Lessee (or any Sublessee), and any balance (or if already paid for by
Lessee (or any Sublessee), all such insurance proceeds) remaining after
compliance with such Sections with respect to such loss shall be paid to Lessee
(or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned by Lessee of
the same type similarly on the ground and not in operation, provided that Lessee
shall maintain insurance against risk of loss or damage to the Aircraft in an
amount equal to the Stipulated Loss Value of the Aircraft during such period
that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be furnished, to
Lessor, the Indenture Trustee and the Owner Participant, on or before the
Delivery Date and on or before July 1 in each year thereafter during the Term
commencing July, 1996, a report, signed by Marsh & McLennan, Incorporated or any
other independent firm of insurance brokers reasonably acceptable to Lessor (the
"INSURANCE BROKERS"), describing in reasonable detail the insurance and
reinsurance then carried and maintained with respect to the Aircraft and stating
the opinion of such firm that the insurance then carried and maintained with
respect to the Aircraft complies with the terms hereof; provided, however, that
all information contained in the foregoing report shall not be made available by
Lessor, the Indenture Trustee, the Loan Participants or the Owner Participant to
anyone except (A) to prospective and permitted transferees of Lessor's, the Loan
Participants', the Owner Participant's or the Indenture Trustee's interest who
agree to hold such information confidential, (B) to Lessor's, the Loan
Participants', the Owner Participant's or the Indenture Trustee's counsel or
independent certified public accountants or independent insurance advisors who
agree to hold such information confidential, (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation or as may be requested by any regulatory agency or body having
authority or (D) as may be necessary for purposes of protecting the interests of
any such Person or for the enforcement of this Lease by Lessor. Lessee will
cause such Insurance Brokers to agree to advise Lessor, the Indenture Trustee
and the Owner Participant in writing of any default in the payment of any
premium and of any other act or omission on the part of Lessee of which it has
knowledge and which might invalidate or render unenforceable, in whole or in
part, any insurance on the Aircraft. To the extent such agreement is reasonably
obtainable, Lessee will also cause such Insurance Brokers to agree to
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advise Lessor, the Indenture Trustee and the Owner Participant in writing at
least thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage), prior to the expiration or termination date of any insurance carried
and maintained on the Aircraft pursuant to this Section 11. In addition, Lessee
will also cause such Insurance Brokers to deliver to Lessor, the Indenture
Trustee and the Owner Participant, on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form as delivered by
Lessee to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or the
Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or the
Indenture Trustee, as the case may be, without waiver of any other rights Lessor
or the Indenture Trustee may have; provided, however, that no exercise by Lessor
or the Indenture Trustee, as the case may be, of said option shall affect the
provisions of this Lease, including the provisions of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance. Notwithstanding
any provisions of this Section 11 requiring insurance, Lessor agrees to accept,
in lieu of insurance against any risk with respect to the Aircraft,
indemnification from, or insurance provided by, the United States Government or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States or, upon the written consent of
Lessor (such consent to be given or withheld in its sole discretion), other
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<PAGE> 48
government of registry of the Aircraft or any agency or instrumentality
thereof, against such risk in an amount which, when added to the amount of
insurance against such risk maintained by Lessee (or any Sublessee) with
respect to the Aircraft (including permitted self-insurance) shall be at least
equal to the amount of insurance against such risk otherwise required by this
Section 11.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 11 which is payable to
or retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or any Sublessee) if at the time of such payment or retention a Default
of the type described in Section 14(a), 14(b) or 14(e) or an Event of Default
shall have occurred and be continuing, but shall be held by or paid over to
Lessor as security for the obligations of Lessee (or any Sublessee) under this
Lease and, if Lessor declares this Lease to be in default pursuant to Section 15
hereof, applied against Lessee's obligations hereunder as and when due. At such
time as there shall not be continuing any such Default or Event of Default, such
amount shall be paid to Lessee (or such Sublessee) to the extent not previously
applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, and upon at least 15
days' prior written notice to Lessee, Lessor, the Owner Participant or the
Indenture Trustee or their respective authorized representatives may (not more
than once every 12 months (unless during the circumstances set forth in the last
paragraph of Section 5(a) or an Event of Default has occurred and is continuing
when such inspection right shall not be so limited)) inspect the Aircraft and
inspect and make copies (at Lessor's, the Owner Participant's or the Indenture
Trustee's expense, as the case may be) of the books and records of Lessee
relating to the maintenance of the Aircraft; any such inspection of the Aircraft
shall be limited to a visual, walk-around inspection and shall not include
opening any panels, bays or the like without the express consent of Lessee
(unless already open); provided that no exercise of such inspection right shall
interfere with the operation or maintenance of the Aircraft by, or the business
of, Lessee (or any Sublessee). In addition, upon receipt by Lessee of a written
request from the Owner Participant specifying that the Owner Participant desires
to have an authorized representative observe the next scheduled major overhaul
to be performed on the Aircraft, Lessee shall cooperate with the Owner
Participant to enable the Owner Participant's authorized representative to
observe the next scheduled major overhaul to be performed on the Aircraft;
provided that Lessee shall be required to so cooperate only to the extent
necessary to enable the Owner Participant's authorized representative to observe
one scheduled major overhaul during each 18 month period of the Term; provided
that the Owner Participant's authorized representative shall merely observe such
major overhaul, shall not interfere with or extend in any manner the conduct or
duration of the major overhaul and shall not be entitled to direct any of the
work performed in connection with such overhaul. None of Lessor, the Owner
Participant or the Indenture Trustee shall have any duty to make any such
inspection nor shall any of them incur any liability or obligation by reason of
not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein, Lessee
will not, without prior written consent of Lessor, assign in whole or in part
any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and
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<PAGE> 49
interest in and to this Lease or the Aircraft except as provided herein, in the
Trust Agreement or in the Participation Agreement. Subject to the foregoing,
the terms and provisions of this Lease shall be binding upon and inure to the
benefit of Lessor and Lessee and their respective successors and permitted
assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) and each such Event of
Default shall continue so long as, but only as long as, it shall not have been
remedied:
(a) Lessee shall not have made a payment of Interim Rent,
Basic Rent or Stipulated Loss Value within ten (10) days after the
same shall have become due; or
(b) Lessee shall have failed to make a payment of Supplemental
Rent (other than Stipulated Loss Value) after the same shall have
become due and such failure shall continue for ten (10) Business
Days after Lessee's receipt of written demand therefor by the party
entitled thereto (provided that any failure to pay any amount owed
by Lessee under the Tax Indemnity Agreement or any failure of
Lessee to pay to Lessor or the Owner Participant when due any
Excluded Payments (as defined in the Trust Indenture) shall not
constitute an Event of Default unless notice is given by the Owner
Participant to Lessee and the Indenture Trustee that such failure
shall constitute an Event of Default); or
(c) Lessee shall have failed to perform or observe (or caused
to be performed and observed) in any material respect any covenant
or agreement (except the covenants set forth in the Tax Indemnity
Agreement and in clauses (i)(B) and (ii) of the first sentence of
second paragraph of Exhibit F) to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of thirty (30) days after receipt by Lessee
of written notice thereof from Lessor or the Indenture Trustee;
provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under clause (ii) or clause (iii) of the
first sentence of Section 7(a), or under the second sentence of
Section 7(a) as it relates to maintenance, service, repair or
overhaul or under Section 8 and, notwithstanding the diligence of
Lessee in attempting to cure such failure, such failure is not
cured within said thirty day period but is curable with future due
diligence, there shall exist no Event of Default under this Section
14 so long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one hundred
eighty (180) days after receipt by Lessee of such written notice;
or
(d) any representation or warranty made by Lessee herein or in
the Participation Agreement or any document or certificate
furnished by Lessee in
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<PAGE> 50
connection herewith or therewith or pursuant hereto or thereto
(except the representations and warranties set forth in Section 3 of
the Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection with
matters dealt with in the Tax Indemnity Agreement and for no other
purpose and except the representations and warranties in, or in
connection with, the Credit Agreement) shall prove to have been
incorrect in any material respect at the time made and such
incorrectness shall not have been cured (to the extent of the
adverse impact of such incorrectness on the interests of the Owner
Participant, Lessor or the Certificate Holders) within thirty (30)
days after the receipt by Lessee of a written notice from Lessor or
the Indenture Trustee advising Lessee of the existence of such
incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of Lessee or for all or substantially all of
its property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other proceeding
undismissed and unstayed for a period of ninety (90) consecutive
days or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing,
without the consent of Lessee, a receiver, trustee or liquidator of
Lessee, or of any substantial part of its property, or sequestering
any substantial part of the property of Lessee and any such order,
judgment or decree or appointment or sequestration shall be final
or shall remain in force undismissed, unstayed or unvacated for a
period of ninety (90) days after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or
other similar law in the United States, or the consent by Lessee to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of Lessee or for all or substantially all of its
property, or the making by Lessee of any assignment for the benefit
of creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance
required to be maintained in accordance with the provisions of
Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure
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<PAGE> 51
or error is caused solely by reason of an event that constitutes an Event of
Loss so long as Lessee is continuing to comply with all of the terms of Section
10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of Default and
at any time thereafter so long as the same shall be continuing, Lessor may, at
its option, declare by written notice to Lessee this Lease Agreement to be in
default (provided that this Lease shall be deemed to be declared in default
without the necessity of such written declaration upon the occurrence of any
Event of Default described in Section 14(e) or Section 14(f)); and at any time
thereafter, so long as any such outstanding Events of Default shall not have
been remedied, Lessor may do one or more of the following with respect to all or
any part of the Airframe and any or all of the Engines as Lessor in its sole
discretion shall elect, to the extent permitted by, and subject to compliance
with any mandatory requirements of, applicable law then in effect; provided,
however, that during any period the Aircraft is subject to the Civil Reserve Air
Fleet Program in accordance with the provisions of Section 7(b) hereof and in
possession of the United States government or an agency or instrumentality of
the United States, Lessor shall not, on account of any Event of Default, be
entitled to do any of the following in such manner as to limit Lessee's control
under this Lease (or any Sublessee's control under any Sublease) of any Airframe
or any Engines installed thereon, unless at least sixty (60) days' (or such
lesser period as may then be applicable under the Air Mobility Command program
of the United States Government) written notice of default hereunder shall have
been given by Lessor by registered or certified mail to Lessee (and any
Sublessee) with a copy addressed to the Contracting Office Representative for
the Air Mobility Command of the United States Air Force under any contract with
Lessee (or any Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's expense,
cause Lessee to return promptly, and Lessee shall return promptly,
the Airframe or any Engine as Lessor may so demand to Lessor or its
order in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 5 as if such
Airframe or Engine were being returned at the end of the Term, or
Lessor, at its option, may enter upon the premises where all or any
part of the Airframe or any Engine is located and take immediate
possession of and remove the same, without the necessity of first
instituting proceedings, or by summary proceedings or otherwise
(and/or, at Lessor's option, store the same at Lessee's premises
until disposal thereof by Lessor), all without liability accruing
to Lessor for or by reason of such entry or taking of possession or
removing whether for the restoration of damage to property caused
by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or private
sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle the Aircraft as Lessor, in
its sole discretion, may determine, all free and clear of any
rights of Lessee or any Sublessee and without any duty to account
to Lessee with respect to such action or inaction or for any
proceeds with respect thereto, except as hereinafter set forth in
this Section 15;
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<PAGE> 52
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph
(a) or paragraph (b) above with respect to the Airframe and/or any
Engine, Lessor, by written notice to Lessee specifying a payment
date which shall be the Stipulated Loss Value Date not earlier than
ten days from the date of such notice, may demand that the Lessee
pay to Lessor, and Lessee shall pay Lessor, on the payment date so
specified, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the installments of Interim Rent or Basic Rent
for the Aircraft due on the Commencement Date or for Lease Periods
commencing on or after the payment date in such notice), any unpaid
Interim Rent or Basic Rent due on the payment date so specified
(unless Basic Rent is payable in advance but including, without
limitation, any adjustments to Basic Rent payable pursuant to
Section 3(d)) plus whichever of the following amounts Lessor, in its
sole discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from such
specified payment date until the date of actual payment of such
amount): (i) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in such
notice, over the aggregate fair market rental value (computed as
hereafter in this Section 15 provided) of such Aircraft for the
remainder of the Term, after discounting such aggregate fair market
rental value to present value as of the Stipulated Loss Value Date
specified as the payment date in such notice at an annual rate equal
to the Base Rate plus 1%; or (ii) an amount equal to the excess, if
any, of the Stipulated Loss Value for such Aircraft, computed as of
the Lease Period Date specified as the payment date in such notice
over the fair market sales value of such Aircraft (computed as
hereafter in this Section provided) as of the Stipulated Loss Value
Date specified as the payment date in such notice, plus in the case
of each such amount, interest thereon at the Past Due Rate from such
specified payment date until the actual date of payment of such
amount;
(d) in the event Lessor, pursuant to paragraph (b) above,
shall have sold the Airframe and/or any Engine, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to
such Aircraft, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay to Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Interim Rent or Basic Rent for the
Aircraft due on or after such date), any unpaid Interim Rent or
Basic Rent with respect to the Aircraft due on (unless such Basic
Rent is payable in advance) or prior to such date (including,
without limitation, any adjustments to Basic Rent payable pursuant
to Section 3(d)) plus the amount of any deficiency between the net
proceeds of such sale (after deduction of all reasonable costs of
sale) and the Stipulated Loss Value of such Aircraft, computed as
of the Stipulated Loss Value Date on or immediately preceding the
date of such sale together with interest, if any, on the amount of
such deficiency, at the Past Due Rate, from the date of such sale
to the date of actual payment of such amount; and/or
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<PAGE> 53
(e) Lessor may rescind this Lease Agreement as to the
Aircraft, and/or may exercise any other right or remedy which may be
available to it under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for breach
hereof.
For the purposes of paragraph (c) above, the "fair market rental value"
or the "fair market sales value" of the Aircraft shall be the rental value or
sales value, as the case may be, which would be obtained in an arm's-length
transaction between an informed and willing lessee or purchaser, as the case may
be, under no compulsion to lease or purchase, as the case may be, and an
informed and willing lessor or seller in possession under no compulsion to lease
or sell, as the case may be, in each case based upon the actual condition and
location of the Aircraft, which value shall be determined by mutual agreement
or, in the absence of mutual written agreement, pursuant to an appraisal
prepared and delivered by a nationally recognized firm of independent aircraft
appraisers nominated by Lessor, and Lessor shall immediately notify Lessee of
such nomination. Unless Lessee shall have objected in writing within ten days
after its receipt of Lessor's notice, Lessor's nomination shall be conclusive
and binding. If Lessee shall object, however, Lessor and Lessee shall endeavor,
within ten days after such objection is made, to select a mutually acceptable
appraiser; provided that, if Lessee shall not so endeavor to make such
selection, Lessor's nomination referred to in the preceding sentence hereof
shall be conclusive and binding. If Lessor and Lessee fail to reach agreement
(except for the reason referred to in the proviso in the preceding sentence), or
if any appraiser selected fails to act for any reason, then the question shall
be determined by an appraisal (applying the definitions of "fair market rental
value" and "fair market sales value" as set forth above based upon the actual
condition of the Aircraft) mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is
more disparate from the average of all three determinations than each of the
other two determinations, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average
shall be final and binding upon the parties hereto. If no determination is more
disparate from the average of all three determinations than each of the other
determinations, then such average shall be final and
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binding upon the parties thereto. The cost of such appraisal or appointment
shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided above
and without duplication of amounts payable hereunder, for any and all unpaid
Rent due hereunder before, after or during the exercise of any of the foregoing
remedies and for all reasonable legal fees and other costs and expenses
(including fees of the appraisers hereinabove referred to) incurred by Lessor,
the Indenture Trustee, the Loan Participants and the Owner Participant by reason
of the occurrence of any Event or Default or the exercise of Lessor's remedies
with respect thereto, including all costs and expenses incurred in connection
with the return of the Airframe or any Engine in accordance with the terms of
Section 5 or in placing such Airframe or Engine in the condition and
airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this Section
15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) may bid for and purchase such property. Lessor agrees to give
Lessee at least fifteen (15) days' prior written notice of the date fixed for
any public sale of the Airframe or any Engine or of the date on or after which
will occur the execution of any contract providing for any private sale. Except
as otherwise expressly provided above, no remedy referred to in this Section 15
is intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Lessor
of any or all of such other remedies. No waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS. Forthwith
upon the execution and delivery of each Lease Supplement and Trust Supplement
from time to time required by the terms hereof and upon the execution and
delivery of any amendment to this Lease, to the Trust Indenture or to the Trust
Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and, in
the case of the initial Lease Supplement and Trust Supplement, this Lease, the
Trust Agreement and the Trust Indenture as well) or amendment to be duly filed
and recorded, and maintained of record, in accordance with the applicable laws
of the government of registry of the Aircraft. In addition, Lessee will
promptly and duly execute and deliver to Lessor such further documents and take
such further action as Lessor or the Indenture Trustee may from time to time
reasonably request in order more effectively to carry out the intent and purpose
of this Lease and to establish and protect the rights and remedies created or
intended to be created in favor of Lessor and the Indenture Trustee hereunder,
including, without limitation, if requested by Lessor or the Indenture Trustee,
at the expense of Lessee, the execution and delivery of supplements or
amendments hereto or to the Trust Indenture, each in recordable form, subjecting
to this Lease and the Trust Indenture, any airframe or engine substituted for
the Airframe or any Engine pursuant to the terms thereof and the recording or
filing of counterparts thereof, in accordance with the laws of such
jurisdictions as Lessor or the Indenture Trustee may from time to time deem
advisable. Lessee agrees to furnish to Lessor and the Indenture Trustee
promptly after execution and
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delivery of any supplement and amendment hereto and promptly after the
execution and delivery of any supplement and amendment to the Trust Indenture
(except for any such supplement or amendment which does not require or receive
the approval of Lessee pursuant to the Operative Documents and is not required
pursuant to the terms of the Operative Documents), an opinion of counsel
reasonably satisfactory to Lessor and the Indenture Trustee as to the due
recording or filing of such supplement or amendment. Commencing in 1997, on or
before April 30 of each year during the Term, Lessee will deliver to Lessor and
the Indenture Trustee a certificate of Lessee, signed by the President, a Vice
President or the Chief Financial Officer of Lessee to the effect that the signer
is familiar with or has reviewed the relevant terms of this Lease and the signer
does not have actual knowledge of the existence, as of the date of such
certificate, of any condition or event which constitutes a Default or an Event
of Default. Lessee agrees that if the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer of Lessee
has actual knowledge of the existence of a Default, then Lessee shall promptly
give to Lessor, the Owner Participant and the Indenture Trustee notice thereof
and such other information relating thereto as Lessor, the Owner Participant or
the Indenture Trustee may reasonably request. Lessee agrees that if an officer
of Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee may reasonably
request. Lessee will deliver to Lessor, the Owner Participant and the Indenture
Trustee (i) within sixty (60) days after the end of each of the first three
quarterly periods of each fiscal year of the Guarantor, the publicly filed Form
10-Q report of the Guarantor; (ii) within one hundred twenty (120) days after
the close of such fiscal year, the publicly filed annual report and Form 10-K
report of the Guarantor; and (iii) once each calendar quarter, any other
Securities and Exchange Commission filings of the Guarantor during the preceding
calendar quarter. In addition, Lessee will deliver to Lessor and the Owner
Participant (i) within 60 days after the end of the first three quarterly
periods of each fiscal year of Lessee, a balance sheet of Lessee as of the close
of such period, together with the related statements of operations and cash
flows for such period; and (ii) within one hundred and twenty (120) days after
the close of such fiscal year, a balance sheet of Lessee as of the close of such
fiscal year, together with the related statements of operations and cash flows
for such fiscal year prepared in the case of clause (i) and (ii) in
accordance with generally accepted accounting principles, consistently applied.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight courier
at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121,
Attention: Senior Vice President-Finance and Treasurer (Telecopy
No. (612) 726-0665), or to such other address
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<PAGE> 56
or telecopy number as Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801)
246-5053), or to such other address or telecopy number as Lessor shall
from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at such address or telecopy number as
such Loan Participant, the Indenture Trustee or the Owner Participant
shall have furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at its address or telecopy
number set forth in Schedule I to the Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is a net lease.
All Rent shall be paid by Lessee to Lessor in funds of the type specified in
Section 3(f). Except as provided in Section 3(g) hereof, Lessee's obligation
to pay all Rent payable hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which Lessee may have
against Lessor, in its individual capacity or as Owner Trustee under the Trust
Agreement, the Indenture Trustee (in its individual capacity or as Indenture
Trustee), any Loan Participant, the Owner Participant, or anyone else for any
reason whatsoever (whether in connection with the transactions contemplated
hereby or any other transactions), including, without limitation, any breach by
Lessor or the Owner Participant of their respective warranties, agreements or
covenants contained in any of the Operative Documents, (ii) any defect in the
title, registration, airworthiness, condition, design, operation, or fitness for
use of, or any damage to or loss or destruction of, the Aircraft, or any
interruption or cessation in or prohibition of the use or possession thereof by
Lessee (or any Sublessee) for any reason whatsoever, including, without
limitation, any such interruption, cessation or prohibition resulting from the
act of any government authority, (iii) any insolvency, bankruptcy,
reorganization or similar case or proceedings by or against Lessee (or any
Sublessee) or any other person, or (iv) any other circumstance, happening, or
event whatsoever, whether or not unforeseen or similar to any of the foregoing.
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 without limitation of the other rights or remedies of Lessor
hereunder, subject to the rights of Lessee to setoff under Section 3(g) hereof,
to pay to Lessor an amount equal to each Rent payment at the time such payment
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or in part. Lessee hereby waives, to the
extent permitted by applicable law, any and all rights which it may now have or
which at any time hereafter may be conferred upon it, by statute or otherwise,
to terminate, cancel, quit or surrender this Lease except in accordance with the
express terms hereof.
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<PAGE> 57
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION. (a) Renewal
Options. (1) Fixed Renewal Term. Lessee shall have the right to renew this
Lease for up to three consecutive one year renewal terms the first of which
shall commence only upon the expiration of the Basic Term (any such renewal
term, a "FIXED RENEWAL TERM") by delivery to Lessor at least one hundred eighty
(180) days before the end of the Basic Term, the first Fixed Renewal Term or the
second Fixed Renewal Term, as the case may be, a written notice irrevocably
electing to renew this Lease for a Fixed Renewal Term. Basic Rent during any
Fixed Renewal Term shall be payable in an amount and at the times specified in
Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the third Fixed
Renewal Term or any Fair Market Renewal Term, Lessee shall have the option to
renew this Lease for a renewal term of not less than one year and not more than
four years for a Basic Rent equal to the "fair market rental value" of the
Aircraft for such period (any such renewal term, a "FAIR MARKET RENEWAL TERM").
Each such option to renew shall be exercised by Lessee delivering to Lessor, at
least one hundred eighty (180) days prior to the commencement of such Fair
Market Renewal Term, a written notice irrevocably electing to renew this Lease
for a Fair Market Renewal Term (which notice shall also specify the length of
the Fair Market Renewal Term). The aggregate length of all Fair Market Renewal
Terms pursuant to this Section 19(a)(2) may not exceed four years.
(3) If no written notice is delivered by Lessee to Lessor pursuant to
Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee has
elected to renew this Lease as aforesaid, and provided that there shall not then
have occurred and be continuing a Default of the type referred to in Section
14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all necessary
governmental authorizations and approvals shall have been received and that
Basic Rent for the Renewal Term has already been determined as above provided
and a Lease Supplement evidencing such renewal has been executed and filed for
recordation with the Federal Aviation Administration, this Lease shall continue
in full force and effect during the Renewal Term, except that (x) Lessee shall
pay Lessor Basic Rent for the Aircraft during the Renewal Term in an amount
equal to the "fair market rental value" thereof determined in accordance with
Section 19(c), but not to exceed in the case of a Fixed Renewal Term the higher
of (i) one-half of the average Basic Rent during the Basic Term (such average
being determined as the total of all payments of Basic Rent during the Basic
Term added together and divided by the number of payments of Basic Rent during
the Basic Term) and (ii) 2.092% multiplied by Lessor's Cost, which Basic Rent
shall be payable in semi-annual installments in arrears, each such installment
being due and payable on each Lease Period Date occurring during the Renewal
Term, commencing with the Lease Period Date immediately following the
commencement of the Renewal Term, and (y) the Stipulated Loss Values applicable
during the Renewal Term shall be determined separately for each Renewal Term by
the Owner Participant in good faith to reflect Stipulated Loss Values determined
in accordance with the following sentence. Stipulated Loss Values during a
Renewal Term shall on the date
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<PAGE> 58
on which such Renewal Term begins be equal to the fair market sales value of the
Aircraft as of such date, determined in accordance with the provisions of this
Section 19(a)(4) and Section 19(c) hereof, and shall decline ratably on a
monthly basis to the fair market sales value of the Aircraft as of the last day
of such Renewal Term, determined in accordance with the provisions of this
Section 19(a)(4) and Section 19(c) hereof.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term no effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
(b) Purchase Options. Lessee shall have the option, upon at least one
hundred eighty (180) days' irrevocable prior written notice to Lessor, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the lesser of the fair market sales value of
the Aircraft and 50% of Lessor's Cost. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred sixty-five
(365) days prior to the date on which Lessee may purchase the Aircraft pursuant
to Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1) or
Section 19(a)(2) hereof, Lessee may deliver to Lessor a revocable notice
(subject to the requirements as to irrevocable notice set forth in Sections
19(a)(1), 19(a)(2) and 19(b) hereof) of its intent to exercise its renewal
option or purchase option. For all purposes of this Section 19, including the
appraisal referred to in this Section 19(c), in determining "fair market rental
value" or "fair market sales value", the Aircraft shall be valued (i) as if in
the condition and otherwise in compliance with the terms of Section 5 upon a
return of the Aircraft, (ii) on the basis of the value which would obtain in an
arm's-length transaction between an informed and willing buyer-user or lessee
under no compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding the purchase and renewal options of the lessee provided
in this Lease, and (iii) in the case of such valuation for determining "fair
market rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred
seventy (270) days prior to the end of the Basic Term or the Renewal Term in
question, then the question shall be determined by an appraisal mutually agreed
to by two recognized independent aircraft appraisers, one of which appraisers
shall be chosen by Lessor and one by Lessee within five Business Days after
Lessor or Lessee shall have received written notice
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<PAGE> 59
from the other party of a demand that such an appraisal be made, which notice
shall specify the appraiser chosen by the party giving the notice or, if such
appraisers cannot agree on the amount of such appraisal within twenty Business
Days after the end of such five-day period, each shall render its own appraisal
and shall by mutual consent choose another appraiser within five Business Days
after the end of such twenty-day period. If, within such five-day period, such
two appraisers fail to appoint a third appraiser, then either Lessor or Lessee,
on behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall
be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. Lessee and
Lessor shall share equally all expenses relating to such appraisal procedure,
provided if Lessee elects not to renew this Lease or purchase the Aircraft
following such appraisal, Lessee shall pay all expenses of such appraisal.
(d) Special Purchase Option. On January 2, 2012 (or, if January 2, 2012
is not a Business Day, the Business Day immediately succeeding January 2, 2012),
Lessee shall have the option, upon at least ninety (90) days' irrevocable prior
notice to Lessor and, if any Secured Certificates are then outstanding, the
Indenture Trustee, to purchase the Aircraft on such date for a purchase price
equal to, at Lessee's option, either (a) the Special Purchase Price or (b) the
Initial Installment (payable on such date) plus the Remaining Installments
(payable thereafter). In the event Lessee elects to purchase the Aircraft for a
purchase price equal to the Special Purchase Price, on such date Lessee shall
pay Lessor the Special Purchase Price. In addition, if in the case of clause
(a) on such date there shall be any Secured Certificates outstanding, Lessee
shall also have the option to assume, pursuant to Section 8(x) of the
Participation Agreement and Section 2.15 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture. If such assumption is made,
Lessee shall pay Lessor a purchase price equal to (I) the Special Purchase Price
minus (II) an amount equal to principal of, and accrued but unpaid interest on,
any Secured Certificates that are outstanding on such date. Upon such payment in
full and payment of any other amounts then due hereunder (including costs or
expenses of the Owner Participant in connection with such purchase, any
installments of Basic Rent due prior to such date and, if Basic Rent is payable
in arrears on such date as indicated on Exhibit B, on such date (but not any
installment of Basic Rent due on such date if Basic Rent is payable in advance
on such date), and all unpaid Supplemental Rent due on or prior to such date,
including Supplemental Rent payable pursuant to the second sentence of Section
3(e)), Lessor will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens
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<PAGE> 60
but for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft and under the Trust Indenture and,
unless there shall be any Secured Certificates outstanding after such payment,
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Trust Indenture. In the event Lessee elects to purchase the
Aircraft for a purchase price equal to the Initial Installment plus the
Remaining Installments, on such date Lessee shall pay Lessor an amount equal to
the amount set forth under the heading "Initial Installment" on Exhibit B (the
"INITIAL INSTALLMENT"). Upon such payment and payment of any other amounts then
due hereunder (including costs or expenses of the Owner Participant in
connection with such purchase, any installments of Basic Rent due prior to such
date and, if Basic Rent is payable in arrears on such date as indicated on
Exhibit B, on such date (but not any installment of Basic Rent due on such date
if Basic Rent is payable in advance on such date), and all unpaid Supplemental
Rent due on or prior to such date, including Supplemental Rent payable pursuant
to the second sentence of Section 3(e)), and after Lessee shall have provided
Lessor with its undertaking to pay the amounts due on the dates set forth under
the heading "Remaining Installments" on Exhibit B (the "REMAINING INSTALLMENTS")
and with collateral security for such undertaking reasonably acceptable to the
Owner Participant, Lessor will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
all of Lessor's right, title and interest in and to the Aircraft and under the
Trust Indenture and shall exercise such rights as it has to cause the Aircraft
to be released from the Lien of the Trust Indenture.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF SECURED
CERTIFICATES. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein set
forth. To the extent, if any, that this Lease, the Lease Supplements and any
amendments to this Lease constitute 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, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the
assignment of all Lessor's right, title and interest in and to this Lease
pursuant to the terms of the Trust Indenture. Subject to Section 3(f) hereof,
Lessee agrees to pay directly to the Indenture Trustee (or, after receipt by
Lessee of notice from the Indenture Trustee of the discharge of the Trust
Indenture, to Lessor), all amounts of Rent due or to become due hereunder and
assigned to the Indenture Trustee and Lessee agrees that the Indenture Trustee's
right to such payments hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, the
circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
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<PAGE> 61
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an Event of
Default hereunder) Lessor may itself make such payment or perform or comply
with such agreement but shall not be obligated hereunder to do so, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon
demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR LIMITED.
(a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("MOODY'S") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of A1 by S&P or P1 by Moody's and having a
final maturity of ninety (90) days or less from the date of purchase thereof;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing.
Lessee shall be responsible for any net loss realized as a result of any such
investment and shall reimburse Lessor (or the Indenture Trustee, as the case may
be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and understood
that all representations, warranties and undertakings of Lessor hereunder shall
be binding upon Lessor only in its capacity as trustee under the Trust
Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross
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<PAGE> 62
negligence or willful misconduct or for breach of its covenants, representations
and warranties contained herein, to the extent covenanted or made in its
individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and
nothing contained herein shall be construed as conveying to Lessee any right,
title or interest in the Aircraft except as a lessee only. Neither Lessee nor
any affiliate of Lessee will file any tax returns in a manner inconsistent with
the foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
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<PAGE> 63
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event of Default
shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's continued possession, use and operation of, and quiet
enjoyment of, the Aircraft pursuant to the terms of this Lease or Lessee's
rights, benefits and obligations pursuant to the Overall Transaction during the
Term of this Lease, and this Lease shall not be terminated except as expressly
provided herein.
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<PAGE> 64
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY:____________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:____________________________________
Title:
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on the _____ day of __________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:____________________________________
Title:
- Signature Page -
<PAGE> 65
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 B]
LEASE SUPPLEMENT NO.
[NW 1996 B]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY
BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement [NW 1996 B], dated as of _______ __,
199_, between [________________________], as Owner Participant, and such Owner
Trustee (such Owner Trustee, in its capacity as such Owner Trustee, being herein
called "LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement [NW 1996 B], dated as of April 24, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease is attached hereto, and made a part hereof, and this
Lease Supplement, together with such attachment, is being filed for recordation
on the date hereof with the Federal Aviation Administration as one document.
(2)The Lease Agreement relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated _______________, 19__ to the Lease Agreement, has
been recorded by the Federal Aviation Administration on ________________, 19__,
as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the
date hereof consists of the following components:
__________________
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 66
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037 engines
bearing, respectively, manufacturer's serial nos. P______ and P______
(each of which engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent for the
Aircraft throughout the Term therefor in accordance with Section 3 of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby incorporated
by reference in this Lease Supplement to the same extent as if fully set forth
herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE> 67
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By____________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By____________________________________
Title:
3Receipt of this original counterpart of the foregoing Lease Supplement is
hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By____________________________________
Title:
_______________________
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 68
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 B]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST, SPECIAL PURCHASE PRICE, INITIAL
INSTALLMENT AND REMAINING INSTALLMENTS SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Transition (Percentage of
Date Lessor's Cost)
- -------------------------------- --------------------------------------
Commencement Date Interim Rent (Percentage of
Lessor's Cost)
- -------------------------------- --------------------------------------
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
- -------------------------------- --------------------------------------
<PAGE> 69
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
EXHIBIT B - PAGE 2
<PAGE> 70
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST, SPECIAL PURCHASE PRICE, INITIAL
INSTALLMENT AND REMAINING INSTALLMENTS SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
------------------------------- ---------------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
EXHIBIT B - PAGE 3
<PAGE> 71
Lessor's Cost for the Aircraft:
Special Purchase Price:
Initial Installment:
Remaining Installments: Date Amount
---- ------
Transition Date:
EXHIBIT B - PAGE 4
<PAGE> 72
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 B]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
---------------------- ---------------------
<PAGE> 73
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1996 B]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
--------------- ---------------
<PAGE> 74
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1996 B]
RENT RECALCULATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE> 75
EXHIBIT F
TO
LEASE AGREEMENT
[NW 1996 B]
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 B]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 B], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1996 B], dated as of April 24, 1996
(in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1996 B], dated as of April 24, 1996
(the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1996 B] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N538US; manufacturer's serial No. 26485; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727166 and P727167;
WHEREAS, Section 17 of the Participation Agreement [NW 1996
B], dated as of April 24, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants named
therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and
State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that
the Secured Certificates issued by the Owner Trustee under the Trust Indenture
and Security Agreement [NW 1996 B], dated as of April 24, 1996, between Lessor
(in its individual capacity as expressly provided therein and as trustee) and
the Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1996 B], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages,
the Special Purchase Price and the Remaining Installments in order to reflect,
among other things, the interest rate of the refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages,
the Special Purchase Price and the Remaining Installments, Lessor and Lessee
desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996,
and the Trust Agreement and Indenture Supplement [NW 1996 B], dated April 30,
1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3,
1996, and assigned Conveyance No. E21283;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.LEASE
(a) The definitions of "Business Day", "Excess Amount",
"Indemnitee", "Loan Participant", "Net Present Value of Rents", "Operative
Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and
"Termination Value" in Section 1 of the Lease are hereby amended applicable on
and after the Closing Date to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York; Boston,
Massachusetts; or Minneapolis, Minnesota.
"EXCESS AMOUNT" for the Closing Date or the
Commencement Date means an amount equal to the amount
determined by multiplying Lessor's Cost by the percentage set
forth in Exhibit B hereto under the heading "Excess Amount"
opposite the Closing Date or the Commencement Date.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i) through
(iv), inclusive, (x) each Affiliate of the Persons described
in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of
the Persons described in clauses (i) through (viii),
inclusive, (xii) the successors and permitted assigns of the
Persons described in clauses (i) through (iv), inclusive, and
(xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
-2-
<PAGE> 3
"NET PRESENT VALUE OF RENTS" means the net present
value, as of the Commencement Date, of Basic Rent set forth in
Exhibit B hereto, Special Purchase Price and Remaining
Installments discounted at an annual interest rate of 12.0% on
a semi-annual basis.
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of the
Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost by
the percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount is
determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any date after January 2, 2019 shall be the amount determined
as provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a)
all amounts, liabilities, indemnities and obligations (other
than Interim Rent or Basic Rent) which Lessee assumes or
agrees to pay under any Lessee Document to or on behalf of
Lessor or any other Person, (b) amounts payable by Lessor
pursuant to clause (b) of the third paragraph of Section 2.02
of the Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreement, and (d)
Lessor's pro rata share of all compensation and reimbursement
of expenses and disbursements payable to the Subordination
Agent under the Intercreditor Agreement except with respect to
any income or franchise taxes incurred by the Subordination
Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata
share" means as of any time a fraction, the numerator of which
is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes"
(as such term is defined in the Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
and each of their respective Affiliates, successors and
permitted assigns, (ii) in the case of the Owner Participant,
directors,
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<PAGE> 4
officers, employees, servants and agents of the Owner
Participant and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with respect to which the amount is
determined (as such Exhibit D may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order:
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing
shall occur.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving
Credit Agreements between the Subordination Agent, as
borrower, and the Liquidity Provider, and any replacement
thereof, in each case as the same may be amended, modified or
supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider under the Liquidity Facilities, or any
successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture
and Security Agreement [NW 1996 B], dated as of April 24,
1996, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
-4-
<PAGE> 5
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass
through trust agreement and supplement pursuant to which the
Class D pass through trust certificates are issued.
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the three separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and
Trust Company, a Massachusetts trust company, in its capacity
as trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as successor
trustee under any such Pass Through Trust Agreement.
"PURCHASERS" means the Pass Through Trustees under
each Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Special Purchase Price, Initial
Installment, Remaining Installments, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
"REFINANCING DATE" means the proposed date on which
the outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers pursuant
to the Trust Indenture Amendment and the Refunding Agreement
on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption of
the
-5-
<PAGE> 6
Secured Certificates issued on the Refinancing Date and the
concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1996 B], dated as of June 3, 1996, among Lessor,
Lessee, the Owner Participant, the Purchasers, the Indenture
Trustee, the Subordination Agent and the Guarantor, as the
same may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"SUBORDINATION AGENT" means State Street Bank and
Trust Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 B],
dated as of the Closing Date, between Lessor and State Street
Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
Section 2. Amendment of Sections 3(b), 3(c), 3(d), 3(e) and
3(g) of the Lease.F THE LEASE
(a) Section 3(b) of the Lease is hereby amended by deleting on
and after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
Lessee shall pay Basic Rent with respect to each
Lease Period during the Basic Term on the Commencement Date
and on each Lease Period during the Basic Term, in consecutive
installments in the amounts as provided in the next sentence,
each such installment to cover the Lease Period specified in
Exhibit B. Each such installment of Basic Rent shall be equal
to Lessor's Cost multiplied by the percentage for the
Commencement Date or the applicable Lease Period Date
specified in Exhibit B hereto.
-6-
<PAGE> 7
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs
other than on June 12, 1996, (B) Transaction Expenses paid by
Lessor pursuant to Section 16 of the Participation Agreement
are determined to be other than 1.0% of Lessor's Cost, or (C)
Refinancing Expenses paid by Lessor or the Owner Participant
pursuant to Section 11(a) of the Refunding Agreement are
determined to be other than 1.4854% of Lessor's Cost, then in
each case, the Basic Rent percentages set forth in Exhibit B
and the Stipulated Loss Value percentages set forth in Exhibit
C, the Termination Value percentages set forth in Exhibit D,
the Special Purchase Price and the Remaining Installments
shall be recalculated by the Owner Participant, on or prior to
November 15, 1996 using the same methods and assumptions used
to calculate original Basic Rent, Stipulated Loss Value and
Termination Value percentages, the Special Purchase Price, the
Initial Installment and the Remaining Installments, in order
to: (1) maintain the Owner Participant's Net Economic Return
and (2) minimize the Net Present Value of Rents to Lessee to
the extent possible consistent with clause (1) hereof. In such
recalculation there will be no change in the amortization of
the Secured Certificates.
(d) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the second sentence thereof.
(e) The second sentence of Section 3(e) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay as Supplemental Rent the Make-Whole
Amount, if any, due pursuant to Section 2.10(b) or Section
2.11 of the Trust Indenture in connection with a prepayment of
the Secured Certificates upon redemption of such Secured
Certificates in accordance with such Section 2.10(b) or
Section 2.11."
(f) Section 3(f) of the Lease is hereby amended by deleting on
and after the Closing Date the numbers and punctuation "124-000-12" in the first
sentence thereof and substituting therefor the numbers and punctuation
"124-0000-12".
(g) Section 3(g) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(g) Prepayment of Certain Rent Payments. To the
extent, if any, that there shall not have been received by the
Indenture Trustee to its account and in funds of the type
specified in Section 3(f) hereof by 10:30 A.M., New York time,
on the Commencement Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall, on the Commencement
Date, prepay on the Commencement Date a portion of Basic Rent
equal to the Excess Amount not so
-7-
<PAGE> 8
paid (the amount of such Basic Rent to be prepaid by Lessee
being herein called "PREPAID Rent"); provided, that Lessee
will also pay to the Indenture Trustee, on demand, as
Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate in effect from time to time on
any part of any Prepaid Rent not paid when due for any period
for which the same shall be overdue. Lessor agrees to
reimburse Lessee in the manner provided in the following
sentence for (x) the Prepaid Rent so paid by Lessee, plus (y)
any Supplemental Rent paid with respect to Prepaid Rent by
Lessee pursuant to this Section 3(g), plus (z) accrued
interest on the unreimbursed portion thereof at a rate per
annum equal to the Base Rate as in effect from time to time
plus 5% per annum from the date such amount is paid by Lessee
to but not including the date of each such reimbursement (such
amounts to be reimbursed being herein called the
"REIMBURSEMENT AMOUNT"). Lessor shall pay to Lessee, in funds
of the type specified in Section 3(f) hereof, within five days
after Lessor, the Owner Participant and the Indenture Trustee
shall have received written notice from Lessee demanding
payment, the Reimbursement Amount. In addition, if, for any
reason, Lessor shall fail to pay to Lessee the Reimbursement
Amount as above provided, Lessee shall be entitled to offsets
(without duplication) against each succeeding payment (other
than as limited by the proviso to this sentence) due from
Lessee to Persons other than the Loan Participants, the
Indenture Trustee and the Owner Trustee in its individual
capacity (including, without limitation, Basic Rent, payments
due under Section 9, 10, 15 and 19 hereof, payments due under
the Tax Indemnity Agreement and payments due to Persons other
than the Loan Participants, the Indenture Trustee and Lessor
in its individual capacity under Section 7 of the
Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however,
that in the case of any payment due from Lessee which is
distributable under the terms of the Trust Indenture, Lessee's
right to offset shall be limited to amounts distributable to
Lessor thereunder. No such offset or aggregate combined effect
of separate offsets shall reduce the amount of any installment
of Interim Rent or Basic Rent to an amount insufficient,
together with the Excess Amount and all other amounts payable
simultaneously by Lessee, to pay in full the payments then
required to be made on account of the principal of and
interest on (and Make-Whole Amount, if any, due with respect
to) the Secured Certificates then outstanding.
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the words "the Owner Participant and the
Indenture Trustee" and substituting therefor the word "Lessor" and (ii) deleting
on and after the Closing Date the word "their" and substituting therefor the
word "its".
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<PAGE> 9
SECTION 4. AMENDMENT OF SECTIONS 9(A)(3) AND 9(C) OF THE
LEASE.
(a) Section 9(a)(3) of the Lease is hereby amended by deleting
on and after the Closing Date the word, punctuation and number "ten (10)" in the
second sentence thereof and substituting therefor the word, punctuation and
number "fifteen (15)".
(b) Section 9(c) of the Lease is hereby amended by deleting on
and after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by deleting on
and after the Closing Date the words "the third Business Day following the
receipt of insurance proceeds in respect of such occurrence (but not earlier
than thirty (30) days after such occurrence)" in clause (i)(y) thereof and
substituting therefor the words "an earlier Business Day irrevocably specified
fifteen days in advance by notice from Lessee to Lessor and the Indenture
Trustee".
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on
and after the Closing Date the words and punctuation ", the Refunding Agreement"
after the words "Participation Agreement" and (ii) adding on and after the
Closing Date the words "and except for representations or warranties contained
in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in
the Refunding Agreement) or any document or instrument furnished pursuant to
either thereof" after the word "Agreement" at the end of the first parenthetical
phrase therein.
SECTION 7. AMENDMENT OF SECTION 15(C) OF THE LEASE.
Section 15(c) of the Lease is hereby amended by (i) deleting
on and after the Closing Date the word "the" from the fourth line thereof and
substituting therefor the word "a" and (ii) inserting on and after the Closing
Date the words "or prior to" after the word "on" in the tenth line thereof.
SECTION 8. AMENDMENT OF SECTION 17 OF THE LEASE.
Section 17 of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage
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<PAGE> 10
prepaid, or by personal delivery of written notice and any
such notice shall become effective when received, addressed:
(i) if to Lessee, for U.S. Mail at 5101
Northwest Drive (A4010), St. Paul, Minnesota
55111-3034, and for overnight courier at
2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer, (Telecopy
No. (612) 726-0665), or to such other
address, telex number or telecopy number as
Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate
Trust Department (Telecopy No. (801)
246-5053), or to such other address or
telecopy number as Lessor shall from time to
time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed
to such Loan Participant, the Indenture
Trustee or the Owner Participant at such
address or telecopy number as such Loan
Participant, the Indenture Trustee or the
Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until
an address is so furnished, addressed to
such Loan Participant, the Indenture Trustee
or the Owner Participant at its address or
telecopy number set forth on the signature
pages of the Refunding Agreement."
SECTION 9. AMENDMENT OF SECTION 19 OF THE LEASE.
(a) Section 19(a)(2) of the Lease is hereby amended by
deleting on and after the Closing Date the word "third" in the first sentence
thereof and substituting the words and punctuation "Basic Term, any" therefor.
(b) The third sentence of Section 19(d) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
In addition, if on such date Lessee has otherwise elected to
pay the Special Purchase Price and there shall be any Secured
Certificates outstanding, Lessee shall have the option to
assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.13 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture.
SECTION 10. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26
of the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
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<PAGE> 11
SECTION 11. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable to and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
(b) The parties hereto agree that Exhibits B, C and D attached
hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss
Value and Termination Value percentages and the Special Purchase Price and the
Remaining Installments to take into account the interest rates borne by the
Secured Certificates as of the Closing Date.
SECTION 12. EFFECTIVENESS OF AMENDMENTS.
The amendments to the Lease set forth in Sections 1 through 11
hereof shall be effective as of the date hereof.
SECTION 13. RATIFICATION.
Except as amended hereby, the Lease as heretofore supplemented
continues and shall remain in full force and effect in all respects.
SECTION 14. MISCELLANEOUS.
Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. No term or provision of this Amendment may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Lessor, Lessee and any assignee of Lessor's rights hereunder. Nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee. The section and paragraph headings
in this Amendment and the table of contents are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Amendment. THIS AMENDMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of such counterparts shall
together constitute but one and the same instrument. To the extent, if any, that
this Amendment 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 Amendment may be created through the transfer or possession of
any counterpart other than the original counterpart, which shall be identified
as the counterpart containing the receipt
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<PAGE> 12
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 13
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
By: ____________________________________________
Title:
NORTHWEST AIRLINES, INC.
Lessee
By: ____________________________________________
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of ______________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By: ___________________________________________
Title:
- ------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 B]
This GUARANTEE [NW 1996 B], dated as of April 24, 1996 (as amended,
modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST
AIRLINES CORPORATION, a Delaware corporation (together with its permitted
successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I
hereto (collectively, together with their successors and permitted assigns, the
"PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"),
an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a
Lease Agreement [NW 1996 B], dated as of the date hereof (as amended, modified
or supplemented from time to time, the "LEASE"), between the Lessee and First
Security Bank of Utah, National Association, not in its individual capacity but
solely as Owner Trustee (as defined therein), except as expressly provided
therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft,
together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and
engines, and any substitute Airframe and Engines under the Lease, being
collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation
Agreement [NW 1996 B], dated as of the date hereof (as amended, modified or
supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the
Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the Parties to
consummate the transactions contemplated by the Participation Agreement that
the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security certain of
its right, title and interest in and to this Guarantee to the Indenture Trustee
(as defined in the Lease), pursuant to a Trust Indenture and Security Agreement
[NW 1996 B], dated as of the date hereof, between the Lessor and the Indenture
Trustee (as amended, modified or supplemented from time to time, the "TRUST
INDENTURE"), as security for the obligations of the Lessor referred to therein;
and
WHEREAS, the capitalized terms used herein that are not defined herein are
used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and
to induce the other Parties referred to above to enter into the Participation
Agreement and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully aware of the
terms and conditions of the Lease, the Participation Agreement and the other
Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby,
and does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent),
the Participation Agreement, the Tax Indemnity Agreement and the other
Operative Documents to which the Lessee is a party (such obligations of the
Lessee guaranteed hereby being hereafter referred to, individually, as a
"FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in
accordance with the terms of the Operative Documents, and the timely
performance of all other obligations of the Lessee thereunder (individually, a
"NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or,
collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor
does hereby agree that in the event that the Lessee fails to pay any Financial
Obligation when due for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party
in any such proceeding) within five days after the date on which such Financial
Obligation became due and payable and the applicable grace period has expired,
the Guarantor shall pay or cause to be paid forthwith, upon the receipt of
notice from any Party (such notice to be sent to the Lessee (to the extent such
Party is not stayed or prevented from doing so by operation of law) and the
Guarantor) stating that such Financial Obligation was not paid when due and for
five days after the applicable grace period has expired, the amount of such
Financial Obligation. The Guarantor hereby agrees that in the event the Lessee
fails to perform any Nonfinancial Obligation for any reason (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Lessee, or the disaffirmance
with respect to the Lessee of the Lease or the Operative Documents to which the
Lessee is a party in any such proceeding) within 10 Business Days after the
date on which such Nonfinancial Obligation is required to be performed (for
avoidance of doubt, to include any applicable grace period), the Guarantor
shall cause such Nonfinancial Obligation to be performed within 10 Business
Days following the receipt of notice from any Party (such notice to be sent to
the Lessee (to the extent such Party is not stayed or prevented from doing so
by operation of law) and the Guarantor) stating that such Nonfinancial
Obligation was not performed when so required and that any applicable grace
period has expired.
(b) The obligations of the Guarantor hereunder shall not be, to the
fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in
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<PAGE> 3
accordance with the terms of the Operative Documents) without the consent of
the Guarantor, or by any priority or preference to which any other obligations
of the Lessee may be entitled over the Lessee's obligations under the Lease and
the other Operative Documents to which the Lessee is a party, or by any other
circumstance that might otherwise constitute a legal or equitable defense to or
discharge of the obligations of a surety or guarantor including, without
limitation, any defense arising out of any laws of the United States of America
or any State thereof which would excuse, discharge, exempt, modify or delay the
due or punctual payment and performance of the obligations of the Guarantor
hereunder. Without limiting the generality of the foregoing, it is agreed that
the occurrence of any one or more of the following shall not, to the fullest
extent permitted by law, affect the liability of the Guarantor hereunder: (a)
the extension of the time for or waiver of, at any time or from time to time,
without notice to the Guarantor, the Lessee's performance of or compliance with
any of its obligations under the Operative Documents (except that such
extension or waiver shall be given effect in determining the obligations of the
Guarantor hereunder)), (b) any assignment, transfer, sublease or other
arrangement by which the Lessee transfers possession or loses control of the
use of the Aircraft, (c) any defect in the title, condition, design, operation
or fitness for use of, or damage to or loss or destruction of, the Aircraft,
whether or not due to the fault of the Lessee, (d) any merger or consolidation
of the Lessee or the Guarantor into or with any other Person, or any sale,
transfer, lease or disposal of any of its assets or (e) any change in the
ownership of any shares of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing guaranty of
payment and performance and not of collectability and is in no way conditional
or contingent upon any attempt to collect from the Lessee any unpaid amounts
due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim
for personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate (as such
term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain
or assert a claim for personal judgment against any other Person liable for the
Obligations, or make any effort at collection of the Obligations from any such
other Person, or exercise or assert any other right or remedy to which any
Party is or may be entitled in connection with the Obligations or any security
or other guaranty therefor, or (v) assert or file any claim against the assets
of the Lessee or any other guarantor or other Person liable for the
Obligations, or any part thereof, before or as a condition of enforcing the
liability of the Guarantor under this Guarantee or requiring payment of said
Obligations by the Guarantor hereunder, or at any time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted by law, that,
without limiting the generality of this Guarantee, if an Event of Default shall
have occurred and be continuing and the Lessor (or any assignee thereof
including, without limitation, the Indenture Trustee) shall be prevented by
applicable law from exercising its remedies (or any of them) under Section 15
of the Lease, the Lessor (or any assignee thereof, including, without
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<PAGE> 4
limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive
hereunder from the Guarantor, upon demand therefor the sums that would
otherwise have been due from the Lessee under the Lease had such remedies been
able to be exercised. The Guarantor hereby unconditionally waives, to the
fullest extent permitted by law, any requirement that, as a condition precedent
to the enforcement of the obligations of the Guarantor hereunder, the Lessee or
all or any one or more of any other guarantors of any of the Obligations be
joined as parties to any proceedings for the enforcement of any provision of
this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be
deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit
of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives
notice of the acceptance of this Guarantee and of the performance or
nonperformance by the Lessee, demand for payment from the Lessee or any other
Person, notice of nonpayment or failure to perform on the part of the Lessee,
diligence, presentment, protest, dishonor and, to the fullest extent permitted
by law, all other demands or notices whatsoever, other than the request for
payment hereunder and notice provided for in Section 1 hereof. The obligations
of the Guarantor shall be absolute and unconditional and shall remain in full
force and effect until satisfaction of all Obligations hereunder and, without
limiting the generality of the foregoing, to the extent not prohibited by
applicable law, shall not be released, discharged or otherwise affected by the
existence of any claims, set-off, defense or other rights that the Guarantor
may have at any time and from time to time against any Party, whether in
connection herewith or any unrelated transactions. This Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect
of any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be continuing,
in which case no such payment in respect of such a claim by the Guarantor
may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or in
the event of any proceedings for voluntary liquidation, dissolution or
other winding-up of the Lessee, whether or not involving insolvency or
bankruptcy proceedings, in which case the Obligations shall be paid and
performed in full before any payment in respect of a claim by the
Guarantor shall be made by or on behalf of the Lessee.
- 4 -
<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or
waiver or modification of, or consent under, the terms hereof, shall be
effective unless evidenced by an instrument in writing signed by the Guarantor
and each Party against whom such amendment, supplement, waiver, modification or
consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in respect of any
Obligation shall be made in Dollars and otherwise as provided in the Lease, the
Participation Agreement or any other Operative Document in which such
Obligation is contained; provided that the Guarantor consents to all the terms
of the Trust Indenture and agrees to make all payments hereunder directly to
the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust
Indenture, the Lessor will assign, and create a security interest in, certain
of its rights hereunder to and for the benefit of the Indenture Trustee. From
and after the execution and delivery of the Trust Indenture, and until receipt
by the Guarantor of a written notice from the Indenture Trustee to the effect
that the Trust Indenture has been fully satisfied and discharged, no remedy or
election hereunder may be exercised by the Lessor or consent given by the
Lessor, except by or with the prior written consent of the Indenture Trustee,
and the Guarantor will make payment of all amounts hereunder that are assigned
to the Indenture Trustee directly to the Indenture Trustee, and such payments
shall discharge the obligations of the Guarantor to the Lessor to the extent of
such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing in good
standing pursuant to the laws of the State of Delaware. It has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to enter
into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval of, or
exemption by, or the giving of notice to, or the registration with or the
taking of any other action in respect of, any Federal, state, municipal
or other governmental department, bureau, agency or instrumentality, and
no filing, recording, publication or registration in any public office or
any other place, is now, or under existing law in the future will be,
required or necessary on its behalf to authorize the execution, delivery
and performance (other than as contemplated by the Operative Documents in
the case of the
- 5 -
<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee, or
for the legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee, the
performance of its obligations hereunder, nor its consummation of the
transactions contemplated hereby, will conflict with or result in any
breach of, or constitute a default under, or result in any creation or
imposition of any Lien upon any of its property or assets under, any
applicable laws or any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it may be
bound or to which any of its property or assets may be subject, or its
Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this Guarantee
have been duly authorized by all necessary corporate action. This
Guarantee has been duly executed and delivered by it and constitutes its
legal, valid and binding obligation enforceable in accordance with its
terms except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Guarantee brought by any party, and (b) hereby waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, to the extent permitted by applicable law, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Guarantee may not be enforced in
or by such courts. The Guarantor hereby generally consents to service of
process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York
10038, Attention: Managing Attorney, or such office of the Guarantor in New
York City as from time to time may be designated by the Guarantor in writing to
the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This
Guarantee (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the Guarantor and
the Parties, with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, and (c) shall be
binding upon the successors and assigns of the Guarantor and shall inure to the
benefit of, and shall be enforceable by, each of the Parties to the fullest
extent permitted by applicable laws. The headings in this Guarantee are for
purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
- 6 -
<PAGE> 7
10. NOTICES. All requests, notices or other communications hereunder
shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and
Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to exercise, no delay
in exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further
exercise of such right or remedy or the exercise of any other right or remedy.
12. SURVIVAL. All representations and warranties contained herein or made
in writing by the Guarantor in connection herewith shall survive the execution
and delivery of this Guarantee regardless of any investigation made by any
Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by applicable law, any
provision of this Guarantee that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or any provision in any other Operative Document, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE
RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING
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<PAGE> 8
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL BE
DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any
and all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
16. TERMINATION. Subject to the provisions of Section 3 hereof, this
Guarantee shall terminate upon the indefeasible payment and performance in full
of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to
the Obligations described in Section 1 and nothing in this Guarantee shall be
deemed to constitute a guarantee of payment of any of the Secured Certificates
or shall give rise to any inference that the Lessee or the Guarantor has so
guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be
duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By: ____________________________________
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By: _____________________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
_____________________________________
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 B]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Insert Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 B]
THIS PARTICIPATION AGREEMENT [NW 1996 B] dated as of April 24, 1996, among
(i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of
the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on
Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which
executes and delivers a counterpart of this Agreement and of the Trust
Agreement (as hereinafter defined) on or prior to the Delivery Date referred to
below, (iii) the institutions listed on Schedule I and identified therein as
"LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee under the Trust
Agreement (herein, in such latter capacity, together with any successor owner
trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is defined in
the Lease hereinafter referred to) between Lessee and the Manufacturer, the
Manufacturer has agreed to sell to Lessee, among other things, certain Boeing
757-251 aircraft, including the Aircraft which has been delivered by the
Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1996 B], dated as of the date hereof (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to
the Owner Trustee certain rights and interests of Lessee under the
Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and Agreement [NW
1996 B] (herein called the "CONSENT AND AGREEMENT"), substantially in the
form attached to the Purchase Agreement Assignment (herein called the
"CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Participant is entering into a Trust Agreement [NW 1996 B], dated as
of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST AGREEMENT", such
term to include, unless the context otherwise requires, any Trust Supplement
referred to below), with the Owner Trustee, pursuant to which Trust Agreement
the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the
execution and delivery of this Agreement are entering into the Trust Indenture
and Security Agreement [NW 1996 B], dated as of the date hereof (said Trust
Indenture and Security Agreement, as the same may be amended or supplemented
from time to time, being herein called the "TRUST INDENTURE", such term to
include, unless the context otherwise requires, the Trust Supplement referred
to below) pursuant to which the Owner Trustee issues to each of the Loan
Participants one or more secured certificates (herein called collectively, the
"SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence
of the Owner Trustee's indebtedness to the Loan Participants arising from the
Loan Participants' making secured loans to the Owner Trustee to finance a
portion of the Owner Trustee's purchase of the Aircraft, which Secured
Certificates are to be secured by the mortgage and security interests created
by the Owner Trustee in favor of the Indenture Trustee, and the Owner Trustee
shall execute and deliver a Trust and Indenture Supplement substantially in the
form of Exhibit A to the Trust Indenture (the "TRUST SUPPLEMENT") covering the
Aircraft, supplementing the Trust Agreement and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 B],
dated as of the date hereof (such Lease Agreement, as the same may be amended
or supplemented from time to time to the extent permitted by the terms thereof
and this Agreement, herein called the "LEASE", such term to include, unless the
context otherwise requires, the Lease Supplement referred to below), whereby,
subject to the terms and conditions set forth therein, the Owner Trustee agrees
to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the
Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and
delivered by Lessee to the Owner Trustee under the Bill of Sale, and accepted
by the Owner Trustee for all purposes of the Lease, such acceptance to be
evidenced by the execution of the Trust Supplement covering the Aircraft, and
such lease to be evidenced by the execution and delivery of a Lease Supplement
covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section 13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a)
Participation by Loan Participants. Subject to the terms and conditions of
this Agreement, each Loan Participant agrees to finance, in part, the Owner
Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to
the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule
II opposite the name of such Loan Participant. Each Loan Participant shall
make such Loan to the Owner Trustee on a date to be designated pursuant to
Section 2 hereof, but in no event later than April 30, 1996, by transferring to
the account of the Owner Trustee at Bankers Trust Company, New York, New
York, Acct. No. 01014789,
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<PAGE> 3
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite such Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan Participants to the
Owner Trustee, to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon, the Owner Trustee shall issue and the
Indenture Trustee shall authenticate Secured Certificates which shall be
delivered simultaneously to the Loan Participants under the Trust Indenture to
evidence the obligation of the Owner Trustee to repay the Loans together with
interest thereon. The Owner Trustee agrees to pay the Secured Certificates in
installments in the amounts and on the dates provided in the Trust Indenture
together with interest thereon and all other amounts payable with respect
thereto, all as more fully provided in the Trust Indenture.
(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than April 30,
1996, by transferring to the account of the Owner Trustee at Bankers Trust
Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later
than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite the Owner
Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation of each of the
Loan Participants and the Owner Participant to be made as provided above in the
payment of Lessor's Cost for the Aircraft is hereinafter called such party's
"COMMITMENT" for the Aircraft. In case any of the Loan Participants or the
Owner Participant shall default in its obligation under the provisions of this
Section 1, no other such party shall have any obligation to make any portion of
such defaulted amount available or to increase the amount of its Commitment and
the obligation of such nondefaulting party shall remain subject to the terms
and conditions set forth in this Agreement. Upon receipt by the Owner Trustee
of all amounts to be furnished to it on the Delivery Date pursuant to this
Section 1 and the satisfaction of the conditions set forth in Section 4 hereof,
Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee,
and the Owner Trustee shall purchase and take title to and accept delivery of
the Aircraft. In consideration of the transfer of title to and delivery of the
Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with
such transfer of title and delivery, pay to Lessee from the amounts so
furnished it by the Participants, the Lessor's Cost of the Aircraft.
(d) Determination of Interest Period. The length of each Interest Period
shall be determined by Lessee on behalf of the Owner Trustee in accordance with
Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each
Participant, the Owner Trustee and the Indenture Trustee at least two Business
Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of
Lessor's Cost and the amount of each Participant's Commitment for the Aircraft.
As to each Participant, the making of its Commitment for the Aircraft available
in the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 4(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill of
Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
(v) to borrow from the Loan Participants to finance a portion of the
Lessor's Cost for the Aircraft and to issue to the Loan Participants
Secured Certificates in aggregate principal amount equal to the amount
borrowed, pursuant hereto and to the Trust Indenture; and
(vi) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative
Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in
the Aircraft. It is agreed that the obligations of each of the Loan
Participants and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it
relates to representations and warranties only contained in the Tax Indemnity
Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants),
(xxvi) and (xxvii) shall not be a condition precedent to the obligations of the
Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner
Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the
obligation of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall have
received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing or
as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be in
effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would make
it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available in
accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the benefits
of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan Participants
shall have made available the amount of their Commitments for the
Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft
in accordance with Section 1 hereof.
(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 the Documentation Agent and
the Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Loan Participants and the
Owner Participant, or their respective counsel, provided that only each
Loan Participant shall receive an executed original of its respective
Secured Certificate and provided, further, that an excerpted copy of the
Purchase Agreement shall only be delivered to and retained by the Owner
Trustee and the Owner Participant (but the Indenture Trustee shall also
retain an excerpted copy of the Purchase Agreement which may be inspected
by the Documentation Agent and its counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant and their respective counsel if
and only if there shall occur and be continuing an Event of Default), the
chattel paper counterpart of the Lease and the Lease Supplement covering
the Aircraft dated the Delivery Date shall be delivered to the Indenture
Trustee, and the Tax Indemnity Agreement shall only be delivered to
Lessee and the Owner Participant and their respective counsel:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Documentation Agent, the Owner Participant
and Lessee (herein called the "ACCEPTANCE CERTIFICATE") duly
completed and executed by the Owner Trustee or its agent, which may
be a representative of Lessee, and by such representative on behalf
of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement; and
(14) the Guarantee.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS"
and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the
Granting Clause of the Trust Indenture that are not covered by the
recording system established by the Federal Aviation Act shall have been
executed and delivered by the Owner Trustee, and such financing statement
or statements shall have been duly filed in all places necessary or
advisable, and any additional Uniform Commercial Code financing
statements deemed advisable by the Owner Participant or the Documentation
Agent shall have been executed and delivered by Lessee or the Owner
Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall have
received the following, in each case in form and substance satisfactory
to the Documentation Agent and the Owner Participant:
(1) a certified copy of the Certificate of Incorporation and
By-Laws of Lessee and a copy of resolutions of the board of
directors of Lessee, certified
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<PAGE> 7
by a Vice President, the Secretary or an Assistant Secretary of
Lessee, duly authorizing the sale of the Aircraft and the lease by
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by Lessee of this Agreement, the Bill of Sale, the
FAA Bill of Sale, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Tax Indemnity
Agreement and each other document required to be executed and
delivered by Lessee on or before the Delivery Date in accordance
with the provisions hereof and thereof, and a certified copy of the
Certificate of Incorporation and By-Laws of the Guarantor and a copy
of resolutions of the Board of Directors of the Guarantor, certified
by a Vice President, the Secretary or an Assistant Secretary of the
Guarantor, duly authorizing the execution, delivery and performance
by the Guarantor of the Guarantee;
(2) such other documents and evidence with respect to Lessee,
the Guarantor, the Manufacturer, the Owner Trustee, the Owner
Participant, the Owner Participant Guarantor, the Indenture
Trustee, and the Loan Participants as the Loan Participants or the
Owner Participant, or the respective counsel for the Loan
Participants or the Owner Participant, may reasonably request in
order to establish the authority of such parties to consummate the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith; and
(3) a certificate of Lessee as to the person or persons
authorized to execute and deliver this Agreement, the Purchase
Agreement Assignment, the Lease, the Lease Supplement covering the
Aircraft and any other documents to be executed on behalf of Lessee
in connection with the transactions contemplated hereby and as to
the signatures of such person or persons, and a certificate of the
Guarantor as to the person or persons authorized to execute and
deliver the Guarantee and as to the signatures of such person or
persons.
(viii) All appropriate action required to have been taken prior to
the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, authorizations, exemptions and approvals shall
be in full force and effect on the Delivery Date.
(ix) On the Delivery Date the following statements shall be true,
and the Documentation Agent and the Owner Participant shall have received
evidence satisfactory to it to the effect that:
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<PAGE> 8
(1) the Owner Trustee has good title (subject to filing and
recording the FAA Bill of Sale with the Federal Aviation
Administration) to the Aircraft on such Delivery Date, free and
clear of Liens other than the rights of Lessee under the Lease and
Lease Supplement covering the Aircraft, the mortgage and security
interests created by the Trust Indenture, the rights of the Owner
Participant under the Trust Agreement and the Trust Supplement, and
Liens permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the Federal
Aviation Administration (or there shall have been received adequate
assurances from the Federal Aviation Administration that the
certification will be issued as soon as the registration of the
Aircraft is complete) as to type and airworthiness in accordance
with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Federal
Aviation Administration, and the Trust Agreement shall have been
filed (or shall be in the process of being so filed) with the
Federal Aviation Administration; and
(4) application for registration of the Aircraft in the name
of the Owner Trustee has been duly made with the Federal Aviation
Administration.
(x) On the Delivery Date, (A) the representations and warranties of
Lessee, the Owner Participant and the Owner Trustee contained in Sections
7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be
true and accurate as though made on and as of such date except to the
extent that such representations and 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, or would result from the purchase,
sale, lease or mortgage of the Aircraft, which constitutes (or would,
with the passage of time or the giving of notice or both, constitute) an
Event of Default.
(xi) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant and the Owner Trustee, and
reasonably satisfactory as to scope and substance to the Documentation
Agent and the Owner Participant, from Cadwalader, Wickersham & Taft,
special counsel for Lessee and the Guarantor, as to New York and certain
federal law matters, and Lessee's and the Guarantor's in-house or other
counsel, as to Minnesota and certain federal law matters and the Delaware
General Corporation Law, to the collective effect that:
(1) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota and has the
corporate power and authority to carry on its business as now
conducted and to enter into and
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<PAGE> 9
perform its obligations under the Lessee Documents. Lessee is a
Certificated Air Carrier. The Guarantor is a corporation duly
organized and validly existing pursuant to the laws of the State of
Delaware and has the corporate power and authority to enter into and
perform its obligations under the Guarantee;
(2) the execution, delivery and performance of the Lessee
Documents by Lessee and of the Guarantee by the Guarantor have been
duly authorized by all necessary corporate action on the part of
Lessee and the Guarantor, as the case may be, do not require any
approval of stockholders of Lessee or the Guarantor, as the case
may be, or, to the knowledge of such counsel, any approval or
consent of any trustee or holders of any indebtedness or
obligations of Lessee or the Guarantor, as the case may be (or that
any such approval or consent as is required has been obtained), and
neither the execution and delivery of any thereof by Lessee or the
Guarantor, as the case may be, nor the performance by Lessee or the
Guarantor, as the case may be, of its respective obligations
thereunder (A) contravenes any law, governmental rule or regulation
or, to the knowledge of such counsel, judgment or order applicable
to or binding on Lessee or the Guarantor, as the case may be, or
(B) to the knowledge of such counsel, contravenes or results in any
breach of, or constitutes any default under, or results in the
creation of any Lien (other than Permitted Liens) upon any property
of Lessee or the Guarantor, as the case may be, under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, or any other
agreement or instrument, corporate charter, by-law or permit issued
by any Minnesota or United States governmental authority to which
Lessee or the Guarantor, as the case may be, is a party or by which
Lessee or the Guarantor, as the case may be, or its properties may
be bound or affected;
(3) neither the execution and delivery by Lessee of the Lessee
Documents or by the Guarantor of the Guarantee nor the performance
by Lessee or the Guarantor of their respective obligations
thereunder requires the consent or approval of, or the giving of
notice to, or the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority
in the United States, except for (A) the registration of the
Aircraft (including the placement on board of the owner's copy of
the application for registration of the Aircraft and, if necessary,
a flying time wire), recordations and other actions referred to in
paragraph 5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the Lessee
Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and delivered by
the Guarantor, the Purchase Agreement (insofar as it relates to the
Aircraft) has been duly entered into and delivered by Lessee,
and each of the other Lessee Documents has been duly entered into
and delivered by Lessee and each of such other Lessee Documents and
the Guarantee constitutes the legal, valid and
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<PAGE> 10
binding obligations of Lessee or the Guarantor, as the case may
be, enforceable against Lessee or the Guarantor, as the case may be,
in accordance with its respective terms, except as limited by (A)
general principles of equity, (B) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the Lease,
which laws, however, do not in the opinion of such counsel make the
remedies provided in the Lease inadequate for the practical
realization of the benefits provided thereby, but no opinion is
expressed as to the amount or priority of any recovery under any
particular circumstances and, in particular, no opinion is expressed
as to the effect on such remedies of Section 1-201(37) of the
Uniform Commercial Code, as in effect in any jurisdiction, and (D)
in the case of indemnity provisions contained in such documents, as
limited by public policy considerations;
(5) subject to the registration of the Aircraft with the
Federal Aviation Administration in the name of the Owner Trustee,
and assuming the due and timely filing for recordation in
accordance with the provisions of the Federal Aviation Act of (A)
the FAA Bill of Sale, (B) the Lease with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and made a part thereof and (C) the Trust
Indenture with the Trust Supplement attached thereto and made a
part thereof, with respect to such portion of the Aircraft as is
covered by the recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the United
States Code by virtue of the same constituting an "aircraft" or an
"aircraft engine" as defined in the Federal Aviation Act, no
further filing or recording of any document (including any
financing statement with respect to the Lease under Article 9 of
the Uniform Commercial Code of Minnesota or Utah), is necessary in
any applicable jurisdiction within the United States in order (x)
to establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee or any third parties or (y) to create
and perfect the Indenture Trustee's security interest in such
portion of the Aircraft as against the Owner Trustee or any third
parties. With respect to such portion of the Aircraft, if any, as
may not be deemed to constitute an "aircraft" or "aircraft engine"
as defined in the Federal Aviation Act, except for the filing of
financing statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified in
such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and when
required, (x) under the federal laws of the United States and the
laws of the State of New York no filing or recording of any
document (including any financing statement) is necessary under
Article 9 of the Uniform Commercial Code in order to establish the
Owner Trustee's title to such portion of the Aircraft as
against Lessee and any third parties in any applicable jurisdiction
within the United States, and (y) under the federal laws of the
United States and the laws of the State of New York no filing or
recording of any document
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<PAGE> 11
(including any financing statement) is necessary or advisable under
Article 9 of the Uniform Commercial Code in order to create or
perfect the Indenture Trustee's security interest in such portion of
the Aircraft as against the Owner Trustee and any third parties in
any applicable jurisdiction within the United States; and
(6) there are no legal or governmental proceedings pending or,
to the best knowledge of such in-house counsel, threatened to which
Lessee or any of its subsidiaries is a party or to which any of the
properties of Lessee or any of its subsidiaries is subject other
than those proceedings summarized in the Guarantor's publicly filed
annual, quarterly and other reports filed with the Securities and
Exchange Commission, and proceedings which such in-house counsel
believes would not reasonably be expected to have a material
adverse effect on Lessee and its subsidiaries, taken as a whole, or
on the power or ability of Lessee to perform its obligations under
the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such further
effect with respect to such other matters as the Documentation Agent or
the Owner Participant may reasonably request. Such opinion with respect
to the matters specified in this paragraph (xi) may rely exclusively (A)
upon the opinion of special counsel in Oklahoma City, Oklahoma, referred
to in paragraph (xv) of this Section 4(a) with respect to the matters
stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with
respect to the opinion in paragraph (5) above insofar as it relates to
the laws of the State of Utah and (C) upon the representations and
warranties set forth herein, including, without limitation, in Section 8
hereof, with respect to matters of fact, and may state that no opinion is
expressed as to laws other than laws of the State of New York (in the
case of such special counsel's opinion), the State of Minnesota and the
Delaware General Corporation Law (in the case of Lessee's in-house or
other counsel's opinion) and the Federal laws of the United States. Such
counsel may assume that, except for the filings and recordations
contemplated herein, there are no filings or recordations with respect to
the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the
Trust Agreement, the Trust Supplement or the Trust Indenture with the
Federal Aviation Administration, or of Uniform Commercial Code financing
statements naming the Owner Trustee as a debtor in the filing offices of
the Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be identified
in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee
and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant,
the Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the Manufacturer Documents and such other matters as such
parties may reasonably request.
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<PAGE> 12
(xiii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National Association is a
national banking association duly organized, validly existing and
in good standing under the laws of the United States, is a Citizen
of the United States and has under the laws of the State of Utah
and federal banking law the power, authority and legal right to
execute, deliver and carry out in its capacity as Owner Trustee or
in its individual capacity, as the case may be, the terms of the
Owner Trustee Documents, including the Secured Certificates;
(2) First Security Bank of Utah, National Association, is the
duly appointed Owner Trustee under the Trust Agreement;
(3) each of the Owner Trustee Documents has been duly
authorized, executed and delivered by First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee,
or both, as the case may be, and each of the Owner Trustee
Documents constitutes the legal, valid and binding obligation of
First Security Bank of Utah, National Association, in its
individual capacity, as Owner Trustee, or both, as the case may be,
enforceable against First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both,
as the case may be, in accordance with its respective terms, except
as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited or
rendered unenforceable by applicable laws, which laws, however, do
not in the opinion of such counsel make the remedies provided in
such document inadequate for the practical realization of the
benefits provided thereby;
(4) the execution, delivery and performance by the Owner
Trustee and by First Security Bank of Utah, National Association,
in its individual capacity, or both, as the case may be, of the
Owner Trustee Documents and the consummation of the transactions by
the Owner Trustee and by First Security Bank of Utah, National
Association in its individual capacity contemplated thereby are
not and will not be in violation of the articles of association or
By-Laws of First Security Bank of Utah, National Association or of
any indenture, mortgage, credit agreement, license or other
agreement or instrument known to
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<PAGE> 13
such counsel after due inquiry to which First Security Bank of Utah,
National Association in its individual capacity or as the Owner
Trustee is a party or by which it is bound, or of any Federal or
Utah law, governmental rule or regulation applicable to First
Security Bank of Utah, National Association in its individual
capacity or as the Owner Trustee or any judgment or order
applicable to it and known to such counsel after due inquiry;
(5) neither the execution and delivery by the Owner Trustee
and, where appropriate, by First Security Bank of Utah, National
Association in its individual capacity, or both, as the case may
be, of the Owner Trustee's Documents nor the consummation of any of
the transactions by the Owner Trustee, by First Security Bank of
Utah, National Association in its individual capacity, or both, as
the case may be, contemplated thereby requires the consent or
approval of, the giving of notice to, or the registration with, or
the taking of any other action with respect to, any governmental
authority or agency under any existing Federal law governing the
banking and trust powers of First Security Bank of Utah, National
Association or Utah law (except for filings pursuant to the Uniform
Commercial Code, and except for compliance with requirements of the
Federal Aviation Act as to which such counsel may express no
opinion);
(6) the Trust Agreement, as supplemented by the Trust
Supplement, duly creates for the benefit of the Owner Participant
the trust interest in the Trust Estate which the Trust Agreement by
its terms purports to create;
(7) assuming that Utah law were to govern the perfection of
the security interests in the Trust Indenture Estate under the
Trust Indenture, except for (i) the Indenture Trustee's taking of
possession of the original counterparts of the Lease and the Lease
Supplement covering the Aircraft (insofar as the Lease and the
Lease Supplement covering the Aircraft may constitute chattel paper
(as such term is defined in the Uniform Commercial Code as in
effect in Utah)) and all monies and securities (including
instruments) required to be deposited with the Indenture Trustee,
and (ii) the filing of Uniform Commercial Code financing statements
with the office of the Division of Corporations and Commercial Code
of the State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture, naming the
Owner Trustee as debtor and the Indenture Trustee as secured party,
which filing has been duly effected, no other filing or recording
or refiling or rerecording is necessary in the State of Utah to
create, perfect or maintain the perfected status of such security
interest (except for the timely filing of continuation statements
in respect of such financing statements);
(8) assuming that the Operative Documents were negotiated to a
substantial degree in the State of New York and that the closing of
a substantial portion of the transactions contemplated by the
Operative Documents occurred
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<PAGE> 14
in the State of New York, the choice of New York law to
govern the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which the
Owner Trustee or First Security Bank of Utah, National Association
in its individual capacity, or both, is a party is, under the laws
of the State of Utah, a valid choice of law and should, in a
properly presented case, be honored by the courts of the State of
Utah;
(9) the Owner Trustee has received from Lessee such title to
the Aircraft as Lessee had immediately prior to the conveyance to
the Owner Trustee, subject to the rights of the Owner Trustee and
Lessee under the Lease and the security interest created pursuant
to the Trust Indenture and the Trust Supplement;
(10) no taxes, fees or other charges, except taxes imposed on
fees payable to the Owner Trustee, will be imposed by Salt Lake
City or the State of Utah or any political subdivision or taxing
authority thereof on or with respect to the execution, delivery or
performance of any of the Operative Documents and the trust created
pursuant to the Trust Agreement will not be subject to any such
taxes, fees or other charges on, based on or measured by the net
income of the Trust Estate (as distinguished from the net income of
the Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such tax,
fee or other charge if the Owner Trustee performed its duties under
the Trust Agreement and the Trust Indenture from an office located
outside Utah); and
(11) there are no pending or, to the knowledge of such
counsel, threatened proceedings against or affecting the Owner
Trustee before any court or administrative agency, individually or
in the aggregate, which, if determined adversely to it, would
materially adversely affect the power or ability of the Owner
Trustee to perform its obligations under the Owner Trustee
Documents.
Such opinion shall be to such further effect with respect to such other
matters incident to the matters covered thereby as the Documentation
Agent, the Owner Participant, the Indenture Trustee or Lessee may
reasonably request. Such opinion may state that (A) no opinion is
expressed as to laws other than the laws of the State of Utah, the
Federal laws of the United States governing the banking and trust powers
of First Security Bank of Utah, National Association, and the Federal
Aviation Act as it relates to paragraph (1) and (B) no opinion is
expressed as to the priority of security interests or as to title to any
part of the Trust Estate. Such opinion may assume (M) the due
authentication of the Secured Certificates by the Indenture Trustee, (N)
that the Operative Documents (other than the Trust Agreement) are legal,
valid and binding under the laws of the State of [ ] and (O) the
due authorization, execution and delivery of the Trust Agreement by the
Owner Participant and of the other Operative
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<PAGE> 15
Documents by each of the parties thereto other than First Security Bank
of Utah, National Association in its individual capacity and as the Owner
Trustee.
(xiv) The Loan Participants shall have received a favorable opinion
addressed to the Loan Participants, the Indenture Trustee, the Owner
Trustee and Lessee, and reasonably satisfactory as to scope and substance
to the Documentation Agent, the Indenture Trustee, the Owner Trustee and
Lessee, from [ ], special counsel for the Owner
Participant, to the effect that:
(1) the Owner Participant is a duly incorporated and validly
existing corporation in good standing under the laws of the State
of [ ] and has the corporate power and authority to execute,
deliver and carry out the terms of the Owner Participant Documents;
(2) the Owner Participant Documents have been duly authorized,
executed and delivered by the Owner Participant and, assuming the
due authorization, execution and delivery thereof by the other
parties thereto, constitute legal, valid and binding obligations of
the Owner Participant, enforceable against the Owner Participant in
accordance with their respective terms, except as limited by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law)
and by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and, in the case of indemnity provisions
contained herein and therein, as limited by public policy
considerations;
(3) neither the execution and delivery by the Owner
Participant of the Owner Participant Documents nor the consummation
of any of the transactions by the Owner Participant contemplated
thereby requires the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action
with respect to, any governmental authority or agency of the United
States or the State of [ ] or any governmental subdivision of
either thereof) (except as shall have been duly obtained or given,
specifying the same);
(4) assuming the due authorization, execution and delivery
thereof by the Owner Trustee and the other parties, if any, thereto
(other than the Owner Participant in the case of this Agreement),
and the due authentication of the Secured Certificates by the
Indenture Trustee, the Owner Trustee Documents (other than the
Trust Agreement) constitute legal, valid and binding obligations of
the Owner Trustee, enforceable against the Owner Trustee in
accordance with their respective terms, except as limited by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
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<PAGE> 16
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(5) assuming the due authorization, execution and delivery
thereof by the Owner Trustee and the Indenture Trustee as
aforesaid, the Trust Indenture duly creates for the benefit of the
Indenture Trustee the security interests which the Trust Indenture
purports to create and the Indenture Trustee is entitled to the
benefits and security afforded by the Trust Indenture;
(6) the execution, delivery and performance of the Owner
Participant Documents by the Owner Participant does not require any
approval of stockholders of the Owner Participant, or, to the
knowledge of such counsel, any approval or consent of any trustee
or holders of any indebtedness or obligations of the Owner
Participant (or that any such approval or consent as is required
has been obtained), and neither the execution and delivery of the
Owner Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations thereunder
(A) contravenes any law, governmental rule or regulation or, to the
knowledge of such counsel, judgment or order applicable to or
binding on the Owner Participant or (B) to the knowledge of such
counsel, contravenes or results in any breach of, or constitutes
any default under, or results in the creation of any Lien (other
than Liens provided for in the Operative Documents) upon any
property of the Owner Participant under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank
loan or credit agreement, or any other agreement or instrument,
corporate charter or by-law or permit issued by any [ ] or
United States governmental authority to which the Owner Participant
is a party or by which it or its properties may be bound or
affected; and
(7) there are no pending or, to the knowledge of such counsel,
threatened actions or proceedings against or affecting the Owner
Participant before any court or administrative agency individually
or in the aggregate which, if determined adversely to the Owner
Participant, would have a material adverse effect on the Owner
Participant or the ability of the Owner Participant to perform its
obligations under the Owner Participant Documents;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's obligations in connection
with this Agreement as the Documentation Agent, the Indenture Trustee,
the Owner Trustee or Lessee may reasonably request. Such opinion may
rely upon the representations and warranties set forth herein, including,
without limitation, in Section 8 hereof, as to matters of fact. Such
opinion may state that (M) no opinion is expressed as to laws other than
the laws of the State of [ ], and the Federal laws of the United
States, and (N) no opinion is expressed as to the perfection or priority
of security interests or as to title to any part of the Trust
Estate.
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<PAGE> 17
(xv) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and the Trust Indenture with the Trust Supplement
attached thereto are in due form for recording by and have been
duly filed for recordation with the Federal Aviation Administration
in accordance with the provisions of Section 44107 of Title 49 of
the United States Code;
(2) proper application for registration of the Aircraft in the
name of the Owner Trustee together with the affidavits of the Owner
Trustee and the Owner Participant required by Section
47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and
the Trust Agreement have been duly filed with the Federal Aviation
Administration in accordance with the Federal Aviation Act, and
such counsel is of the opinion that the Federal Aviation
Administration will issue a Certificate of Aircraft Registration
(AC Form 8050-3) in response to said application;
(3) the Owner Trustee is the owner of the legal title to the
Aircraft, and the Aircraft is free and clear of all Liens, except
the security interests created by the Trust Indenture and such
other Liens as are permitted by the Lease or this Agreement;
(4) the Aircraft is eligible for registration in the name of
the Owner Trustee and will be duly registered in due course in the
name of the Owner Trustee pursuant to and in accordance with the
provisions of Sections 44102 and 44103 of Title 49 of the United
States Code;
(5) the Trust Indenture as supplemented by the Trust
Supplement creates a duly and validly perfected first priority
security interest in the Aircraft and a duly perfected assignment
of all the right, title and interest of the Owner Trustee in, to
and under the Lease as supplemented by the Lease Supplement
(insofar as such security interest affects an interest covered by
the recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the United
States Code), subject only to the Lease and to Liens permitted by
the Lease and the Trust Indenture, it being understood that no
opinion need be expressed as to the validity or enforceability of
such security interest under local law or as against third
parties in respect of the Aircraft when the same is outside the
United States;
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<PAGE> 18
(6) none of the Trust Indenture, the Trust Agreement, the
Trust Supplement, the Lease or the Lease Supplement is required to
be filed or recorded in any other place within the United States in
order to perfect the security interest in the Aircraft and the
Lease as supplemented by the Lease Supplement (insofar as such
security interest affects an interest covered by the recording
system established by the Federal Aviation Administration pursuant
to Section 44107 of Title 49 of the United States Code), under the
applicable laws of any jurisdiction within the United States; and
(7) no authorization, approval, consent, license or order of,
or registration with, or giving of notice to, the FAA Aircraft
Registry is required for the valid authorization, delivery or
performance of the Lease, the Lease Supplement, the Trust
Agreement, the Trust Indenture and the Trust Supplement or to
evidence the Owner Trustee's title to the Aircraft except for such
authorizations, approvals, consents, licenses, orders,
registrations, and notices as have been effected.
Such opinion may state that no opinion is expressed as to laws other than
the Federal laws of the United States. Said opinion may also contain a
statement to the effect that such opinion is limited to the records
maintained by the Federal Aviation Administration Aircraft Registry and
does not cover liens that are perfected without the filing of notice
thereof with the Federal Aviation Administration, such as Federal tax
liens, liens arising under Section 1368(a) of Title 29 of the United
States Code and possessory artisans' liens, and is subject to the
accuracy of FAA personnel in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Said opinion may also rely
on the opinion obtained by such counsel from counsel for the Aeronautical
Center of the FAA, satisfactory in form and scope to such counsel, and on
past practice of the FAA which is consistent with such Aeronautical
Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould, special counsel for the Indenture Trustee, to the effect that:
(1) State Street Bank and Trust Company is a Massachusetts
trust company, duly organized and validly existing in good standing
under the laws of the Commonwealth of Massachusetts and has the
full corporate power, authority and legal right to enter into and
perform its obligations under the Indenture Trustee Documents and,
in its capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(2) the execution, delivery and performance by State Street
Bank and Trust Company, in its individual capacity or as Indenture
Trustee, as the case
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<PAGE> 19
may be, of the Indenture Trustee Documents and the consummation
by State Street Bank and Trust Company, in its individual capacity
or as Indenture Trustee, as the case may be, of the transactions
contemplated thereby and compliance by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee, as the
case may be, with the terms thereof including, without limitation,
the authentication of the Secured Certificates to be delivered on
the Delivery Date, have been duly authorized by all necessary
corporate action on the part of State Street Bank and Trust Company,
and neither the execution and delivery thereof nor the consummation
by State Street Bank and Trust Company, in its individual capacity
or as Indenture Trustee, as the case may be, of the transactions
contemplated thereby nor compliance by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee, as the
case may be, with any of the terms and provisions thereof (i) does
or will contravene any law or governmental rule or regulation of the
United States governing the banking or trust powers of State Street
Bank and Trust Company or the Commonwealth of Massachusetts or any
order or judgment known to such counsel and applicable to or binding
on State Street Bank and Trust Company, or (ii) does or will
contravene or result in any breach of, or constitute any default
under, the charter documents or by-laws of State Street Bank and
Trust Company or the provisions of any indenture, mortgage, contract
or other agreement, in each case known to such counsel, to which
State Street Bank and Trust Company is a party or by which it or any
of its properties is or may be bound or affected;
(3) neither the execution and delivery by State Street Bank
and Trust Company, in its individual capacity or as Indenture
Trustee, of the Indenture Trustee Documents or the certificates of
authentication on the Secured Certificates to be delivered on the
Delivery Date, nor the performance by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee, as the
case may be, of any of the transactions contemplated thereby
requires or required the consent or approval of, the giving of
notice to, the registration with, the recording or filing of any
document with, or the taking of any other action in respect of, any
Federal or Massachusetts governmental authority or agency governing
the banking or trust powers of State Street Bank and Trust Company
or under any Massachusetts law;
(4) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in
its individual capacity or as Indenture Trustee, as the case may
be, and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is the legal, valid
and binding obligation of State Street Bank and Trust Company, in
its individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization
or other similar laws or equitable
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<PAGE> 20
principles of general application to or affecting the enforcement
of creditors' rights;
(5) the Secured Certificates to be issued and dated the
Delivery Date have been duly authenticated and delivered by the
Indenture Trustee pursuant to the terms of the Indenture Trustee
Documents;
(6) to the knowledge of such counsel, there are no pending or
threatened actions or proceedings against or affecting State Street
Bank and Trust Company before any court or administrative agency or
arbitration board or tribunal which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of State Street Bank and Trust Company
to perform its obligations under the Indenture Trustee Documents;
and
(7) there are no taxes, fees or other governmental charges
("TAXES") payable under the laws of the Commonwealth of
Massachusetts with respect to the execution of and delivery by
State Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of any of the Indenture
Trustee Documents (except for taxes on any fees payable to State
Street Bank and Trust Company in its individual capacity) which
would not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts or
did not perform its administrative duties under the Indenture
Trustee Documents in Massachusetts. Neither State Street Bank and
Trust Company, in its individual capacity or as Indenture Trustee,
as the case may be, the Owner Participant, the Owner Trustee, nor
the trust created by the Trust Agreement will, as a result of the
transactions contemplated thereby, be subject to any taxes under
the laws of the Commonwealth of Massachusetts or any political
subdivision thereof (except for taxes on any fees payable to State
Street Bank and Trust Company in its individual capacity) which
would have not been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts or
did not perform its administrative duties under the Indenture
Trustee Documents in Massachusetts, and there are no taxes under
the laws of the Commonwealth of Massachusetts or any political
subdivision thereof (except for taxes on any fees payable to State
Street Bank and Trust Company in its individual capacity) upon or
with respect to the Aircraft or any Engine or any part of any
interest therein, or the purchase, ownership, delivery, lease,
sublease, possession, presence, use, operation, condition, storage,
maintenance, modification, alteration, repair, sale, return,
transfer or other disposition of the Aircraft or any Engine which
would not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts
or did not perform its administrative duties under the Indenture
Trustee Documents in Massachusetts;
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<PAGE> 21
and to such further effect with respect to such other matters incident to
the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request. Such
opinion may state that no opinion is expressed as to laws other than the
internal substantive laws of the Commonwealth of Massachusetts and the
Federal laws of the United States. Such opinion may further state that
with respect to paragraph (4) in connection with the opinion relating to
legality, validity and binding effect of the documents there referred to,
such counsel has assumed that the laws of the jurisdictions whose laws
govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from Vedder, Price,
Kaufman & Kammholz, special counsel for the Loan Participants, a
favorable opinion satisfactory in substance and form to the Documentation
Agent, as to such matters incident to the transactions contemplated
hereby as the Documentation Agent may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall have
received a certificate signed by the President, any Executive Vice
President, any Senior Vice President or any Vice President of Lessee,
dated the Delivery Date, addressed to the Loan Participants and the Owner
Participant and certifying as to the matters stated in paragraphs (viii),
(x) (A) (insofar as it relates to Lessee) and (xxii) of this Section
4(a). Copies of the orders, permits, waivers, authorizations, exemptions
and approvals referred to in Section 4(a)(viii) shall have been furnished
to the Loan Participants and the Owner Participant.
(xix) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b) of this Agreement, be deemed to
have reaffirmed the representations and warranties made by it in Section
8 of this Agreement.
(xx) The Owner Participant shall have received an appraisal report,
in form and substance satisfactory to the Owner Participant, from BK
Associates, Inc., independent aircraft appraisers, or such other
recognized aircraft appraiser agreed upon by the Owner Participant and
Lessee.
(xxi) The Loan Participants and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Documentation Agent and the Owner Participant, as to
the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event of Loss
(or event which with the passage of time would become an Event of Loss)
with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
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<PAGE> 22
(xxiv) 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 to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions
contemplated hereby.
(xxv) The representations and warranties of the Indenture Trustee
and the Loan Participants contained in Section 8 shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and each Participant shall have received a certificate signed by
the Chairman of the Board, the President, any Vice President or any
Assistant Vice President of the Indenture Trustee addressed to such
Participant and certifying as to the foregoing matters with respect to
the Indenture Trustee.
(xxvi) The Owner Participant shall have received from [
], special counsel to the Owner Participant, a favorable
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its special
counsel, there shall have been, since the date hereof, no amendment,
modification, addition, or change in or to the provisions of the Internal
Revenue Code of 1986, as amended through the date hereof, and the
regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or
Executive Orders of the President of the United States, all as in effect
on the date hereof, the effect of which might preclude the Owner
Participant from obtaining any of the income tax benefits and
consequences assumed to be available to the Owner Participant as set
forth in Section 2 of the Tax Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants and the
Owner Participant, and reasonably satisfactory as to scope and substance
to the Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee, which opinion shall state
(with customary assumptions and qualifications) that the Owner Trustee,
as lessor under the Lease, and the Indenture Trustee, as assignee of the
Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
would be entitled to the benefits of 11 U.S.C. Section 1110 with respect
to the Aircraft.
(xxix) The Loan Participants shall have received an opinion
addressed thereto, in form and substance reasonably satisfactory to the
Documentation Agent, from BK
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<PAGE> 23
Associates, Inc., independent aircraft appraisers, to the effect that the
fair market value of the Aircraft on the Delivery Date is equal to
Lessor's Cost.
Promptly upon the registration of the Aircraft and the recording of the
Trust Indenture, the Lease, the Lease Supplement covering the Aircraft and the
Trust Supplement covering the Aircraft pursuant to the Federal Aviation Act,
Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee and Lessee an opinion as to the due and valid
registration of the Aircraft in the name of the Owner Trustee, the due
recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement,
such Trust Supplement, the Lease and the Trust Agreement and the lack of filing
of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It is agreed that
the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B)
to accept delivery of the Aircraft under the Lease, are all subject to the
fulfillment to the satisfaction of Lessee prior to or on the Delivery Date of
the following conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, exemptions, authorizations and approvals shall
be in full force and effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and
4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or
parties thereto (other than Lessee and the Guarantor) in the manner
specified in Section 4(a)(v), shall each be satisfactory in form and
substance to Lessee, shall be in full force and effect on the Delivery
Date, and an executed counterpart of each thereof (other than the Secured
Certificates) shall have been delivered to Lessee or its special counsel.
(iv) Lessee shall have received a copy of the resolutions or other
instruments satisfactory to Lessee of the Board of Directors of the Owner
Participant, or other evidence of authority satisfactory to Lessee,
certified as of the Delivery Date by the Secretary or an Assistant
Secretary of the Owner Participant, duly authorizing or evidencing
authority for the execution, delivery and performance by the Owner
Participant of all of the Owner Participant Documents, a copy of the
resolutions or other instruments satisfactory to Lessee of the Board of
Directors of the Owner
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<PAGE> 24
Participant Guarantor, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Owner Participant Guarantor, duly
authorizing the execution, delivery and performance by the Owner
Participant Guarantor of the Owner Participant Guaranty, and a copy of the
general authorizing resolutions of the boards of directors of the
Indenture Trustee and the Owner Trustee, certified as of the Delivery Date
by the Secretary or an Assistant Secretary of the Indenture Trustee and
the Owner Trustee, respectively, which authorize the execution, delivery
and performance by the Indenture Trustee of the Indenture Trustee
Documents and the Secured Certificates and by the Owner Trustee of the
Owner Trustee Documents, together with such other documents and evidence
with respect to the Indenture Trustee, the Owner Participant, the Owner
Participant Guarantor and the Owner Trustee as Lessee or its special
counsel may reasonably request in order to establish the consummation of
the transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) The representations and warranties of the Loan Participants, the
Indenture Trustee, the Owner Participant and the Owner Trustee, contained
in Section 8 hereof shall be true and accurate as of the Delivery Date as
though made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which
event such representations and warranties shall have been true and
accurate on and as of such earlier date) and Lessee shall have received a
certificate signed by the Chairman of the Board, the President, any Vice
President or any Assistant Vice President or other authorized
representative of the Indenture Trustee, the Owner Participant and the
Owner Trustee, respectively, addressed to Lessee and certifying as to the
foregoing matters with respect to the Indenture Trustee, the Owner
Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in Sections
4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case
addressed to Lessee and dated the Delivery Date and in each case in scope
and substance reasonably satisfactory to Lessee and Lessee's special
counsel.
(vii) 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 to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions
contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in effect
which, in the opinion of Lessee or its special counsel, would make it a
violation of law or regulations or guidelines for Lessee to enter into
any transaction contemplated by the Operative Documents.
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<PAGE> 25
(ix) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under
any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. [Reserved] .
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full. Each of the Loan Participants and, by its acceptance
of a Secured Certificate, each Certificate Holder agrees that it will look
solely to the income and proceeds from the Trust Indenture Estate to the extent
available for distribution to such Certificate Holder as provided in Article
III of the Trust Indenture and that neither the Owner Participant nor the Owner
Trustee shall be personally liable to the Loan Participants or any Certificate
Holder for any amounts payable under the Secured Certificates, the Trust
Indenture or hereunder, except as expressly provided in the Operative
Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In
General. Lessee represents, warrants and covenants to each of the Loan
Participants, the Owner Trustee, the Indenture Trustee, and the Owner
Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly existing
pursuant to the laws of the State of Minnesota; is duly qualified to do
business as a foreign corporation in each jurisdiction in which its
operations or the nature of its business requires, other than failures to
qualify which would not have a material adverse effect on the
consolidated business, assets, properties or condition (financial or
otherwise) of Lessee and its subsidiaries taken as a whole or on the
ability of Lessee to perform its obligations under the Lessee Documents;
is a Certificated Air Carrier; has its chief executive office (as such
term is used in Article 9 of the Uniform Commercial Code) located at
Eagan, Minnesota; holds all licenses, certificates, permits and
franchises from the appropriate agencies of the United States and/or all
other governmental authorities having jurisdiction necessary to authorize
Lessee to engage in air transport and to carry on scheduled passenger
service as presently conducted (other than those licenses, certificates,
permits and franchises which, if not obtained, would not have a material
adverse effect on the consolidated business assets, properties or
condition (financial or otherwise) of Lessee and its subsidiaries taken as
a whole or on the ability
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<PAGE> 26
of Lessee to perform its obligations under the Lessee Documents); and
has the corporate power and authority to own or hold under lease its
properties wherever located or used and to enter into and perform its
obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of the Lessee
Documents will, on the Delivery Date, have been duly authorized by all
necessary corporate action on the part of Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holders of
any indebtedness or obligations of Lessee except such as have been duly
obtained or by the Delivery Date will have been duly obtained, and
neither the execution or delivery thereof or the consummation by Lessee
of the transactions contemplated thereby nor the compliance by Lessee
with any of the terms and provisions of such agreements contravenes any
law, judgment, government rule, regulation or order binding on Lessee or
the certificate of incorporation or by-laws of Lessee or contravenes the
provisions of, or constitutes a default under, or results in the creation
of any Lien (other than Permitted Liens) upon the property of Lessee
under, any indenture, mortgage, contract or other agreement to which
Lessee is a party or by which it or its properties may be bound or
affected;
(iii) neither the execution and delivery by Lessee of the Lessee
Documents nor the performance by Lessee of its obligations thereunder
require the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of, any
Federal, State or foreign government authority or agency, except for (A)
the orders, permits, waivers, exemptions, authorizations and approvals of
the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee required to be obtained on or prior to the Delivery
Date, which orders, permits, waivers, exemptions, authorizations and
approvals have been duly obtained and are, or will on the Delivery Date
be in full force and effect (other than a flying time wire, all steps to
obtain the issuance of which will have been, on the Delivery Date, taken
or caused to be taken by Lessee), (B) the registration of the Aircraft
referred to in Section 4(a)(ix)(4) and (C) such consents, approvals,
notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only
after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each constitute
legal, valid and binding obligations of Lessee enforceable against Lessee
in accordance with the terms thereof (subject to the qualifications set
forth in clause (4) of the form of opinion of counsel to Lessee in
Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's knowledge,
threatened actions, suits or proceedings before any court, governmental
body, arbitration board, tribunal or administrative agency which might
materially adversely affect the business, condition (financial or
otherwise), operations or properties of Lessee or Lessee's ability to
perform its obligations under the Operative Documents;
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<PAGE> 27
(vi) except for (A) the registration of the Aircraft pursuant to the
Federal Aviation Act, (B) the filing for recording pursuant to said Act
of the Lease with the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a part
thereof, the Trust Indenture with the Trust Supplement attached thereto
and made a part thereof and the FAA Bill of Sale, (C) the filing of
financing statements (and continuation statements at periodic intervals)
with respect to the security and other interests created by such
documents under the Uniform Commercial Code of Minnesota and Utah and
such other states as may be specified in the opinion furnished pursuant
to Section 4(a)(xi) hereof, and (D) the taking of possession by the
Indenture Trustee of the original counterpart of each of the Lease and
the Lease Supplement covering the 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 Owner Trustee's title to and the Indenture Trustee's
security interest in the Aircraft as against Lessee and any third parties
in any applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an Event of
Default under the Lease (or any event which with the giving of notice or
the passage of time or both would constitute an Event of Default under
the Lease) which is presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of
Lessee will not be unreasonably small for the conduct of the business in
which Lessee is engaged or is about to engage; Lessee has no intention or
belief that it is about to incur debts beyond its ability to pay as they
mature; and Lessee's sale of the Aircraft is made without any intent to
hinder, delay or defraud either present or future creditors;
(ix) The consolidated balance sheets of the Guarantor and its
consolidated subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated subsidiaries
for the year then ended, which have been audited by independent certified
public accountants, copies of which have been furnished to the Owner
Participant and each Loan Participant, fairly present the consolidated
financial condition of the Guarantor and its consolidated subsidiaries as
at such date and the results of operations and cash flow of the Guarantor
and its consolidated subsidiaries for the period ended on such date, all
in accordance with generally accepted accounting principles consistently
applied and since December 31, 1995 there has been no material adverse
change in the consolidated financial condition, cash flow or results of
operations of the Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive good title
to the Aircraft free and clear of all Liens, except Liens permitted by
clause (v) of Section 6 of the Lease, the rights of Lessee under the
Lease and the Lease Supplement covering the
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<PAGE> 28
Aircraft, the Lien of the Trust Indenture and the beneficial interest of
the Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation G or U of the Board of Governors of the
Federal Reserve System;
(xii) Lessee is not in default in the performance of any term or
condition of the Purchase Agreement which materially adversely impairs
the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft; and
(xiv) On the Delivery Date, the Aircraft will be duly certified by
the FAA as to type and airworthiness, will be insured by Lessee in
accordance with the terms of the Lease and will be in the condition and
state of repair required under the terms of the Lease.
(b) General Tax Indemnity. [Reserved]
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<PAGE> 29
(c) General Indemnity. [Reserved]
(d) Income Tax. For purposes of this Section 7, the term "INCOME TAX"
means any Tax based on or measured by gross or net income or receipts (other
than taxes in the nature of sales, use, license or property Taxes) (including,
without limitation, capital gains taxes, minimum taxes, income taxes collected
by withholding and taxes on tax preference items), and Taxes which are capital,
doing business, excess profits or net worth taxes, estate taxes, inheritance
taxes, succession taxes, medicare, FICA, FUTA and similar taxes and interest,
additions to tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner
Participant represents that it is acquiring its interest in the Trust Estate
for investment and not with a present intent as to any resale or distribution
thereof (subject nonetheless to any requirement of law that the disposition of
its properties shall at all times be and remain within its control) and that
neither it nor anyone acting on its behalf has directly or indirectly offered
any interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire any of the same from,
anyone in a manner which would result in a violation of the Securities Act of
1933, as amended.
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<PAGE> 30
(b) Lessee represents and warrants that neither Lessee nor anyone acting
on behalf of Lessee has directly or indirectly offered any interest in the
Trust Estate or any Secured Certificates for sale to, or solicited any offer to
acquire any of the same from, anyone in a manner which would result in a
violation of the Securities Act of 1933, as amended.
(c) Each of the Owner Participant and First Security Bank of Utah,
National Association, in its individual capacity, represents and warrants (as
to itself) to the other parties to this Agreement that it is, and on the
Delivery Date will be, a Citizen of the United States without making use of any
voting trust, voting powers agreement or similar arrangement. The Owner
Participant agrees, solely for the benefit of Lessee and the Loan Participants,
that if (i) it shall cease to be a Citizen of the United States and (ii) while
the Aircraft is registered in the United States or at such time as Lessee
desires to reregister the Aircraft in the United States, the Aircraft shall or
would therefore become ineligible for registration in the name of the Owner
Trustee under the Federal Aviation Act and regulations then applicable
thereunder, then the Owner Participant shall (at its own expense and without
any reimbursement or indemnification from Lessee) promptly effect a voting
trust, voting powers agreement or other similar arrangement or take any other
action as may be necessary to prevent any deregistration and to maintain the
United States registration of the Aircraft or to permit reregistration of the
Aircraft in the United States, as the case may be. It is agreed that: (A) the
Owner Participant shall be liable to pay on request to each of the other
parties hereto and to each holder of a Secured Certificate for any damages
actually suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee
and the Loan Participants for any damages which may actually be incurred by
Lessee, any Sublessee or the Loan Participants as a result of the Owner
Participant's failure to comply with its obligations pursuant to the second
sentence of this Section 8(c). Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the
second sentence of this Section 8(c). First Security Bank of Utah, National
Association, in its individual capacity, agrees that if at any time an officer
or responsible employee of the Corporate Trust Department of First Security
Bank of Utah, National Association, shall obtain actual knowledge that First
Security Bank of Utah, National Association, has ceased to be a Citizen of the
United States without making use of a voting trust, voting powers
agreement or similar arrangement, it will promptly resign as Owner Trustee (if
and so long as such citizenship is necessary under the Federal Aviation Act as
in effect at such time or, if it is not necessary, if and so long as the Owner
Trustee's citizenship would have any material adverse effect on the Loan
Participants, Lessee or the Owner Participant), effective upon the appointment
of a successor Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or First Security Bank of Utah, National
Association, in its individual capacity, does not comply with the requirements
of this Section 8(c), the Owner Trustee, the Indenture Trustee and the
Participants hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the giving of notice or
both) shall not have occurred and be continuing under the Lease due to
non-compliance by Lessee with the registration requirements in the Lease.
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<PAGE> 31
(d) First Security Bank of Utah, National Association, in its individual
capacity, represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Documents to which it is a
party are kept is Salt Lake City, Utah. First Security Bank of Utah, National
Association, in its individual capacity, agrees that it will not change the
location of such office to a location outside of Salt Lake City, Utah, without
prior written notice to all parties. First Security Bank of Utah, National
Association, in its individual capacity, further represents and warrants that
(A) on the Delivery Date the Owner Trustee shall have received whatever title
to the Aircraft as was conveyed to it by Lessee, and (B) the Trust Agreement,
and, assuming due authorization, execution and delivery of the Trust Agreement
by the Owner Participant, the other Owner Trustee Documents, when executed and
delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank of Utah, National Association, in its
individual capacity, represents that it has not offered any interest in the
Trust Estate or any Secured Certificates or any similar securities for sale to,
or solicited any offer to acquire the same from, anyone, and that no officer or
responsible employee of the Corporate Trust Department of First Security Bank
of Utah, National Association, has knowledge of any such offer or solicitation
by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither it nor
anyone acting in its behalf has offered any Secured Certificates for sale to,
or solicited any offer to buy any Secured Certificate from, any person or
entity other than in a manner in compliance with, and which does not require
registration under, the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
(f) The Owner Participant and each of the Loan Participants agree that, at
any time after the Depreciation Period, as long as no Event of Default or
Default of the type referred to in Section 14(a), 14(b) or 14(e) of the Lease
shall have occurred and be continuing, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner Participant, in its sole discretion, approves)
and (b) the following conditions are met: (i) unless the country of registry
is Taiwan, the United States maintains normal diplomatic relations with the
country of registry of the Aircraft, and if
the country of registry is Taiwan, the United States maintains diplomatic
relations at least as good as those in effect on the Delivery Date; and (ii)
the Owner Trustee and the Indenture Trustee shall have received prior to such
reregistration favorable opinions (subject to customary exceptions) addressed
to each such party, from counsel of recognized reputation qualified in the laws
of the relevant jurisdiction and reasonably satisfactory to the Owner
Participant to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of
Lessee, and the rights and remedies of the Owner Trustee, under the Lease
shall remain valid, binding and enforceable under the laws of such
jurisdiction (or the laws of the jurisdiction to
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<PAGE> 32
which the laws of such jurisdiction would refer as the applicable
governing law) to substantially the same effect as in the United States,
(C) after giving effect to such change in registration, the Lien of the
Trust Indenture on the Owner Trustee's right, title and interest in and to
the Aircraft and the Lease shall continue as a valid and duly perfected
first priority security interest and all filing, recording or other action
necessary to protect the same shall have been accomplished (or, if such
opinion cannot be given at the time of such proposed change in
registration because such change in registration is not yet effective, (1)
the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall have
received a certificate from Lessee that all possible preparations to
accomplish such filing, recording and other action shall have been done,
and such filing, recording and other action shall be accomplished and a
supplemental opinion to that effect shall be delivered to the Owner
Trustee and the Indenture Trustee on or prior to the effective date of
such change in registration), (D) it is not necessary, solely as a
consequence of such change in registration and without giving effect to
any other activity of the Owner Trustee, the Owner Participant or the
Indenture Trustee (or any Affiliate thereof), as the case may be, for the
Owner Trustee, the Owner Participant or the Indenture Trustee to qualify
to do business in such jurisdiction as a result of such reregistration in
order to exercise any rights or remedies with respect to the Aircraft
pursuant to the Lease, (E) there is no tort liability of the owner or
lessor of an aircraft not in possession thereof under the laws of such
jurisdiction (it being agreed that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Participant, such
opinion shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee shall
have agreed to provide insurance covering the risk of requisition of use
of such Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the
loss of use of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such change in
registration after giving effect to such change in registration and that the new
country of registry imposes aircraft maintenance standards not materially
different from those of the United States, France, Germany, Japan, the
Netherlands or the United Kingdom and (b) the Owner Participant shall have
received assurances reasonably satisfactory to it as to the matters in the
preceding clause (a) and that (i) the original indemnities in favor of it under
this Agreement afford it substantially the same protection as provided prior to
such change in registry, (ii) no Liens shall arise from such reregistration
other than Permitted Liens and (iii) such change will not result in the risk of,
or the imposition of, or increase the amount of, any Tax for which Lessee is not
required to indemnify under the Operative Documents, or is not then willing to
enter into a binding agreement to indemnify in a manner reasonably satisfactory
in form and substance to the Owner Participant. Lessee shall pay all costs,
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<PAGE> 33
expenses, fees, recording and registration taxes, including the reasonable
fees and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
(g) The Owner Participant represents and warrants to Lessee, the Indenture
Trustee, the Loan Participants and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties and
to enter into and perform its obligations under the Owner Participant
Documents, and has a tangible net worth (exclusive of goodwill) greater
than $75,000,000;
(ii) the Owner Participant Documents have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do
not require any approval not already obtained of stockholders of the
Owner Participant or any approval or consent not already obtained of any
trustee or holders of any indebtedness or obligations of the Owner
Participant, and have been duly executed and delivered by the Owner
Participant, and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance by
the Owner Participant with any of the terms and provisions thereof will
contravene any United States Federal or state law, judgment, governmental
rule, regulation or order applicable to or binding on the Owner
Participant (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation or
to the nature of the equipment owned by the Owner Trustee, other than
such laws, rules or regulations relating to financing or the citizenship
requirements of the Owner Participant under applicable aviation law) or
contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner Participant under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter, by-law
or other agreement or instrument to which the Owner Participant is a party
or by which it or its properties may be bound or affected;
(iii) each of the Owner Participant Documents constitutes a legal,
valid and binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with the terms thereof (subject to
the qualifications set forth in clause (2) of the opinion of counsel to
the Owner Participant in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially adversely
affect the financial condition of the Owner Participant or the
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<PAGE> 34
ability of the Owner Participant to perform its obligations under
the Owner Participant Documents;
(v) upon the execution and delivery of the Trust Indenture, the
Trust Indenture Estate will be free and clear of Lessor Liens (including
for this purpose Liens that would be Lessor Liens but for the proviso in
the definition of Lessor Liens) attributable to the Owner Participant;
and
(vi) neither the execution and delivery of the Owner Participant
Documents nor the performance by the Owner Participant of its obligations
thereunder require the consent or approval of, the giving of notice to,
or the registration with, or the taking of any other action in respect of
any Federal, state or foreign government authority or agency except for
those exceptions referred to in Section 7(a)(iii) which may be applicable
to the Owner Participant and the Owner Participant Documents.
(h) Each of First Security Bank of Utah, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each of
First Security Bank of Utah, National Association, in its individual capacity,
and the Owner Participant agrees that it will promptly, at its own expense,
take such action as may be necessary duly to discharge such Lessor Lien
attributable to it. Each of First Security Bank of Utah, National Association,
in its individual capacity, and the Owner Participant agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Estate resulting from Lessor Liens (including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to it.
(i) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Indenture Estate
pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted
by, or failure of the Indenture Trustee to take any action required by, the
Operative Documents, (C) claims against the Indenture Trustee relating to Taxes
or Expenses which are excluded from the indemnification provided by Section 7
pursuant to said Section 7, or (D) claims against the Indenture Trustee arising
out of the transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the
Operative Documents other than a transfer of the Aircraft pursuant to Section 9,
10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing
pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section
15 of the Lease while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due pursuant to the Trust
Indenture.
(j) Each Loan Participant represents, warrants, covenants and agrees as to
itself: (i) that this Agreement has been duly authorized, executed and
delivered by such Loan Participant and this Agreement constitutes a legal,
valid and binding obligation of such Loan Participant enforceable against such
Loan Participant in accordance with its terms except as
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<PAGE> 35
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that
such Loan Participant is duly organized and validly existing under the laws of
its jurisdiction of organization; and (iii) that such Loan Participant has full
power, authority and legal right to execute, deliver and carry out the terms of
this Agreement.
(k) Each Loan Participant represents and warrants that the Secured
Certificate to be issued to it pursuant to the Trust Indenture is being
acquired by it for investment and not with a view to resale or distribution (it
being understood that such Loan Participant may pledge or assign as security
its interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its
control, except that the Loan Participants may sell, transfer or otherwise
dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement.
(l) The Indenture Trustee, and by acceptance of the Secured Certificates
the Certificate Holders, hereby (i) agree that for purposes of the application
of Section 1111(b) of Title 11 of the United States Code or any successor
provision or any comparable provisions that the "debtor" in any bankruptcy
proceeding involving the assets held or administered pursuant to the Trust
Agreement shall be strictly limited to the Trust Estate (excluding the Excluded
Payments) and (ii) make (and hereby agree to make), with respect to the Trust
Indenture Estate, the election provided for in Section 1111(b)(2) of Title 11
of the United States Code. It is hereby agreed by the Indenture Trustee, and
by the acceptance of the Secured Certificates the Certificate Holders hereby
agree, that if (i) all or any part of the Trust Estate becomes the property of,
or the Owner Participant becomes, a debtor subject to the reorganization
provisions of the Bankruptcy Reform Act of 1978 or any successor provision or
any comparable proceeding, (ii) pursuant to such reorganization provisions the
Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to the holder(s) of the
Secured Certificates or to the Indenture Trustee, directly or indirectly (other
than the recourse liability of the Owner Participant under this Participation
Agreement), to make payment on account of any amount payable as
principal or interest on the Secured Certificates and (iii) any holder(s) of the
Secured Certificates or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner Trustee
(in its individual capacity) or the Owner Participant on account of (ii) above,
then such holder(s) or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee or the Owner Participant (whichever shall have made
such payment) such Excess Payment. For purposes of this Section 8(l), "EXCESS
PAYMENT" means the amount by which such payment exceeds the amount which would
have been received by the holder(s) of the Secured Certificates or the Indenture
Trustee if the Owner Trustee (in its individual capacity) or the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section 8(l) shall prevent the holder of a
Secured Certificate or the Indenture Trustee from enforcing any personal
recourse obligation (and
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<PAGE> 36
retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under this Agreement or the Trust Indenture
(and any exhibits or annexes thereto) that is expressed as being an obligation
of the Owner Participant or the Owner Trustee (in its individual capacity).
(m) State Street Bank and Trust Company represents and warrants, in its
individual capacity, to Lessee, the Owner Trustee and each Participant as
follows:
(i) it is a Citizen of the United States without making use of any
voting trust, voting powers trust agreement or other similar arrangement,
will notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States without making use
of any voting trust, voting powers trust agreement or other similar
arrangement, is likely to change and that it will resign as Indenture
Trustee as provided in Section 8.02 of the Trust Indenture if it should
cease to be a Citizen of the United States without making use of any
voting trust, voting powers trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the requisite corporate power and authority to
enter into and perform its obligations under the Trust Indenture and this
Agreement and to authenticate the Secured Certificates to be delivered on
the Delivery Date;
(iii) the Indenture Trustee Documents and the authentication of the
Secured Certificates to be delivered on the Delivery Date have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or state law or
governmental rule or regulation relating to its banking or trust powers
or contravene or result in any breach of, or constitute any default under
its charter or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly executed
and delivered by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, and, assuming
that each such agreement is the legal, valid and binding obligation of
each other party thereto, is the legal, valid and binding obligation of
State Street Bank and Trust Company, in its individual capacity or as
Indenture Trustee, as the case may be, enforceable against State Street
Bank and Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, in accordance with its terms except as
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the
enforcement of creditors' rights.
(n) The Owner Participant will not, directly or indirectly, sell, assign,
convey or otherwise transfer any of its right, title or interest in and to this
Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to
any person or entity, unless
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<PAGE> 37
(i) the proposed transferee is a "Transferee" (as defined below) and (ii) the
Owner Participant sells, assigns, conveys or otherwise transfers all of its
right, title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and the proceeds therefrom to a single entity. A "TRANSFEREE" shall
mean either (A) a bank, finance company, insurance company, leasing company,
institutional investor or other financial institution with a combined capital,
surplus and undivided profits of at least $75,000,000 or a corporation whose
tangible net worth is at least $75,000,000, exclusive of goodwill, in either
case as of the proposed date of such transfer, as determined in accordance with
generally accepted accounting principles, or (B) any Affiliate of such a Person
identified in clause (A), provided that such Person furnishes to the Owner
Trustee, the Loan Participants, the Indenture Trustee and Lessee a guaranty with
respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Loan Participants,
the Indenture Trustee and Lessee, the Owner Participant's obligations hereunder,
including but not limited to, under Section 8(c) and Section 8(h) hereof, in the
form attached as Exhibit C hereto or otherwise in form and substance reasonably
satisfactory to Lessee, the Owner Trustee and the Majority in Interest of
Certificate Holders; provided, however, that any Transferee shall not be an
airline, a commercial air carrier, an air freight forwarder, an entity engaged
in the business of parcel transport by air or other similar person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person. Each such transfer to a Transferee shall be subject to the conditions
that (M) upon giving effect to such transfer, the Transferee is a Citizen of the
United States (including by use of a voting trust agreement, voting powers
agreement or other similar arrangement), and has full power and authority to
enter into the transactions contemplated hereby, (N) the Transferee has the
requisite power and authority to enter into and carry out the transactions
contemplated hereby and such Transferee shall have delivered to Lessee, the
Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of
counsel in form and substance reasonably satisfactory to such persons as to the
due authorization, delivery, legal, valid and binding effect and enforceability
of the agreement or agreements referred to in the next clause with respect to
the Transferee and any guaranty provided pursuant to the provisions of this
Section 8(n) as to guarantor, (O) the Transferee enters into an agreement or
agreements, in form and substance reasonably satisfactory to the Owner
Trustee, the Majority in Interest of Certificate Holders, Lessee and the
Indenture Trustee, whereby the Transferee confirms that it shall be deemed a
party to this Agreement and a party to the Trust Agreement and agrees to be
bound by all the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in, the Owner Participant Documents (to
the extent of the participation so transferred to it) and makes the
representations and warranties made by the Owner Participant thereunder, (P)
such transfer does not affect registration of the Aircraft under the Federal
Aviation Act, or any rules or regulations promulgated thereunder or create a
relationship which would be in violation thereof or violate any provision of the
Securities Act of 1933, as amended, or any other applicable Federal or state
law, (Q) the transferor Owner Participant assumes the risk of any loss of its
Interest Deductions, Amortization Deductions and MACRS Deductions and its risk
of any Inclusion Event (each as defined in the Tax Indemnity Agreement) to the
extent resulting from such transfer, (R) the transferor Owner Participant
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<PAGE> 38
pays all of the reasonable costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred in connection with such
transfer, including the reasonable costs and expenses of the Owner Trustee, the
Indenture Trustee, Lessee and the Loan Participants in connection therewith,
and (S) the terms of the Operative Documents and the Overall Transaction shall
not be altered. Upon any such transfer by the Owner Participant as above
provided, the Transferee shall be deemed the Owner Participant for all purposes
hereof and of the other Operative Documents and each reference herein to the
transferor Owner Participant shall thereafter be deemed for all purposes to be
to the Transferee and the transferor Owner Participant shall be relieved of all
obligations of the transferor Owner Participant under the Owner Participant
Documents arising after the date of such transfer except to the extent fully
attributable to or arising out of acts or events occurring prior thereto and
not assumed by the Transferee (in each case, to the extent of the participation
so transferred). If the Owner Participant intends to transfer any of its
interests hereunder, it shall give 20 (10, in the case of a transfer to an
Affiliate of the Owner Participant) days' prior written notice thereof to the
Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee. For the avoidance
of doubt, in the event that [ ] or an Affiliate of
[ ] is the Owner Participant, nothing in this Section 8(n)
shall be deemed to restrict the ability of [ ] or such
Affiliate to merge with, consolidate with, or transfer all or substantially all
of its assets to any Person which is not an Affiliate of [ ],
provided that such Person agrees to be bound by all of the terms of the
Operative Documents and undertakes all of the obligations of the Owner
Participant thereunder.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless waived
by the Loan Participants, Lessee shall not be entitled to assume the Secured
Certificates on the date for purchase of the Aircraft pursuant to Section 19(d)
of the Lease if on such date an Event of Default shall have occurred and be
continuing or any condition or event shall exist which, with the passage of
time or giving of notice or both, would become such an Event of Default.
(p) First Security Bank of Utah, National Association, and State Street
Bank and Trust Company, each in its individual capacity, agrees for the benefit
of Lessee to comply
with the terms of the Trust Indenture which it is required to comply with in
its individual capacity.
(q)(A) Each Loan Participant represents and warrants that (i) it is not an
"employee benefit plan" subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or an individual retirement
account, individual retirement annuity or plan subject to Section 4975 of the
Code (hereafter collectively referred to as an "ERISA Plan"), and (ii) no part
of the funds to be used by it to acquire or hold any Secured Certificate (or
any participation or other interest therein) constitutes assets of an ERISA
Plan, or any trust established under any ERISA Plan, or of a "church plan", as
defined in Section 3(33) of ERISA or Section 414(e) of the Code, or of a
"governmental plan", as defined in Section 3(32) of ERISA or Section 414(d) of
the Code, subject to the laws of a state of the
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<PAGE> 39
United States having prohibitions on transactions with such church or
governmental plan substantially similar to Section 406 of ERISA or Section 4975
of the Code ("Plan Assets"). Each Loan Participant covenants that it will not
grant participations (including, without limitation, "risk participations") in
its Secured Certificate or Secured Certificates to any Person unless such
Person represents, warrants and covenants in accordance with the immediately
preceding sentence, and agrees not to transfer the interest so acquired except
to another Person qualifying under the terms of this sentence. Other than as
set forth in the immediately preceding sentence, each Loan Participant covenants
that it will not transfer (including, without limitation, by a change in the
capacity in which it holds any Secured Certificates) any interest in any Secured
Certificate to any Person unless such Person represents and warrants (or is
deemed to represent and warrant) in accordance with the first sentence of this
Section 8(q)(A), and unless such Person agrees (or is deemed to agree) not to
transfer any such interest except in compliance with the terms of the
immediately preceding sentence or this sentence. The Owner Participant
represents and warrants that it is not an ERISA Plan and is not to any extent
acquiring its interest in the Trust Estate or any interests represented thereby
with Plan Assets. The Owner Participant covenants that it will not transfer any
of its right, title or interest in and to this Agreement, the Trust Estate or
the Trust Agreement or any proceeds therefrom to any Person unless such Person
makes (or is deemed to have made) a representation and warranty as of the date
of transfer that either (i) such Person is not an ERISA Plan and no part of the
funds to be used by it for the purchase of such right, title and interest (or
any part thereof) constitutes Plan Assets, or (ii) that such transfer will not
result in a prohibited transaction (as defined in Section 4975 of the Code and
ERISA).
(B) Lessee represents and warrants that: none of (i) the execution and
delivery of this Agreement and the other Operative Documents, (ii) the initial
purchase by the Loan Participants of the Secured Certificates, and (iii) the
initial acquisition by the Owner Participant of its beneficial interest in the
Trust Estate will involve any non-exempt prohibited transaction within the
meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the
Code (such representation being made in reliance upon and subject to the
accuracy of the representations contained in subparagraph (A) of this Section
8(q)).
(r) Each Participant, the Owner Trustee and the Indenture Trustee agrees
for the benefit of the Manufacturer and Lessee that it will not disclose or
suffer to be disclosed the terms of the Purchase Agreement to any third party
except (A) as may be required by any applicable statute, court or administrative
order or decree or governmental ruling or regulation or to any regulatory
authorities having official jurisdiction over them, (B) in connection with the
financing of the Aircraft and the other transactions contemplated by the
Operative Documents (including any transfer of Secured Certificates (including
by way of participation or assignment of an interest, provided such participant
or assignee agrees to hold such terms confidential to the same extent as herein
provided) or the Owner Participant's beneficial interest in the Trust Estate and
any exercise of remedies under the Lease and the Trust Indenture), (C) with the
prior written consent of the Manufacturer and Lessee, (D) to the Owner
Trustee's, the Indenture Trustee's and each Participant's counsel or special
counsel, independent insurance brokers or other agents who agree to hold such
information confidential, or (E) in the case of the Owner Participant and/or the
Owner Trustee, it may
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<PAGE> 40
disclose so much of the Purchase Agreement as has been assigned to the
Owner Trustee under the Purchase Agreement Assignment and not specifically
reserved to Lessee under Section 1 thereof, to bona fide potential purchasers of
the Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not jointly,
represent and warrant that none of the funds made available by the Loan
Participants pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve
System, assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not cause or
permit to exist a Loan Participant Lien attributable to it with respect to the
Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it. Each Loan Participant agrees that Lessee
may, on behalf of the Owner Trustee and upon notice to the affected Certificate
Holder, arrange for another institution (which may be a Certificate Holder) to
purchase the Secured Certificates of the affected Certificate Holder (providing
that such transfer is otherwise in accordance with Section 8(q)(A) hereof) by
paying the affected Certificate Holder an amount equal to the unpaid principal
amount of the Secured Certificates held by the affected Certificate Holder plus
accrued but unpaid interest thereon to the date of payment of such principal
amount plus all other amounts owed to such affected Certificate Holder under
the Operative Documents (including any Funding Loss Amount payable as a result
of the applicable purchase occurring on a day other than the last day of an
Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE
HOLDER" shall mean a Certificate Holder which has asserted claims against the
Owner Trustee or Lessee under or sought rights or remedies provided by Section
7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that
it will promptly, at its own expense, take such action as may be necessary duly
to discharge such Indenture Trustee's Liens. State Street Bank and Trust
Company, in its individual capacity, agrees to make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Indenture Estate or
the Trust Estate resulting from such Indenture Trustee's Liens.
(v) First Security Bank of Utah, National Association, in its individual
capacity, represents and warrants that:
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<PAGE> 41
(i) the Trust Agreement and, assuming due authorization, execution
and delivery of the Trust Agreement by the Owner Participant, each of the
other Owner Trustee Documents has been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such
instruments on behalf of First Security Bank of Utah, National
Association or the Owner Trustee, as the case may be;
(ii) the Trust Estate is free and clear of Lessor Liens (including
for this purpose Liens that would be Lessor Liens but for the proviso in
the definition of Lessor Liens) attributable to First Security Bank of
Utah, National Association, in its individual capacity, and there are no
Liens affecting the title of the Owner Trustee to the Aircraft or any
part of the Trust Estate or the Trust Indenture Estate resulting from any
act or claim against First Security Bank of Utah, National Association,
in its individual capacity, arising out of any event or condition not
related to the ownership, leasing, use or operation of the Aircraft or to
any other transaction contemplated by this Agreement or any of the
Operative Documents, including any such Lien resulting from the
nonpayment by First Security Bank of Utah, National Association, in its
individual capacity, of any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes (or to the
best of its knowledge would, with the passage of time or the giving of
notice or both, constitute) an Event of Default as defined in the Trust
Indenture which has been caused by or relates to First Security Bank of
Utah, National Association, in its individual capacity, and which is
presently continuing;
(iv) it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has
the full corporate power, authority and legal right to enter into and
perform its obligations under each of the Owner Trustee Documents (to the
extent entered into in its individual capacity) and assuming due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant, has all requisite power and authority as Owner Trustee to
execute, deliver and perform the other Owner Trustee Documents;
(v) each of the Owner Trustee Documents has been duly authorized by
all necessary corporate action on its part, and neither the execution and
delivery thereof, either in its individual capacity or (assuming due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant) as Owner Trustee, as the case may be, nor its performance of
any of the terms and provisions thereof will violate any Federal law
governing the banking and trust powers of First Security Bank of Utah,
National Association, or Utah law or regulation or contravene or result in
any breach of the provisions of its articles of association or By-Laws or
any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly executed and
delivered by First Security Bank of Utah, National Association, in its
individual
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<PAGE> 42
capacity, as Owner Trustee, or both and, assuming that each such agreement
is the legal, valid and binding obligation of each other party thereto,
each thereof is the legal, valid and binding obligation of First
Security Bank of Utah, National Association, in its individual capacity,
as Owner Trustee, or both, as the case may be, enforceable against First
Security Bank of Utah, National Association, in its individual capacity,
as Owner Trustee, or both, as the case may be, in accordance with its
respective terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its individual
capacity or as Owner Trustee), the Trust Estate, the Owner Participant,
Lessee, the Indenture Trustee or the Loan Participants to the State of
Utah in connection with the execution, delivery and performance of the
Operative Documents solely because First Security Bank of Utah, National
Association is a national banking association with its principal office
in the State of Utah and will perform its obligations under the Operative
Documents in the State of Utah, other than franchise or other taxes based
on or measured by any fees or compensation received or accrued by First
Security Bank of Utah, National Association for services rendered in
connection with the transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if (i) Lessee has
elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by
causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii)
the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee
written notice of Lessor's election to retain title to the Aircraft and (iii)
the Owner Trustee has failed to make, on or before the Termination Date, any
payment required to be made by the Owner Trustee pursuant to Section 9(c) in
connection with its retention of title to the Aircraft, the Owner Participant
will indemnify Lessee for any losses, damages, costs or expenses of any kind
(including any additional rents paid by Lessee and any fees and expenses of
lawyers, appraisers, brokers or accountants) incurred as a consequence of such
failure by the Owner Trustee. The Owner Participant further covenants and
agrees to pay those costs and expenses specified to be paid by the Owner
Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee
elects (a) to purchase the Aircraft pursuant to Section 19(b) of the Lease or
(b) to terminate the Lease and purchase the Aircraft pursuant to Section 19(d)
of the Lease, then each of the parties will, upon compliance by Lessee with all
applicable provisions of the Lease, execute and deliver
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<PAGE> 43
appropriate documentation transferring all right, title and interest in the
Aircraft to Lessee (including, without limitation, such bills of sale and other
instruments and documents as Lessee shall reasonably request to evidence (on the
public record or otherwise) such transfer and the vesting of all right, title
and interest in and to the Aircraft in Lessee), and if Lessee, in connection
with such purchase, elects to assume the obligations of the Owner Trustee
pursuant to the Trust Indenture and the Secured Certificates each of the
parties will execute and deliver appropriate documentation permitting Lessee to
assume such obligations on the basis of full recourse to Lessee, maintaining the
security interest in the Aircraft created by the Trust Indenture, releasing the
Owner Participant and the Owner Trustee from all future obligations in respect
of the Secured Certificates, the Trust Indenture and all other Operative
Documents and all such other actions as are reasonably necessary to permit such
assumption by Lessee.
(y) (A) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease all or substantially all of the assets of Lessee as an entirety
shall be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease all or substantially all of the assets of Lessee as an entirety
shall execute and deliver to the Owner Trustee, the Indenture Trustee and
each Participant an agreement in form and substance reasonably
satisfactory to such Participant containing an assumption by such
successor corporation or Person of the due and punctual performance and
observance of each covenant and condition of this Agreement, the Lease,
the Purchase Agreement Assignment and the Tax Indemnity Agreement to be
performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the Indenture
Trustee and each Participant a certificate signed by the President, any
Executive Vice President, any Senior Vice President or any Vice President
and by the Secretary or an Assistant Secretary of Lessee, and an opinion
of counsel reasonably satisfactory to the Participants, each stating that
such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (ii) above comply with this
subparagraph (A) of Section 8(y) and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(v) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease all or substantially all of the assets of Lessee shall make such
filings and recordings with the FAA pursuant to the Federal Aviation Act
as shall be necessary or desirable to evidence such consolidation,
merger, conveyance, transfer or lease with or to such entity.
Upon any such consolidation or merger or any such conveyance, transfer or
lease of all or substantially all of the assets of Lessee as an entirety in
accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such
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<PAGE> 44
consolidation or into which Lessee is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Agreement with the same
effect as if such successor corporation or Person had been named as Lessee
herein. No such conveyance, transfer or lease of substantially all of the
assets of Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this subparagraph (A) of Section 8(y) from its liability in
respect of any Operative Document to which it is a party.
(B) Lessee shall at all times maintain its corporate existence except
as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be taken, such action
with respect to the recording, filing, re-recording and refiling of the Lease,
the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust
Supplement and any financing statements or other instruments as are necessary
to maintain (or as are reasonably requested by the Owner Participant), so long
as the Trust Indenture or the Lease is in effect, the perfection of the
security interests created by the Trust Indenture and any security interest
that may be claimed to have been created by the Lease and the interest of the
Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the
Indenture Trustee timely notice of the necessity of such action, together with
such instruments, in execution form, and such other information as may be
required to enable them to take such action. Lessee will notify the Owner
Trustee, the Owner Participant and the Indenture Trustee of any change in the
location of its chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) promptly after making such change or in any event
within the period of time necessary under applicable law to prevent the lapse
of perfection (absent refiling) of financing statements filed under the
Operative Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value, Termination Value, Special Purchase
Price, Initial Installment and Remaining Installments, and the Owner
Participant hereby agrees to make such recalculations as and when contemplated
by the Lease and subject to all the terms and conditions of the Lease and
promptly to take such further actions as may be necessary or desirable to give
effect to and to cause the Owner Trustee to give effect to the provisions of
Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee, and only with
Lessee, and not for the benefit of any other party to this Participation
Agreement, that it will promptly pay in full to the Owner Trustee any funds
necessary to enable the Owner Trustee promptly to pay to Lessee the full amount
of any Reimbursement Amount owed to Lessee.
(cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee
to be notified by telecopier not later than 10:00 a.m. New York time on the
third Business Day prior to the day for which an Excess Amount is indicated in
the event the Owner Participant does not intend to pay such Excess Amount in
full on the due date.
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<PAGE> 45
(dd) [______________] agrees to act as Administrative Agent hereunder.
The Administrative Agent agrees to notify each of the Indenture Trustee, the
Owner Trustee, the Owner Participant and Lessee of the actual interest expected
to accrue on the Secured Certificates during each Interest Period promptly
after the commencement of such Interest Period and after the occurrence of any
event that would cause such actual interest expected to accrue during such
Interest Period to change from the amount previously notified. The
Administrative Agent further agrees to perform all of the functions that are
required to be performed by the Administrative Agent pursuant to the terms of
the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that it will pay, or
cause to be paid, all costs and expenses that are for the account of the Owner
Trustee pursuant to Section 5(d) of the Lease.
(ff) Each Loan Participant hereby represents, warrants and agrees that it
shall not transfer any interest in any Secured Certificate unless and until the
transferee agrees in writing (copies of which shall be provided by the
Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant) to
make the representations contemplated to be made by a Loan Participant in this
Agreement and to be bound by the terms of this Agreement and the Trust
Indenture (including, without limitation, the representations and covenants set
forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this
Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(gg) [_____________] agrees to act as Documentation Agent hereunder and
to perform all of the functions that are required to be performed by the
Documentation Agent hereunder.
(hh) [_____________], [____________] and [_____________] each agrees to
furnish to the Administrative Agent timely information for the purpose of
determining each Eurodollar Rate (as defined in the Trust Indenture).
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND
OWNER TRUSTEE CONCERNING REOPTIMIZATION . (a) In the event of an adjustment to
Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall,
pursuant to this Section 9 and in accordance with the requirements of Section
3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt
payment structures. Within forty-five Business Days after the need for an
adjustment to Rent has been established pursuant to Section 3 of the Lease, the
Owner Participant shall deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE")
setting forth the proposed revised schedules of debt amortization and Basic
Rent, Excess Amounts, Special Purchase Price, Initial Installment, Remaining
Installments, Stipulated Loss Value and Termination Value percentages. Within
forty-five days of its receipt of the Reoptimization Certificate, Lessee may
demand a verification, pursuant to Exhibit E of the Lease, of the information
set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of
the accuracy of the information set forth in the Reoptimization Certificate or
the determination pursuant to such verification procedures of such information,
the Owner Participant will cause
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<PAGE> 46
the Owner Trustee (M) to execute a Lease Supplement setting forth the
reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Initial
Installment, Remaining Installments, Stipulated Loss Value and Termination
Value percentages, and (N) to exchange new Secured Certificates containing
reoptimized amortization schedules for the Secured Certificates outstanding
immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of Basic Rent,
Stipulated Loss Value and Termination Value percentages pursuant to this
Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree
to changes in the amortization schedule of the Secured Certificates, and (N)
each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided that such changes do
not (X) extend the final maturity of the Secured Certificates or (Y) increase
the weighted average lives of the Secured Certificates as of the Delivery Date
to more than 15 years or, without the consent of the Owner Participant,
increase the weighted average lives of the Secured Certificates by more than
six (6) months.
SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner
Trustee hereby (A) agrees with Lessee, the Loan Participants and the Indenture
Trustee not to amend, supplement or otherwise modify any provision of the Trust
Agreement in a manner adversely affecting such party without the prior written
consent of such party and (B) agrees with Lessee and the Loan Participants not
to revoke the Trust Agreement without the prior written consent of Lessee and
the Loan Participants so long as the Lease or the Lien of the Trust Indenture
remains in effect. Notwithstanding the foregoing, so long as the Lease has not
been terminated, the Indenture Trustee and the Owner Trustee hereby agree for
the benefit of Lessee that without the consent of Lessee they will not (i)
amend or modify Article III or IX of the Trust Indenture, (ii) make any
amendment which will affect the stated principal amount or interest on the
Secured Certificates or (iii) amend or modify the provisions of Sections 2.05
or 10.05 of the Trust Indenture. The Indenture Trustee and the Owner Trustee
agree to promptly furnish to Lessee copies of any supplement, amendment, waiver
or modification of any of the Operative Documents to which Lessee is not a
party. Notwithstanding anything to the contrary contained herein, in the Trust
Agreement or in any other Operative Document, the Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without the prior
written consent of Lessee (which will not be unreasonably withheld) unless Owner
Participant indemnifies Lessee in form and substance satisfactory to Lessee, in
its sole discretion, for any adverse consequence resulting from such change.
Each Loan Participant agrees that it will not take any action in respect of the
Trust Indenture Estate except through the Indenture Trustee pursuant to the
Trust Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and agrees with
each of the Loan Participants, the Owner Participant, the Indenture Trustee and
the Owner Trustee, in its capacity as such and in its individual capacity as
follows:
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(a) Lessee will, at its own cost and expense, cause to be done, executed,
acknowledged and delivered all and every such further acts, conveyances and
assurances as the Owner Trustee, the Indenture Trustee or the Owner Participant
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 Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required (or
reasonably requested by the Owner Participant or the Owner Trustee) to enable
the Owner Trustee or the Owner Participant to timely file any reports required
to be filed by it as the lessor under the Lease or as the owner of the Aircraft
with any governmental authority.
(b) Lessee will, at its own cost and expense, cause the Lease, all Lease
Supplements, all amendments to the Lease, the Trust Indenture, all supplements
and amendments to the Trust Indenture and this Agreement 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. Upon the execution
and delivery of the FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Bill of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached, and third, the Trust Indenture, with the Trust Supplement attached.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among
Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft to
be delivered under the Lease and Lessee will be the lessee thereof, and each
party hereto agrees to characterize the Lease as a lease for Federal income tax
purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a)
Except as otherwise defined in this Agreement, terms used herein in capitalized
form shall have the meanings attributed thereto in the Lease. The term "TRUST
OFFICE" shall have the meaning set forth in the Trust Agreement and the term
"TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust
Indenture. Unless the context otherwise requires, any reference herein to any
of the Operative Documents refers to such document as it may be amended from
time to time.
(b) All notices, demands, instructions and other communications required
or permitted to be given to or made upon any party hereto or to the Guarantor
shall be in writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, or by telecopier, or by prepaid courier
service, and shall be deemed to be given for purposes of this
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<PAGE> 48
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 13(b).
Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section 13(b), 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 telecopier numbers) as follows: (A) if to Lessee, the Owner
Trustee, the Loan Participants, the Administrative Agent, the Documentation
Agent, the Indenture Trustee or the Owner Participant, to the respective
addresses set forth below the signatures of such parties at the foot of this
Agreement, or (B) if to a subsequent Owner Participant, addressed to such
subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice to
the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Agreement, the Lease,
the Tax Indemnity Agreement or any other Operative Document, the subject matter
of any thereof or any of the transactions contemplated hereby or thereby
brought by any party or parties thereto, or their successors or assigns, and
(B) hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Agreement, the Lease, the Tax Indemnity Agreement or any
other Operative Document or the subject matter of any thereof or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts. Lessee hereby generally consents to service of process at Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention:
Managing Attorney, or such office of Lessee in New York City as from time to
time may be designated by Lessee in writing to the Owner Participant, the Owner
Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees
that if, at any time, the Trust Estate becomes subject to any Taxes for which
it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the
situs of the trust may be moved with the written consent of the Owner
Participant (which consent shall not be unreasonably withheld) and the Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Loan Participants may
reasonably request, (B) the rights and obligations under the Operative
Documents of the Owner Participant and the Loan Participants shall not be
altered as a result of the taking of such action, (C) the lien of the Trust
Indenture on the Trust Indenture Estate shall not be adversely affected by such
action, and (D) the
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<PAGE> 49
Owner Participant and the Loan Participants shall have received an opinion or
opinions of counsel (satisfactory to the Owner Participant and the Loan
Participants), in scope, form and substance satisfactory to the Owner
Participant and the Loan Participants to the effect that (I) the trust, as thus
removed, shall remain a validly established trust, (II) any amendments to the
Trust Agreement necessitated by such removal shall have been duly authorized,
executed and delivered by the parties thereto and shall constitute the valid and
binding obligations of such parties, enforceable in accordance with their terms,
(III) such removal will not result in the imposition of, or increase in the
amount of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner Trustee,
an opinion of counsel to such successor Owner Trustee in form and substance
reasonably satisfactory to the Loan Participants and to the Owner Participant
covering the matters described in Section 4(a)(xiii) hereof and such other
matters as the Loan Participants and the Owner Participant may reasonably
request, and (E) Lessee shall indemnify and hold harmless the Owner Participant,
the Indenture Trustee and the Loan Participants on a net after-tax basis against
any and all reasonable and actual costs and expenses including reasonable
counsel fees and disbursements, registration fees, recording or filing fees and
taxes incurred by the Owner Trustee, the Owner Participant, the Indenture
Trustee and the Loan Participants in connection with such change of situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the
Owner Participant covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as Lessor, or the
Indenture Trustee under the terms of the Lease which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture
Trustee.
(b) The representations, warranties, indemnities and agreements of Lessee,
the Owner Trustee, the Loan Participants, the Indenture Trustee, the
Administrative Agent, the Documentation Agent and the Owner Participant
provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan
Participants', the Indenture Trustee's, the Administrative Agent's, the
Documentation Agent's and the Owner Participant's obligations under any and all
thereof, shall survive the making available of the respective Commitments by
the Loan Participants and the Owner Participant, the delivery or return of the
Aircraft, the transfer of any interest of the Owner Participant in the Trust
Estate or the Aircraft or any Engine or the transfer of any interest by any
Loan Participant in any Secured Certificate or the Trust Indenture Estate and
the expiration or other termination of this Agreement or any other Operative
Document.
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<PAGE> 50
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, Lessee and its successors and
assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, the Administrative Agent
and the Documentation Agent. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements, representations,
covenants and agreements made by the Owner Trustee (when made in such capacity)
contained in this Agreement and any agreement referred to herein other than the
Trust Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies which can be exercised and enforced against the Trust
Estate. Therefore, anything contained in this Agreement or such other
agreements to the contrary notwithstanding (except for any express provisions
that the Owner Trustee is responsible for in its individual capacity), no
recourse shall be had with respect to this Agreement or such other agreements
against the Owner Trustee in its individual capacity or against any institution
or person which becomes a successor trustee or co-trustee or any officer,
director, trustee, servant or direct or indirect parent or controlling person or
persons of any of them; provided, however, that this Section 15(d) shall not be
construed to prohibit any action or proceeding against any party hereto for its
own willful misconduct or grossly negligent conduct for which it would otherwise
be liable; and provided, further, that nothing contained in this Section 15(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Agreement or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 15(d) shall survive
the termination of this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner Trustee, as
Lessor under the Lease, and the Indenture Trustee, as assignee of such Owner
Trustee's rights under the Lease pursuant to the Trust Indenture, will be
entitled to the benefits of 11 U.S.C. Section 1110 (or any successor statute
containing the material terms of 11 U.S.C. Section 1110) in the event of any
reorganization of Lessee under such Section.
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<PAGE> 51
SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the Owner
Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan
Participants shall promptly submit to Lessee for its prompt approval (which
shall not be unreasonably withheld) copies of invoices in reasonable detail of
the Transaction Expenses for which it is responsible for providing information
as they are received (but in no event later than July 15, 1996). If so
submitted and approved, the Owner Participant agrees promptly, but in any event
no later than July 31, 1996, to pay (but not in excess of 2% of Lessor's Cost)
Transaction Expenses. Notwithstanding the foregoing, to the extent that
Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option
shall have the right to pay directly its special counsel fees and disbursements
and the fee and disbursements of Babcock and Brown Financial Corporation, and
Lessee shall be obligated to pay directly any and all Transaction Expenses
which are in excess of 2% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the transaction
contemplated by this Participation Agreement fails to close as a result of the
Owner Participant's failure to negotiate in good faith or to comply with the
terms and conditions upon which its participation in the transaction was
predicated, the Owner Participant will be responsible for all of its fees and
expenses, including but not limited to the fees, expenses and disbursements of
its special counsel and the fees of the appraiser referred to in Section
4(a)(xx).
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default or Default of the type referred to in
Section 14(a), 14(b) or 14(e) of the Lease shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates no more than three times by giving written
notice to the Owner Participant and the Owner Trustee that there be effected a
voluntary redemption of the Secured Certificates by the Owner Trustee, whereupon
the Owner Participant agrees to negotiate promptly in good faith to conclude an
agreement with Lessee as to the terms of such refinancing (including the terms
of any debt to be issued in connection with such refinancing); provided that (1)
no such refinancing shall subject the Owner Participant to any adverse, or the
risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner
Participant for such unindemnified adverse tax consequence (any such indemnity
to be satisfactory in form and substance to the Owner Participant) and (2) the
other terms and conditions of this Section 17 are met.
The Owner Participant understands and agrees that the debt to be issued in
connection with such refinancing may be issued in several classes, each of
which may have a different interest rate, final maturity date and priority of
payment. The Owner Participant further understands and agrees that one or more
of such classes may be entitled to the benefit of a liquidity facility, which
will entitle the Indenture Trustee (or a collateral agent therefor) to make
drawings thereunder to pay interest on a current basis on the enhanced classes
of debt for up to three semi-annual interest payments following a payment
default with respect to such enhanced classes. In such a structure the Owner
Participant agrees that drawings of the entire amount available under the
liquidity facility for any class (and the deposit of the proceeds
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thereof into a cash collateral account) will be required in the event of a
ratings decline with respect to the related liquidity provider or in the event
that the liquidity facility is not extended or replaced prior to its scheduled
expiration. Amounts owed to the liquidity facility provider for both drawings
and interest thereon will generally be senior to all Loan Participant claims.
The Owner Participant understands and agrees that in any refinancing operation
it will agree to these and any other conditions which do not impair the
customary rights of an owner participant in a leveraged lease transaction.
Upon such agreement:
(1) within ten Business Days after the reaching of such agreement, the
Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting
forth (i) the proposed date on which the outstanding Secured Certificates will
be redeemed, any new debt will be issued and the other aspects of such
refinancing will be consummated (such date, the "REFINANCING DATE") and (ii)
the following information calculated pursuant to the provisions of paragraph
(6) of this Section 17(a): (A) subject to the limitations set forth in this
Section 17, the proposed adjusted debt/equity ratio, (B) the principal amount
of debt to be issued by the Owner Trustee on the Refinancing Date and (C) the
proposed revised schedules of Basic Rent percentages, debt amortization,
Special Purchase Price, Initial Installment, Remaining Installments, Stipulated
Loss Value percentages and Termination Value percentages (calculated in
accordance with Section 3(d) of the Lease). Within fourteen days of its
receipt of the Refinancing Certificate, Lessee may demand a verification
pursuant to Exhibit E to the Lease of the information set forth in the
Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of the
information set forth in the Refinancing Certificate (or the determination
pursuant to such verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised Basic Rent percentages, debt amortization, Special Purchase
Price, Initial Installment, Remaining Installments, Stipulated Loss Value
percentages and Termination Value percentages (such information, whether as set
forth or as so determined, the "REFINANCING INFORMATION") the appropriate
parties will take the actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate documentation
(which may involve an underwriting agreement in connection with such sale) with
the institution or institutions to be named therein providing for (i) the
issuance and sale by the Owner Trustee to such institution or institutions on
the Refinancing Date of debt securities in an aggregate principal amount equal
to the then outstanding principal amount of the Secured Certificates (such debt
securities, the "NEW DEBT");
(3) Lessee shall give the notice to the Indenture Trustee pursuant to
Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the period
from and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of Stipulated Loss Value and
Termination Value from and after the Refinancing Date shall be as provided in
the Refinancing Information;
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<PAGE> 53
(4) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the New Debt in like manner as the Secured Certificates
and will enter into such amendments and supplements to the Trust Indenture (or
such new indenture or other security agreement) and the other Operative
Documents as may be necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses of the first
refinancing (so long as the same takes place in 1996) (including, but not
limited to, the fees, expenses and disbursements of counsel and any placement
or underwriting fees) and such expenses shall be treated as Transaction
Expenses (subject to a cap of 2.8% of Lessor's Cost, inclusive of any
Transaction Expenses paid by the Owner Participant pursuant to Section 16(a))
and, unless otherwise agreed to by the Owner Participant, Lessee shall pay all
other expenses of the first financing and all of the expenses (including, but
not limited to, the fees, expenses and disbursements of counsel and any
placement or underwriting fees) of any such refinancing after the first
refinancing; and
(6) when calculating any of the information required to be set forth in a
Refinancing Certificate, the Owner Participant shall make such calculations in
a manner which (A) maintains the Owner Participant's Net Economic Return
(except to the extent the assumptions referred to in the definition of "Net
Economic Return" have been altered since the Delivery Date in connection with
an adjustment to Rents pursuant to Section 3(d) of the Lease or such
assumptions are the subject of the recalculations being conducted by the Owner
Participant), and (B) minimizes the Net Present Value of Rents to Lessee to the
extent possible consistent with clause (A). All adjustments to Basic Rent shall
be (I) in compliance with the tax law as then in effect, including, without
limitation, Rev. Proc. 75-28 as amended and then in effect (or any successor
thereto) and no such adjustment shall cause the Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning of Section
467 of the Internal Revenue Code of 1986, as amended, and any regulations
thereunder, except to the extent that on the Delivery Date the Lease
constituted a "disqualified leaseback or long-term agreement" under Section 467
of the Code on the Delivery Date or was not in compliance with Rev. Proc. 75-28
and without regard to any adjustments to Basic Rent occurring after such date
and (II) subject to verification pursuant to Exhibit E to the Lease.
(b) Lessee and the Owner Participant agree that none of the Owner
Participant's rights against all other parties hereto (including the new Loan
Participants) or its obligations to any such parties and none of its interests
in the Trust Estate or under the Operative Documents shall be materially
adversely affected in the good faith judgment of the Owner Participant compared
to such rights and interests as in effect under the Operative Documents prior
to the changes contemplated by this Section 17. For purposes of ERISA, except
in the case of any refinancing with public debt or pursuant to Rule 144A
promulgated under Securities Act of 1933, as amended, the new lenders shall be
required to make the representation for a Loan Participant set forth in Section
8(q)(A) and agree to be bound by the provision of such Section 8(q)(A)
applicable to a Loan Participant. The Owner Participant agrees that in
connection with any refinancing with public debt or pursuant to Rule 144A
promulgated under the Securities Act of 1933, as amended, the provisions set
forth in Exhibit
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<PAGE> 54
D hereto are acceptable to the Owner Participant and Lessee agrees that in
connection with any such refinancing the Owner Participant will not be obligated
to agree to any other ERISA provisions.
(c) In connection with any such refinancing utilizing public debt or
pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended,
the Owner Participant shall have a right to review and comment on all offering
materials to be used in connection therewith and no such offering materials
shall disclose the identity of the Owner Participant.
(d) The Secured Certificates shall not be subject to voluntary redemption
by the Owner Trustee without the consent of Lessee except as set forth in
Section 2.14 of the Trust Indenture.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes each of the
Administrative Agent and the Documentation Agent (each, an "AGENT") to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement and the other Operative Documents as are delegated to such
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. Each Agent shall have no duties or
responsibilities except those expressly set forth in the Operative Documents.
As to any matters not expressly provided for hereby or by the Trust Indenture,
each Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority in Interest of Certificate Holders (as defined
in the Trust Indenture), and such instructions shall be binding upon all Loan
Participants and all Certificate Holders; provided, however, that such Agent
shall not be required to take any action that exposes such Agent to personal
liability or that is contrary to the Operative Documents or applicable law.
Each Agent agrees to give to each Loan Participant prompt notice of each notice
given to it by the Owner Trustee pursuant to the terms of the Operative
Documents with respect to which such Loan Participant has not otherwise
received such notice.
(b) No Agent nor such Agent's directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the Trust Indenture, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, each Agent: (i) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to any Loan Participant and shall not be
responsible to any Loan Participant for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the
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<PAGE> 55
Operative Documents on the part of any party thereto or to inspect the property
(including the books and records) of any such party; (iv) shall not be
responsible to any Loan Participant for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, the Operative Documents or any other instrument or
document furnished pursuant thereto; and (v) shall incur no liability under or
in respect of the Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier, telegram
or telex) believed by it to be genuine and signed or sent by the proper party or
parties.
(c) With respect to their Loans and any Secured Certificates issued to
them, [ ] and [ ] shall have
the same rights and powers under the Operative Documents as any other Loan
Participant and may exercise the same as though they were not Agents and the
term "Loan Participant" or "Certificate Holder" shall, unless otherwise
expressly indicated, include [ ] and [ ] in their individual capacity. [ ]
and its Affiliates and [ ] and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the Owner
Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any
Person who may do business with or own securities of any of such Persons, all
as if [________] and [_________] were not Agents and without any duty to
account therefor to the Loan Participants.
(d) Each Loan Participant acknowledges that it has, independently and
without reliance upon the Agents or any other Loan Participant and based on the
financial statements referred to in Section 7(a)(ix) of this Agreement and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Loan
Participant also acknowledges that it will, independently and without reliance
upon the Agents or any other Loan Participant and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a successor agent as
provided below, any Agent may resign at any time by giving written notice
thereof to the Loan Participants, the Owner Trustee and Lessee and may be
removed at any time with or without cause by the Majority in Interest of
Certificate Holders (as defined in the Trust Indenture). Upon any such
resignation or removal, the Majority in Interest of Certificate Holders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority in Interest of Certificate Holders, and shall
have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion,
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<PAGE> 56
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the Trust
Indenture. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 18 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the
Administrative Agent and the Documentation Agent hereunder and under the Trust
Indenture shall be the same institution, respectively, as the Administrative
Agent and the Documentation Agent under (and as defined in) the Credit
Agreement.
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<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
---------------------------------------
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[___________________],
Owner Participant
By:
-----------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 58
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
-----------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 59
[INSERT BRIDGE LENDERS]
By:
--------------------------------------
Title:
- Signature Page -
<PAGE> 60
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
- Signature Page -
<PAGE> 61
Owner Participant: Payments made to the Owner Participant as
provided in Section 3.06 of the Trust Indenture
shall be made to:
SCHEDULE I - PAGE 2
<PAGE> 62
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 B
Owner Trustee: First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as provided
in Section 3(f) of the Lease shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 B
<PAGE> 63
SCHEDULE II
COMMITMENTS
Percentage of
Loan Participants: Lessor's Cost
----------------- ------------
<PAGE> 64
Owner Participant:
- -----------------
------------
Total Commitments: 100%
SCHEDULE II - PAGE 2
<PAGE> 65
EXHIBIT A
TO
PARTICIPATION
AGREEMENT
[NW 1996 B]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina Japan
Australia Luxembourg
Austria Malaysia
Bahamas Mexico
Belgium Netherlands
Canada New Zealand
Chile Norway
Denmark Philippines
Finland Portugal
France Singapore
Germany South Africa
Hungary South Korea
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland United Kingdom
Italy
<PAGE> 66
EXHIBIT B
TO
PARTICIPATION
AGREEMENT
[NW 1996 B]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Mexico
Australia Netherlands
Austria New Zealand
Bahamas Norway
Belgium Philippines
Canada Portugal
Chile Singapore
Denmark South Africa
Finland South Korea
France Sweden
Germany Switzerland
Hungary Thailand
Iceland United Kingdom
India
Indonesia
Ireland
Italy
Japan
Luxembourg
Malaysia
<PAGE> 67
EXHIBIT C
TO
PARTICIPATION
AGREEMENT
[NW 1996 B]
FORM OF GUARANTY
[LETTERHEAD OF GUARANTOR]
PARENT GUARANTY
Dated as of ____________ ____, ______
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
One Boeing Model 757-251 Aircraft
Manufacturer's Serial Number [ ]
Ladies and Gentlemen:
Reference is hereby made to the Participation Agreement [NW 1996 B] (as
from time to time amended or supplemented, the "Participation Agreement"), dated
as of April 24, 1996, among Northwest Airlines, Inc. ("Lessee"), [_____________]
(the "Owner Participant"), First Security Bank of Utah, National Association,
not in its individual capacity, except as expressly provided therein, but solely
as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated
as of April 24, 1996, between the Trustee and the Owner Participant (the "Trust
Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and
the Loan Participants listed on Schedule I thereto. Capitalized terms used
herein without definition have the respective meanings ascribed thereto in the
Participation Agreement.
Pursuant to Section 8 of the Participation Agreement and in connection
with the transfer of the Interest (as defined in the Assignment Assumption
Agreement dated as of the date hereof between [Transferor], a ____________
corporation ("Transferor") and [Transferee], a ____________ corporation
("Transferee") (the "Assumption Agreement")) to be consummated as of the date
hereof from Transferor to Transferee, the wholly-owned subsidiary of
_________________________ ("Guarantor"), and the execution by Guarantor of the
guaranty of Transferee's obligations as contemplated by the Assumption Agreement
(this "Guaranty"), Guarantor represents and warrants to, and covenants with,
Lessee, First Security
<PAGE> 68
Bank of Utah, National Association, in its individual capacity ("Trust
Company"), Indenture Trustee and Loan Participants, as follows:
1. Ownership of Transferee. Guarantor directly or indirectly owns and
holds all of the issued and outstanding shares of capital stock of Transferee.
2. Additional Representations and Warranties.
(i) Guarantor is a corporation duly organized and validly existing
pursuant to the laws of ___________________, and has the corporate power and
authority to enter into and perform this Guaranty.
(ii) The execution, delivery and performance by Guarantor of this
Guaranty has been duly authorized by all necessary corporate action on the part
of Guarantor, does not require any stockholder approval, or approval or consent
of any trustee or holders of any indebtedness or obligations of Guarantor except
such as have been duly obtained, and this Guaranty will not contravene any
applicable law or corporate charter or by-law, or contravene the provisions of,
or constitute a default under, or result in the creation of any Lien upon the
property of Guarantor under, any indenture, mortgage, contract or other
agreement to which Guarantor is a party or by which it may be bound or affected.
(iii) Neither the execution and delivery by Guarantor of this Guaranty,
nor the consummation of the transactions by Guarantor contemplated hereby, nor
the performance of the obligations hereunder or under any other documents
contemplated hereby or thereby by Guarantor requires the consent or approval of,
the giving of notice to, or the registration with, or the taking of any other
action in respect of, United States Federal, state, or foreign governmental
authority or agency.
(iv) This Guaranty has been duly executed and validly delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms except as the
enforcement of this Guaranty may be affected by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally.
(v) There are no pending or, to Guarantor's knowledge, threatened
actions or proceedings before any court or administrative agency which might
materially adversely affect the consolidated financial condition, business or
operations of Guarantor, or the ability of Guarantor to perform its obligations
under this Guaranty.
(vi) No broker's or finder's fees or commissions or advisory fees are or
may become payable in connection with this Guaranty or the Assumption Agreement
or, if any such fee is payable, such fee will be the responsibility of
Guarantor.
(vii) On the date hereof the Trust Estate will be free of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) attributable to Guarantor.
<PAGE> 69
(viii) Guarantor is a bank, insurance company, financial institution or
domestic corporation the tangible net worth (exclusive of goodwill) of which is
at least $75,000,000.
3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably
guarantees, not merely as surety but as obligor:
(i) the due and punctual payment of any and all sums which are
payable by Transferee pursuant to any provision of the Assumption
Agreement and the Participation Agreement, the Tax Indemnity Agreement
and any other Operative Document assumed by Transferee pursuant to the
Assumption Agreement (collectively, the "Guaranteed Agreements"), and
(ii) the due and punctual performance of and compliance with
and observance of all other obligations, covenants, warranties and
undertakings of or conditions contained in or arising under the
Guaranteed Agreements binding upon or made by Transferor and assumed by
Transferee under the Assumption Agreement,
in each case, whether or not Guarantor shall have contributed funds to Lessor
or Transferee, as the case may be, for such payment or performance by Lessor or
Transferee (such payments and other obligations guaranteed hereunder
hereinafter referred to as the "Obligations").
(b) Guarantor agrees that this Guaranty is an unconditional and absolute
guaranty of payment and performance (not merely enforceability) and that its
undertakings hereunder are not contingent upon your bringing any action against
Transferee or resorting to any security and hereby expressly waives any claim
that its undertakings hereunder are so contingent.
(c) Guarantor hereby waives promptness, diligence, demand and all
notices whatsoever as to the obligations and covenants guaranteed hereby and
acceptance of this Guaranty, and waives any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the undersigned,
and agrees that it shall not be required to consent to, or receive any notice
of, any amendment or modification of, or waiver, consent or extension with
respect to, the Guaranteed Agreements that may be made or given as provided
therein.
(d) Guarantor agrees to pay any costs and expenses (including reasonable
fees and disbursements of counsel) that may be paid or incurred by the
beneficiaries hereof in enforcing any rights with respect to, or collecting, any
or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, Guarantor under this Guaranty.
(e) Guarantor understands and agrees that its obligations hereunder
shall be construed as continuing, absolute and unconditional without regard to
(i) the validity, regularity or enforceability of any Operative Document, any of
the Obligations or any collateral security therefor or guaranty or right of
offset with respect thereto at any time or
<PAGE> 70
from time to time held by any beneficiary hereof, (ii) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by Transferee against any beneficiary
hereof or (iii) any other circumstances whatsoever (with or without notice to
or knowledge of Transferee or Guarantor) that constitutes, or might be
construed to constitute, an equitable or legal discharge of Transferee for the
Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other
instance.
4. Quiet Enjoyment. So long as no Event of Default shall have occurred
and be continuing, Guarantor will not permit Transferee or Lessor to take or
cause to be taken any action contrary to Lessee's rights under the Lease,
including, without limitation, Lessee's rights to possession and use of the
Aircraft.
5. No Discharge. The obligations of Guarantor hereunder are absolute,
unconditional and irrevocable and will not be discharged by, and this Guaranty
shall remain in full force and effect notwithstanding: (a) the assignment,
conveyance or other transfer by Guarantor of any or all of its interest in or
capital stock of Transferee, unless such assignment, conveyance or transfer of
all of its interest is to a transferee meeting the requirements set forth in
Section 8(n) of the Participation Agreement and otherwise complies with the
requirements for a transfer as set forth in Section 8(n) of the Participation
Agreement, in which event Guarantor shall be discharged from any and all
liabilities arising hereunder (to the extent such liabilities arise after such
transfer); (b) the assignment, conveyance or other transfer by Transferee of any
or all of its interest in the Trust Estate (as defined in the Trust Agreement),
unless such assignment, conveyance or transfer of all of its interest is to a
transferee meeting the requirements set forth in Section 8(n) of the
Participation Agreement and otherwise complies with the requirements for a
transfer as set forth in Section 8(n) of the Participation Agreement, in which
event Guarantor shall be discharged from any and all liabilities arising
hereunder (to the extent such liabilities arise after such transfer) unless
Guarantor guarantees the obligations of the transferee under Section 8(n) of the
Participation Agreement; (c) the assignment, conveyance or other transfer by
Lessor of any or all of its interest in the Aircraft; (d) any extension or
renewal with respect to any obligation of Transferee or Lessor under the
Guaranteed Agreements; (e) any modification of, or amendment or supplement to,
any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional
security or any release of any security; (g) any waiver, consent or other action
or inaction or any exercise or non-exercise of any right, remedy or power with
respect to Transferee or Lessor, or any change in the structure of Transferee or
Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement,
composition, liquidation, dissolution, or similar proceedings with respect to
the Trustee or Transferee; or any other occurrence whatsoever, except payment in
full of all amounts payable by Transferee under the Guaranteed Agreements and
performance in full of all Obligations of Transferee in accordance with the
terms and conditions of the Guaranteed Agreements.
6. Reinstatement. Guarantor agrees that this Guaranty shall be
automatically reinstated with respect to any payment made prior to any
termination of the Guaranty by or on behalf of Transferee pursuant to the
Participation Agreement or the other
<PAGE> 71
Operative Documents to which Transferee is a party if and to the extent that
such payment is rescinded or must be otherwise restored, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.
7. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any set-off or application of funds of Guarantor by any
beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of
the rights of any beneficiary hereof against Transferee or any collateral,
security or guarantee or right of set-off held by any beneficiary hereof for the
payment of the Obligations, nor shall Guarantor seek or be entitled to seek any
reimbursement from Transferee in respect of payment made by Guarantor hereunder,
until all amounts and performance owing to the beneficiaries hereof by
Transferee on account of the Obligations are paid and performed in full.
8. Severability. Any provision of this Guaranty Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor,
its successors and assigns; (b) inure to the benefit of, and be enforceable by,
Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their
respective successors and assigns and each other holder from time to time of any
interest in the Aircraft or the Operative Documents, but shall not, and is not
intended to, create rights in any other third parties; (c) not be waived,
amended or modified without the written consent of Lessee, Trust Company,
Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6
hereof, remain in full force and effect until, and shall be terminated upon (1)
the payment in full of all sums payable by Transferee, as the case may be, under
the Guaranteed Agreements, and by Guarantor hereunder, and performance in full
of Transferee, in accordance with the terms and provisions of the Guaranteed
Agreements and Guarantor in accordance with the terms of this Guaranty or (2)
the date on which Transferee shall meet the requirements set forth in Section 8
of the Participation Agreement without benefit of this Guaranty; provided that
Guarantor hereby covenants and agrees that if Transferee shall at any time
thereafter (while Transferee shall be Owner Participant under the Participation
Agreement) fail to meet such requirements, Guarantor shall immediately reinstate
this Guaranty or execute and deliver to the addressees of this Guaranty a
guaranty substantially identical hereto. All notices to, or requests of,
demands on and other communications with Guarantor shall be made as set forth in
the Participation Agreement.
[rest of page intentionally left blank]
<PAGE> 72
Very truly yours,
[GUARANTOR]
By:
------------------------------
Name:
Title:
<PAGE> 73
EXHIBIT D
TO
PARTICIPATION
AGREEMENT
[NW 1996 B]
ERISA CONSIDERATIONS
IN GENERAL
Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") imposes certain requirements on employee benefit plans subject
to ERISA ("ERISA PLANS"), and on those persons who are fiduciaries with respect
to ERISA Plans. Investments by ERISA Plans are subject to ERISA's general
fiduciary requirements, including the requirement of investment prudence and
diversification and the requirement that an ERISA Plan's investment be made in
accordance with the documents governing the ERISA Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE") prohibit certain transactions involving the assets
of an ERISA Plan (as well as those plans that are not subject to ERISA but which
are subject to Section 4975 of the Code, such as individual retirement accounts
(together with ERISA Plans, "PLANS")) and certain persons (referred to as
"PARTIES IN INTEREST" or "DISQUALIFIED PERSONS") having certain relationships to
such Plans, unless a statutory or administrative exemption is applicable to the
transaction. [A party in interest or disqualified person who engages in a
prohibited transaction may be subject to excise taxes and other penalties and
liabilities under ERISA and the Code.]
The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "PLAN ASSET REGULATION"), describing what the assets of a Plan
with respect to the Plan's investment in an entity for purposes of ERISA and
Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan invests in
a Certificate, the Plan's assets would include both the Certificate and an
undivided interest in each of the underlying assets of the corresponding Trust,
including the Equipment Notes held by such Trust, unless it is established that
equity participation in the Trust by employee benefit plans (including Plans and
entities whose underlying assets include plan assets by reason of an employee
benefit plan's investment in the entity) is not "significant" within the meaning
of the Plan Asset Regulation. No assurance can be given and no monitoring or
other measures will be taken to ensure that this exception will be met at any
particular time. If the assets of a Trust were deemed to constitute the assets
of a Plan, transactions involving the assets of such Trust could be subject to
the prohibited transaction provisions of ERISA and Section 4975 of the Code
unless a statutory or administrative exemption were applicable to the
transaction.
The fiduciary of a Plan that proposes to purchase and hold any
Certificates should consider whether such purchase and holding may involve the
indirect extension of credit to a party in interest or a disqualified person. In
addition, whether or not the assets of a Trust are deemed to be Plan Assets
under the Plan Asset Regulation, if Certificates are
<PAGE> 74
purchased by a Plan and Certificates of a subordinate Class are held by a party
in interest or a disqualified person with respect to such Plan, the exercise by
the holder of the subordinate Class of Certificates of its right to purchase
the senior Classes of Certificates upon the occurrence and during the
continuation of a Triggering Event could be considered to constitute a
prohibited transaction unless a statutory or administrative exemption were
applicable. Depending on the identity of the Plan fiduciary making the
decision to acquire or hold Certificates on behalf of a Plan, Prohibited
Transaction Class Exemption ("PTCE") 91-38 (relating to investments by bank
collective investment funds), PTCE 84-14 (relating to transactions effected by
a "qualified professional asset manager"), PTCE 95-60 (relating to investment
by an insurance company general account) or PTCE 90-1 (relating to investments
by insurance company pooled separate accounts) [(collectively, the "CLASS
EXEMPTIONS")] could provide an exemption from the prohibited transaction
provisions of ERISA and Section 4975 of the Code. There can be no assurance
that any of these class exemptions or any other exemption will be available
with respect to any particular transaction involving the Certificates. If a
prohibited transaction occurs for which no exemption is available, each
fiduciary and other party in interest or disqualified person that has engaged
in the transaction could be required (i) to restore to the Plan any profit
realized on the transaction and (ii) to reimburse the Plan for any losses
suffered by such Plan as a result of the investment. In addition, each party
in interest or disqualified person involved could be subject to an excise tax
equal to 5% of the amount involved in the prohibited transaction for each year
the transaction continues and, unless the transaction is corrected within
statutorily required periods, to an additional tax of 100% of the amount
involved in the transaction.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before
purchasing any Certificates.
Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
CLASS A CERTIFICATES
In addition to the Class Exemptions, an individual exemption may apply
to the purchase, holding and secondary market sale of Class A Certificates by
Plans, provided that certain specified conditions are met. In particular, the
Department of Labor has issued individual administrative exemptions to certain
of the Underwriters which are substantially the same as the administrative
exemption issued to Morgan Stanley & Co. Incorporated, Prohibited Transaction
Exemption 90-24 (55 Fed. Reg. 20,548 (1990) (the "UNDERWRITER EXEMPTION"), which
generally exempts from the application of certain, but not all, of the
EXHIBIT D - PAGE 2
<PAGE> 75
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Code certain transaction relating to the initial purchase, holding and
subsequent secondary market sale of pass-through certificates which represent
an interest in a trust, the assets of which include equipment notes secured by
leases, provided that certain conditions set forth in the Underwriter Exemption
are satisfied.
The Underwriter Exemption sets a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of Class A Certificates to be
eligible for exemptive relief thereunder. In particular, the acquisition of
Class A Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's length transaction with an unrelated
party; the rights and interests evidenced by the Certificates must not be
subordinated to the rights and interests evidenced by other Certificates of the
same trust estate; the Certificates at the time of acquisition by the Plan must
be rated in one of the three highest generic rating categories by the Moody's
Investor Service, Inc., Standard & Poor's Ratings Group, Duff & Phelps, Inc. or
Fitch Investors Service, Inc.; and the investing Plan must be an accredited
investor as defined in Rule 501(a)(1) or Regulation D of the Commission under
the Securities Act.
The Underwriter Exemption does not apply to the Class B Certificates,
the Class C Certificates or the Class D Certificates. Even if all of the
conditions of the Underwriter Exemption are satisfied with respect to the Class
A Certificates, no assurance can be given that the Underwriter Exemption would
apply with respect to all transactions involving the Class A Certificates or the
assets of the Class A Trust. In particular, it appears that the Underwriter
Exemption would not apply to the purchase by Class B Certificateholders, Class C
Certificateholders or Class D Certificateholders of Class A Certificates in
connection with the exercise of their rights upon the occurrence and during the
continuance of a Triggering Event. Therefore, the fiduciary of a Plan
considering the purchase of a Class A Certificate should consider the
availability of the exemptive relief provided by the Underwriter Exemption, as
well as the availability of any other exemptions with respect to transactions to
which the Underwriter Exemption may not apply.
CLASS B, CLASS C AND CLASS D CERTIFICATES
The Class B Certificates, Class C Certificates and Class D Certificates
may not be acquired with the assets of a Plan, provided, however, that such
Certificates may be acquired with the assets of an insurance company general
account that may be deemed to constitute Plan assets if the conditions of
Prohibited Transaction Class Exemption 95-60 have been satisfied. By the
acceptance of a Class B, C or D Certificate, each Certificateholder will be
deemed to have represented and warranted that either (i) no Plan assets have
been used to purchase such Certificate or (ii) the conditions of PTCE 95-60 have
been satisfied and that such purchase or holding is exempt from the prohibited
transaction restrictions of ERISA and the Code pursuant to PTCE 95-60.
EXHIBIT D - PAGE 3
<PAGE> 76
Each Plan fiduciary (and each fiduciary for a governmental or church
plan subject to rules similar to those imposed on Plans under ERISA) should
consult with its legal advisor concerning an investment in any of the
Certificates.
EXHIBIT D - PAGE 4
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1996 B]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 B],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ], a [ ]
corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the
Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each
of the three separate Pass Through Trust Agreements (as defined below), (v)
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as subordination agent and trustee (in such
capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as
defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original
Indenture and the Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[ ], as the loan participants
(collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee
entered into the Participation Agreement [NW 1996 B], dated as of April 24,
1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease
of one Boeing 757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 B], dated as of
April 24, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 B], dated April 30, 1996
<PAGE> 2
(collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee
issued to the Loan Participants secured certificates substantially in the form
set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as
evidence of the loan then being made by the Loan Participants in participating
in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 B] dated April 30, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease
from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 B], dated as of April 24, 1996 (the
"TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24,
1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1996 B] dated as of April 24, 1996 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and Owner Trustee pursuant to such Section 17 of its
desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1996 B], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 B], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue
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<PAGE> 3
new secured certificates substantially in the form set forth in Section 2.01
thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 B], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1996 B] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), three separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date hereof (the
"INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
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<PAGE> 4
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement
is hereby amended by adding the words "or the issuance or transfer of the Pass
Through Certificates" after the words "transfer thereof" in clause (E) thereof.
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1), (3), and (10) thereof; (ii) deleting clauses (2)
and (4) thereof in their entirety and substituting therefor "Intentionally
Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof
and substituting therefor the words "the Indenture Trustee or the Trust
Indenture Estate", (iv) deleting the words "any Loan Participant or any
Certificate Holder" from clause (9) thereof and substituting therefor the words
"the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B)
in clause (11) thereof and substituting therefor "or", (vi) deleting "(C)" in
clause (11) thereof and substituting therefor "(B)", and (vii) deleting the
parenthetical clause and the first proviso from clause (13) thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by deleting the second sentence in the last
paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement
is hereby amended by (I) deleting the words "other than a Loan Participant" from
the first sentence thereof and (ii) deleting the second and third sentences
thereof.
SECTION 6. AMENDMENT OF SECTION 7(b)(xii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(xii) of the Original Participation
Agreement is hereby amended by (i) ) adding the words "or Pass Through Trustee"
after the words "Indenture Trustee", (ii) deleting the words "U.S. Withholding
Tax" the first time such words appear therein and substituting therefor the
words and punctuation "any Income Tax imposed by the United States Federal
government required to be withheld from payments on the Secured Certificates (a
'U.S. WITHHOLDING TAX')", (iii) adding the words "or any Pass Through
Certificate, respectively" after the words "Secured Certificate" and (iv) adding
the words "or any Pass Through Certificate" after the words "Secured
Certificates".
SECTION 7. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is
hereby amended by (i) deleting the word "and" between the words "expenses" and
"Transaction Expenses" in the second parenthetical phrase of the first paragraph
thereof and substituting a comma therefor, (ii) inserting after the phrase "to
Section 16 hereof" in such second parenthetical phrase the
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<PAGE> 5
words "and Refinancing Expenses to the extent not required to be paid by the
Owner Trustee or the Owner Participant pursuant to Section 11(a) of the
Refunding Agreement", (iii) adding the words and punctuation "and, only in the
case of an Indemnitee who is the Owner Participant or the Owner Trustee, the
Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust
Agreements or any of the transactions contemplated thereby and, only in the case
of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and
the Liquidity Facilities" after the words "respect thereof" in the first clause
(A) thereof, (iv) adding the words and punctuation ", the Pass Through
Certificates" after the words "Secured Certificates" the first time such words
appear in the first clause (D) thereof, and (v) adding the words and punctuation
"the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust
Agreements" after the words "Operative Documents" in the second clause (A)
thereof and in the second clause (B) thereof.
SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended by (i) deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof and (ii) inserting the word "or" after the phrase "result of such
reregistration" in clause (D) thereof.
SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation "the Loan
Participants," each time they appear in the second sentence thereof, (ii)
deleting the words "the Majority in Interest of the Certificate Holders" from
the first proviso of the second sentence thereof and substituting therefor the
words "Indenture Trustee"; (iii) deleting the "," between the words "Owner
Trustee" and "the Indenture Trustee" from clause (N) of the third sentence
thereof and substituting therefor "and", (iv) deleting the words "and the Loan
Participants" from clause (N) of the third sentence thereof, (v) deleting the
words "to such persons" in clause (N) of the third sentence thereof and
inserting in lieu thereof the words "to the Owner Trustee and Lessee", (vi)
deleting the words and punctuation "the Majority in Interest of the Certificate
Holders," and "and the Indenture Trustee" from clause (O) of the third sentence
thereof, and deleting the "," before the word "Lessee" in such clause and
substituting therefor the word "and", and (vii) deleting the words and
punctuation "the Loan Participants," from the fifth sentence thereof.
SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended by (i) adding the words "other than the Pass Through Trustee"
after the words "Each Loan Participant" in the first sentence thereof, and (ii)
adding a new sentence to the end thereof to read as follows: "The Pass Through
Trustee agrees that it will not agree to any amendment, modification or waiver
of Section 1.01(e)(i) of the initial supplement (other than the initial
supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each
Pass Through Trust Agreement without the prior written consent of the Owner
Participant."
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<PAGE> 6
SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is
hereby amended by deleting the fourth and fifth sentences thereof.
SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by (i) deleting the words "each Loan Participant" therefrom and
(ii) adding a new second paragraph thereto at the end thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section 1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section 1110.
SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the words "each" the first time it appears in
Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii)
deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Indenture Trustee and the Owner", (iii)
inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" the first time it appears in Section 8(y)(A)(iv) and substituting
therefor the words "the Indenture Trustee and the Owner Participant".
SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 17. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
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<PAGE> 7
SECTION 18. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (A) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (B) thereof and substituting
therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05"
from clause (iii) of the second sentence thereof.
SECTION 19. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 20. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Loan Participants" each time they
appear in clauses (A), (B), and (D) thereof and substituting therefor the words
"Indenture Trustee", (ii) deleting the "," both times it appears between the
words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and
substituting therefor "and", and (iii) deleting the words "and the Loan
Participants" both times they appear in clause (E) thereof.
SECTION 21. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as
Lessor, under the terms of the Lease which by its terms is not
to be unreasonably withheld by the Owner Trustee, as Lessor.
SECTION 22. AMENDMENT OF SECTION 17 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is
hereby amended by adding the following new subclause (7) to clause (a) thereof:
(7) in connection with any proposed
refinancing, if, on the date which is two Business Days prior
to the last date on which notice of revocation of redemption
may be given pursuant to Section 2.12(b) of the Trust
Indenture, the Owner Participant is not satisfied in its sole
discretion that such refinancing will occur on the date
specified for such refinancing in the notice provided pursuant
to Section 2.11 of the Trust Indenture, then Lessee shall not
effect such proposed refinancing and shall provide notice to
such effect to the Indenture Trustee pursuant to Section
2.12(b) of the Trust Indenture.
SECTION 23. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
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<PAGE> 8
SECTION 24. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
SECTION 25. MISCELLANEOUS. (a) Each of the parties hereto
agrees that the transactions contemplated hereby shall constitute one of the
three refinancing operations permitted in Section 17 of the Participation
Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement, and (iii) the Purchaser has no liability or obligation
under any covenant in any of such agreements for any period prior to the
Closing.
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: ___________________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By: ___________________________________
Name:
Title:
[ ],
as Owner Participant
By: ___________________________________
Name:
Title:
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<PAGE> 10
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By: ___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By: ___________________________________
Name:
Title:
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<PAGE> 11
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc. and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
REFUNDING AGREEMENT
[NW 1996 B]
This REFUNDING AGREEMENT [NW 1996 B], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[_____________________], a [____________] corporation (the "OWNER PARTICIPANT"),
(iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [INSERT
BRIDGE LENDERS] as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1996 B], dated as of April 24, 1996 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
<PAGE> 2
Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, as
supplemented by Trust Agreement and Indenture Supplement [NW 1996 B], dated
April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the
Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996, as
supplemented by Lease Supplement No. 1 [NW 1996 B] dated April 30, 1996 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1996 B], dated as of April 24, 1996 (the "TRUST
AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to
hold the Trust Estate defined in Section 1.01 thereof for the benefit of the
Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996 (the
"ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor executed and delivered the Guarantee [NW
1996 B] dated as of April 24, 1996 (the "GUARANTEE") pursuant to which the
Guarantor guaranteed certain obligations of the Lessee under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 B], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1996 B], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1996 B], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1996 B] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, three separate
grantor trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a
"PASS THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
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<PAGE> 4
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Owner Participant
shall pay to the Owner Trustee an amount equal to the unpaid interest
on the Original Secured Certificates accrued up to but not including
the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders under the Original Indenture and the Original Participation
Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture; and
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the maturity and aggregate principal amount, bearing
the interest rate and for the purchase price set forth on Schedule II
hereto opposite the name of such Pass Through Trust.
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(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
any amount in respect of the prepayment of the Original Secured Certificates,
the Original Secured Certificates shall remain outstanding and in full force and
effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall
not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated as
of the date hereof, among the Lessee, the Guarantor and the several underwriters
(the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject
to the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such Pass Through Trust on Schedule II hereto, which Refinancing
Secured Certificates in the aggregate shall be in the principal amounts set
forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through
Trust Agreements and of the other Operative Documents, all such Refinancing
Secured Certificates shall be dated and authenticated as of the Refinancing Date
and shall bear interest therefrom, shall be registered in such names as shall be
specified by the Subordination Agent and shall be paid in the manner and at such
places as are set forth in the Indenture.
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SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents and any such documents shall be reasonably
satisfactory in form and substance to the Owner Participant:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. 1;
(5) each of the Pass Through Trust Agreements;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts.
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1 and any other documents to be
executed on behalf of the Lessee or the Guarantor (as the case may
be) in connection with the
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transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Trust Agreement
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee, and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and
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warranties (other than those contained in clause (v) of Section
8(d)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1, and any other documents to be executed on
behalf of the Owner Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
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(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal
department, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
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(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Fulbright & Jaworski L.L.P., special
counsel for the Owner Participant, and an opinion addressed to it from corporate
counsel to the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in house German counsel
for the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and
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the PA Amendment No. 1 are subject to the receipt by the Lessee and the
Guarantor of (i) each opinion referred to in subsections (j) through (n) of
Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter
from counsel rendering such opinion authorizing the Lessee and the Guarantor to
rely on such opinion as if it were addressed to the Lessee and the Guarantor,
(ii) each certificate referred to in subsections (e) through (g) of Section 3,
(iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and
the Trust Agreement Amendment No. 1, and (iv) such other documents and evidence
with respect to each other party hereto as the Lessee, the Guarantor or their
counsel may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
(b) The respective obligations of each of the Lessee, the Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee to
participate in the transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Refinancing Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The Lessee and the Guarantor, by execution
and delivery hereof, consent to such execution and delivery of the Indenture.
The Indenture shall be effective as of the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver, the Lease Amendment No.
1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof,
to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1
shall be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner
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Participant, by execution and delivery hereof, requests, authorizes and directs
the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the PA Amendment No. 1. Upon the execution and delivery of
the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all necessary corporate action on the part of the
Lessee or the Guarantor, do not
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require any stockholder approval, or approval or consent of any trustee
or holder of any material indebtedness or material obligations of the
Lessee or the Guarantor, except such as have been duly obtained and are
in full force and effect, and do not contravene any law, governmental
rule, regulation or order binding on the Lessee or the Guarantor (as
the case may be) or the certificate of incorporation or by-laws of the
Lessee or the Guarantor (as the case may be), or contravene the
provisions of, or constitute a default under, or result in the creation
of any Lien (other than Permitted Liens) upon the property of the
Lessee or the Guarantor (as the case may be) under, any indenture,
mortgage, contract or other agreement to which the Lessee or the
Guarantor (as the case may be) is a party or by which it may be bound
or affected which contravention, default or Lien, individually or in
the aggregate, would be reasonably likely to have a material adverse
effect on the condition (financial or otherwise), business or
properties of the Guarantor and its subsidiaries considered as one
enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
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(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease and the Lease Amendment No. 1 (to
the extent the Lease constitutes chattel paper), and the filing of
continuation statements at periodic intervals with respect to the
Uniform Commercial Code financing statements in effect on the
Refinancing Date covering the security interests created by the
Original Indenture or describing the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
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(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the
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Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Trust Agreement, has the corporate
power and authority to carry out the terms of the Trust Agreement, and
has, or had on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust Agreement by the
Owner Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the corporate
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1 and each other Operative Document
(other than the Trust Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, and the Lease, when the
Lease Amendment No. 1 shall have been entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee,
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in its individual capacity or as Owner Trustee, as the case may be,
enforceable against it in its individual capacity or as Owner Trustee,
as the case may be, in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Trust Agreement, the Original Indenture, the Indenture, the
Original Lease, the Lease Amendment No. 1, the Refinancing Secured
Certificates or any other Operative Document to which it is a party,
nor the consummation by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, 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 it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any provision
of, or constitutes or will constitute a default under, or results or
will result in any breach of, or results or will result in the creation
of any Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any
law, governmental rule or regulation of the United States of America or
the State of Utah governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of,
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or the carrying out by, the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement, the Participation
Agreement, the Indenture, the Lease or the Refinancing Secured
Certificates, or any other Operative Document to which it is a party or
by which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were
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not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of [__________] and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has, or had on the
respective dates of execution thereof, as the case may be, the
corporate power and authority to enter into and to perform its
obligations under this Agreement, the Original Participation Agreement,
the Tax Indemnity Agreement, the Trust Agreement, the TIA Amendment No.
1 and the PA Amendment No. 1; this Agreement has been duly authorized,
executed and delivered by it; and each of this Agreement, the Tax
Indemnity
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Agreement and the Trust Agreement constitutes, and the Participation
Agreement when the PA Amendment No. 1 shall have been entered into, and
the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have
been entered into, will constitute, the legal, valid and binding
obligations of the Owner Participant enforceable against it in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at law
or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1 or any other Operative Document to which it is a party
nor (B) compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Owner Participant
(it being understood that no representation or warranty is made with
respect to laws, rules or regulations relating to aviation or to the
nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by it of this Agreement, the TIA
Amendment No. 1 and the PA Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to
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acquire any of the same from, any Person; the Owner Participant's
interest in the Trust Estate and the Trust Agreement was acquired for
its own account and was purchased for investment and not with a view to
any resale or distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings and (E)
the existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for the benefit
of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the full corporate power, authority and legal
right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1 and this Agreement and
to perform its obligations under this Agreement, the Pass Through Trust
Agreements, the Intercreditor Agreement and the Participation
Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
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affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under
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subpart E, Part I of Subchapter J of the Code, such trusts will not be
subject to any Taxes imposed by the Commonwealth of Massachusetts or
any political subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement, will constitute, the legal, valid and binding
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obligations of the Subordination Agent enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
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(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States mail, with proper postage for first-class registered or
certified mail prepaid, or when delivered personally or, if promptly confirmed
by mail as provided above, when dispatched by facsimile or other written
telecommunication, addressed, if to the Lessee, the Guarantor, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, at their respective addresses or facsimile
numbers set forth below the signatures of such parties at the foot of this
Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below and
subject to the cap set forth in Section 17(a)(5) of the Participation Agreement,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City,
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<PAGE> 26
Oklahoma, (D) Shearman & Sterling, special counsel for the
Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special
counsel for the Original Loan Participants;
(2) the reasonable fees, expenses and disbursements of
[___________], special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the total amount of Transaction Expenses paid by
the Owner Participant pursuant to Section 16(a) of the Participation Agreement
and Refinancing Expenses exceed 2.8% of Lessor's Cost, the Lessee shall pay
directly any and all Refinancing Expenses to the extent of such excess. In the
event that the transactions contemplated by this Section 11 and the agreements
referred to herein are not consummated, the Lessee shall bear and pay all costs,
expenses and fees referred to in this Section 11; provided that if the
transactions fail to be consummated as a result of the failure of the Owner
Participant to act in good faith in consummating the transactions, or to
otherwise comply with the terms hereof, the Owner Participant shall bear and pay
its own fees, costs and expenses (including, without limitation, the fees and
expenses of its special counsel) and the Lessee shall pay all other reasonable
fees, costs and expenses as aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
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obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
-27-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: _________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
-28-
<PAGE> 29
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: _________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
-29-
<PAGE> 30
[_________________________]
Owner Participant
By: _____________________________________
Title:
Address:
Attn:
Telecopy No.:
-30-
<PAGE> 31
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Pass Through Trustee,
Pass Through Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-31-
<PAGE> 32
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise provided
herein, but solely as
Subordination Agent,
Subordination Agent
By: ___________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-32-
<PAGE> 33
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Indenture Trustee,
Indenture Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-33-
<PAGE> 34
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By: ___________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
-34-
<PAGE> 35
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C dated as of the Closing Date.
<PAGE> 36
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- ------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1C [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 C]
This TRUST AGREEMENT [NW 1996 C] dated as of April 26, 1996 between [
], a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), and
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking
association (in its individual capacity, "FSBU") and otherwise not in its
individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms used
herein shall have the respective meanings assigned thereto in the Lease (as
hereinafter defined) for all purposes hereof. All definitions contained in this
Section 1.01 shall be equally applicable to both the singular and plural forms
of the terms defined. For all purposes of this Trust Agreement the following
terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the Trust
Indenture.
"Indenture Event of Default" has the meaning which the term "Event of
Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 C], to be dated as
of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
<PAGE> 2
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and
its permitted successors and assigns.
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant, the
percentage of its undivided beneficial interest in the Trust Estate created by
this Trust Agreement.
"Participation Agreement" has the meaning ascribed to such term in the
Lease.
"Replacement Airframe" has the meaning ascribed to such term in the
Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the Trust
Indenture.
"Subsequent Owner Participant" means any Person to which the Original
Owner Participant or any transferee from the Original Owner Participant or any
Subsequent Owner Participant shall have transferred at any time after the
Delivery Date its undivided right, title and interest originally held by the
Original Owner Participant in this Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.1 of this Trust
Agreement and Section 8 of the Participation Agreement; provided that in the
event of any such transfer so long as the Lease shall be in effect or any
Secured Certificates remain unpaid, such transferee and its transferor shall
have complied with all of the terms of Section 8(n) of the Participation
Agreement.
"Trust Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill
of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its
individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payments.
2
<PAGE> 3
"Trust Indenture Estate" has the meaning ascribed to such term in the
Trust Indenture.
"Trust Office" shall mean the principal corporate trust office of the
Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or the principal corporate trust office of any
successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee
agrees for the benefit of the Owner Participant that it will on or before the
Delivery Date, execute and deliver the Operative Documents and any other
agreements, instruments or documents to which the Owner Trustee is a party in
the respective forms thereof in which delivered from time to time by the Owner
Participant to the Owner Trustee for execution and delivery and, subject to the
terms hereof, to perform its duties and, upon instructions from the Owner
Participant, exercise its rights under said Operative Documents in accordance
with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Estate upon the trusts hereinafter set forth for the
use and benefit of the Owner Participant, subject, however, to the provisions of
and the Lien created by the Trust Indenture and to the provisions of the Lease
and the Participation Agreement.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees
for the
3
<PAGE> 4
benefit of the Owner Participant that it will, on the Delivery Date, subject to
due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the
FAA Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement
covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the
Participation Agreement;
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with
all other agreements, documents and instruments referred to in
Section 4 of the Participation Agreement to which the Owner
Trustee is a party;
(g) effect the registration of the Aircraft in the name of the
Owner Trustee by filing or causing to be filed with the FAA:
(i) the FAA Bill of Sale; (ii) an application for registration
of the Aircraft in the name of the Owner Trustee (including
without limitation an affidavit from the Owner Trustee in
compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and
(h) execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance
with the directions of the Owner Participant, as the Owner
Participant may deem necessary or advisable in connection with
the transactions contemplated hereby.
SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule II of the
Participation
4
<PAGE> 5
Agreement available to the Owner Trustee, in immediately
available funds, in accordance with Section 1 of the
Participation Agreement; and
(b) the Owner Participant shall have notified the Owner Trustee
that the terms and conditions of Section 4 of the
Participation Agreement, insofar as they relate to the
Aircraft, shall have been complied with in a manner
satisfactory to the Original Owner Participant.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE
AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified to
be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and
upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in
accordance with the provisions of such Section 8(x) provided Lessee shall have
paid all amounts required by such Section 19(d) and 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR
REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, in the event of a Replacement Airframe and Replacement
Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a
Replacement Engine being substituted pursuant to Section 10(b) of the Lease,
subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease,
as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives
of the Owner Trustee (who shall be an employee or employees of
Lessee) to accept delivery of the Replacement Airframe and
Replacement Engines, if any, or the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement Airframe
and Replacement Engines, if any, or the Replacement Engine a
bill of sale or bills of sale (if tendered), and the invoice,
if any, with respect to the Replacement Airframe and
Replacement Engines, if any, or the Replacement Engine being
furnished pursuant to Section 10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make application to the
Federal Aviation Administration for the registration in the
name of the Owner Trustee of the Aircraft of which such
Replacement Airframe is a part;
5
<PAGE> 6
(d) execute and deliver a Lease Supplement and a Trust Supplement
covering (i) the Aircraft of which such Replacement Airframe
is part or (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) the Airframe and Engines
(if any) or the Engine being replaced to Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the
Airframe and Engines or engines (if any) or the Engine or
engine being replaced from the lien created under the Trust
Indenture and release the Purchase Agreement and the Purchase
Agreement Assignment (solely with respect to such replaced
Airframe and Engines, if any, or Engine) from the assignment
and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take such
further action as may be contemplated by clauses (A) and (B)
of the third paragraph of Section 10(a) of the Lease or
clauses (ii) and (iii) of Section 10(b) of the Lease, as the
case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe or engine as the Airframe or Engine being replaced but for the
Event of Loss with respect to such Airframe or Engine.
SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such
engine contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this
purpose Liens that would
6
<PAGE> 7
be Lessor Liens but for the proviso in the definition of
Lessor Liens) and to an Engine to Lessee as contemplated by
such Section 5(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the
Engine being transferred to Lessee pursuant to such Section
5(b) from the lien of the Trust Indenture and to release the
Purchase Agreement and the Purchase Agreement Assignment
(solely with respect to such Engine) from the assignment and
pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust Indenture
shall have been discharged pursuant to Section 10.01 thereof, any payment of the
type referred to in Section 4.01(a) hereof (other than Excluded Payments)
received by the Owner Trustee, any payments received from the Indenture Trustee
other than as specified in Section 4.01(d) hereof and any other amount received
as part of the Trust Estate and for the application or distribution of which no
provision is made herein, shall be distributed forthwith upon receipt by the
Owner Trustee in the following order of priority: first, so much of such payment
as shall be required to reimburse the Owner Trustee for any expenses not
otherwise reimbursed as to which the Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustee; second, so much of the remainder for which provision as to the
application thereof is contained in the Lease or any of the other Operative
Documents shall be applied and distributed in accordance with the terms of the
Lease or such other Operative Document; and third, the balance, if any, shall be
paid to the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from time
to time distributable by the Indenture Trustee to the Owner Participant pursuant
to the Trust
7
<PAGE> 8
Indenture shall, if paid to the Owner Trustee, be distributed by the Owner
Trustee to the Owner Participant in accordance with the provisions of Article
III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement, the Lease and the Operative Documents on the day
received (or on the next succeeding Business Day if the funds to be so
distributed shall not have been received by the Owner Trustee by 12:00 noon, New
York City time).
(e) Multiple Owner Participants. If as a result of a transfer by an
Owner Participant under Section 8.01 of this Trust Agreement, there is more than
one Owner Participant hereunder, each such Owner Participant shall hold in
proportion to its respective beneficial interest in the Trust Estate, an
undivided beneficial interest in the entire Trust Estate and is entitled to
receive ratably with any other Owner Participant payments distributable by the
Owner Trustee hereunder. No Owner Participant shall have legal title to the
Aircraft or any other portion of the Trust Estate.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds on the day received (or the next succeeding Business Day if the
funds to be so distributed shall not have been received by the Owner Trustee by
12:00 noon, New York time, the amount to be distributed to such account or
accounts of the Owner Participant as the Owner Participant may designate from
time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the
Owner Trustee will, if so requested by the Owner Participant in writing, pay any
or all amounts payable to the Owner Participant pursuant to this Article IV
either (i) by crediting such amount or amounts to an account or accounts
maintained by the Owner Participant with the Owner Trustee in its individual
capacity in immediately available funds, (ii) by payment at the Trust Office of
the Owner Trustee, in immediately available funds, or (iii) by mailing an
official bank check or checks in such amount or amounts payable to the Owner
Participant at such address as the Owner Participant shall have designated in
writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall
have knowledge of a Lease Event of Default or Indenture Event of Default (or an
event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the
8
<PAGE> 9
Owner Participant prompt telephonic or telecopy notice thereof followed by
prompt confirmation thereof by certified mail, postage prepaid, provided that
(i) in the case of an event which with the passage of time would constitute an
Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the
Trust Indenture, such notice shall in no event be furnished later than ten (10)
days after the Owner Trustee shall first have knowledge of such event and (ii)
in the case of a misrepresentation by the Owner Trustee which with the passage
of time would constitute an Indenture Event of Default referred to in paragraph
(d) of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten (10) days after the Owner Trustee shall first have
knowledge of such event. The notice shall set forth in reasonable detail the
facts and circumstances known to it with respect to such Lease Event of Default
or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the
Owner Trustee shall take such action or shall refrain from taking such action,
not inconsistent with the provisions of the Trust Indenture, with respect to
such Lease Event of Default, Indenture Event of Default or other event as the
Owner Trustee shall be directed in writing by the Owner Participant. If the
Owner Trustee shall not have received instructions as above provided within
thirty (30) days after the mailing of such notice to the Owner Participant, the
Owner Trustee until instructed otherwise in accordance with the preceding
sentence may, but shall be under no duty to, take or refrain from taking such
action with respect to such Lease Event of Default, Indenture Event of Default
or other event, not inconsistent with the provisions of the Trust Indenture, as
it shall deem advisable in the best interests of the Owner Participant. For all
purposes of this Trust Agreement, the Lease and the other Operative Documents,
in the absence of actual knowledge by an officer of FSBU in the Corporate Trust
Department, the Owner Trustee shall not be deemed to have knowledge of a Lease
Event of Default, Indenture Event of Default or other event referred to in this
Section 5.01 unless notified in writing by the Indenture Trustee, the Owner
Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of
Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of the Owner Participant, the Owner Trustee will take such of
the following actions, not inconsistent with the provisions of the Trust
Indenture, as may be specified in such instructions:
(i) give such notice or direction or exercise such right, remedy
or power hereunder or under any of the Operative Documents to
which the Owner Trustee is a party or in respect of all or any
part of the Trust Estate as shall be specified in such
instructions;
(ii) take such action to preserve or protect the Trust Estate
(including the discharge of Liens) as may be specified in such
instructions;
(iii) approve as satisfactory to it all matters required by the
terms of the Lease or the other Operative Documents to be
satisfactory to the Owner Trustee, it being understood that
without written instructions
9
<PAGE> 10
of the Owner Participant, the Owner Trustee shall not approve
any such matter as satisfactory to it (it being understood
that the provisions of Sections 3.03, 3.04 and 3.06 hereof do
not constitute instructions by the Owner Participant for the
Owner Trustee to approve of or consent to the matters to be
approved of or consented to by the Owner Trustee in the
sections of the Lease referred to in Sections 3.03, 3.04 or
3.06 hereof); and
(iv) subject to the rights of Lessee under the Operative Documents,
after the expiration or earlier termination of the Lease,
deliver the Aircraft to the Owner Participant in accordance
with such instructions, convey all of the Owner Trustee's
right, title and interest in and to the Aircraft for such
amount, on such terms and to such purchaser or purchasers as
shall be designated in such instructions, or net lease the
Aircraft on such terms and to such lessee or lessees as shall
be designated in such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required
to take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless the Owner Trustee shall have been
indemnified by the Owner Participant, in manner and form satisfactory to the
Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
reasonable fees and disbursements of counsel or agents employed by the Owner
Trustee in connection therewith. The Owner Trustee shall not be required to take
any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall
reasonably determine, or shall have been advised by counsel, that such action is
contrary to the terms of any of the Operative Documents to which the Owner
Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with any of the Operative Documents to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Documents to which the Owner Trustee is a party, or (to the extent not
inconsistent with the provisions of the Trust Indenture) as expressly provided
by the terms hereof or in written instructions from the Owner Participant
received pursuant to the terms of Section 5.01 or 5.02, and no implied
10
<PAGE> 11
duties or obligations shall be read into this Trust Agreement against the Owner
Trustee. FSBU agrees that it will, in its individual capacity and at its own
cost or expense (but without any right of indemnity in respect of any such cost
or expense under Section 7.01 hereof) promptly take such action as may be
necessary to duly discharge and satisfy in full all Lessor Liens attributable to
it in its individual capacity which it is required to discharge pursuant to
Section 8(h) of the Participation Agreement and otherwise comply with the terms
of said Section binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to
the contrary notwithstanding, the Owner Trustee shall comply with the provisions
of Section 3.01 hereof upon the satisfaction, to the satisfaction of special
counsel for the Owner Trustee, of all the applicable conditions precedent
specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts
hereby created and agrees to perform the same but only upon the terms hereof
applicable to it. The Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. FSBU shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof and the
first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's
failure to use ordinary care to disburse funds, (d) for liabilities that may
result from the inaccuracy of any representation or warranty of it (or from the
failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03
of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and
8(v) of the Participation Agreement and (e) for any Tax based on or measured by
any fees, commissions or compensation received by it for acting as trustee in
connection with any of the transactions contemplated by the Operative Documents.
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SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Sections 3.01 and 5.04
hereof and the last sentence of Section 9.01(b) hereof, neither the Owner
Trustee nor FSBU shall have any duty (i) to see to any recording or filing of
any Operative Document or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the Federal Aviation Administration or other governmental agencies, except that
FSBU, in its individual capacity, shall comply with the reporting requirements
set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner
Trustee shall, to the extent that information for that purpose is supplied by
Lessee pursuant to any of the Operative Documents, complete and timely submit
(and furnish the Owner Participant with a copy of) any and all reports relating
to the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto, other
than to forward to the Owner Participant copies of all reports and other written
information which the Owner Trustee receives from Lessee pursuant to Section
11(c) of the Lease, (iii) to see to the payment or discharge of any tax,
assessment or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee under the Lease
or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS.
NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that
on the Delivery Date the Owner Trustee shall have received whatever title was
conveyed to it by Lessee and that the Aircraft shall during the Term be free of
Lessor Liens attributable to it, or (b) any representation or warranty as to the
validity, legality or enforceability of this Trust Agreement or any Operative
Document to which the Owner Trustee is a party, or any other document or
instrument, or as to the correctness of any statement contained in any thereof
except to the extent that any such statement is expressly made herein or therein
as a representation by FSBU in its individual capacity or by the Owner Trustee
and except that FSBU in its individual capacity hereby represents and warrants
that this Trust Agreement has been, and (assuming due
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authorization, execution and delivery by the Original Owner Participant of this
Trust Agreement) the Operative Documents to which it or the Owner Trustee is a
party have been (or at the time of execution and delivery of any such instrument
by it or the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself or the
Owner Trustee, as the case may be and that this Trust Agreement constitutes the
legal, valid and binding obligation of FSBU or the Owner Trustee, as the case
may be, enforceable against FSBU or the Owner Trustee, as the case may be, in
accordance with its terms.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as
provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner
Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant or
Lessee mentioned herein or in any of the Operative Documents to which the Owner
Trustee is a party shall be sufficiently evidenced by written instruments signed
by a person purporting to be the chairman of the board, the president, any
executive vice president, any senior vice president or any vice president or a
managing director and in the name of the Owner Participant or Lessee, as the
case may be. The Owner Trustee may accept a copy of a resolution of the Board of
Directors or Executive Committee of Lessee, certified by the secretary or any
assistant secretary of Lessee as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president or
a managing director of Lessee, as to such fact or matter, and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of trusts hereunder, the Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by
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it in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons and the Owner Trustee shall not be liable for the
negligence of any such agent, attorney, counsel, accountant or other skilled
person appointed by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder,
the Owner Trustee acts solely as trustee and not in its individual capacity
except as otherwise expressly provided herein; and, subject to the terms of the
Participation Agreement and the Trust Indenture, all persons, other than the
Owner Participant, as provided herein, having any claim against the Owner
Trustee by reason of the transactions contemplated hereby shall look only to the
Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or
7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not paid
by Lessee as contemplated by the last paragraph of Section 7(c) of the
Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement
and subject to Section 16 thereof, Lessee shall be required to pay the
reasonable fees and expenses of the Owner Trustee comprising the compensation
and reimbursement of expenses to which the Owner Trustee is entitled under this
Section 6.07.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for
the keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Participant shall be responsible for causing to
be prepared and filed all income tax returns required to be filed by the Owner
Participant. The Owner Trustee shall be responsible for causing to be prepared,
at the request and expense of the Owner Participant, all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns. The Owner Participant or the Owner Trustee, as the case
may be, upon request, will furnish the Owner Trustee or the Owner Participant,
as the case may be, with all such information as may be reasonably required from
the Owner Participant or the Owner Trustee, as the case may be, in connection
with the preparation of such income tax returns. The Owner Trustee will give to
the Owner Participant, upon request, such periodic information concerning
receipts and disbursements by it with respect to the Trust Estate as would be
helpful to the Owner Participant in preparing its tax returns.
SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein
to the contrary, the Owner Trustee shall not be authorized and shall have no
power to "vary the investment" of the Owner Participant within the meaning of
Treasury Regulations Section 301.7701-4(c)(1).
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ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner
Participant hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless FSBU in its individual capacity and its
successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by FSBU in its individual capacity on or measured
by any compensation received by FSBU in its individual capacity for its services
hereunder or in connection with the transactions contemplated by the Operative
Documents or otherwise excluded in subclause (e) below), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and
including, without limitation, any liability of an owner, any strict liability
and any liability without fault) of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against FSBU in its individual capacity
(whether or not also indemnified against by Lessee under the Lease or under the
Participation Agreement or also indemnified against by any other person but only
to the extent not otherwise paid or reimbursed by Lessee or such other person)
in any way relating to or arising out of this Trust Agreement or any of the
Operative Documents or the enforcement of any of the terms of any thereof, or in
any way relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust Estate
or the action or inaction of the Owner Trustee or FSBU in its individual
capacity hereunder, except (a) in the case of willful misconduct or gross
negligence on the part of the Owner Trustee or FSBU in its individual capacity
in the performance or non-performance of its duties hereunder or under any of
the other Operative Documents to which the Owner Trustee is a party or (b) those
resulting from the inaccuracy of any representation or warranty of FSBU in its
individual capacity (or from the failure of FSBU in its individual capacity to
perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its individual
capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in
the case of the failure to use ordinary care on the part of the Owner Trustee or
FSBU in its individual capacity in the disbursement of funds or (e) those claims
arising under any circumstances or upon any terms where Lessee would not have
been required to indemnify the Owner Trustee in its individual capacity pursuant
to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this
purpose,
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Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein
results from the Owner Trustee acting in accordance with written instructions of
the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the
willful misconduct or gross negligence of the Owner Participant to the extent
imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such
failure referred to therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7 (c)(D) (to the
extent such disposition therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H),
7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this
purpose, those claims arising or resulting from any action taken by or inaction
of the Owner Trustee in accordance with written instructions of the Owner
Participant). The indemnities contained in this Section 7.01 extend to FSBU only
in its individual capacity and shall not be construed as indemnities of the
Trust Indenture Estate or the Trust Estate (except to the extent, if any, that
FSBU in its individual capacity has been reimbursed by the Trust Indenture
Estate or the Trust Estate for amounts covered by the indemnities contained in
this Section 7.01). The indemnities contained in this Section 7.01 shall survive
the termination of this Trust Agreement. In addition, if necessary, FSBU in its
individual capacity shall be entitled to indemnification from the Trust Estate,
subject to the Lien of the Trust Indenture, for any liability, obligation, loss,
damage, penalty, tax, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by Lessee, the Owner Participant or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same FSBU
in its individual capacity shall have a Lien on the Trust Estate, subject to the
Lien of the Trust Indenture, which shall be prior to any interest therein of the
Owner Participant. The payor of any indemnity under this Article VII shall be
subrogated to any right of the person indemnified in respect of the matter as to
which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of
the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement. If there is more than one Owner Participant, no
assignment, conveyance or other transfer by an Owner Participant of any of its
right, title or interest in and to this Trust Agreement or the Trust Estate
shall be valid unless each other Owner Participant's prior written consent
(which consent may be withheld in the sole discretion of such other Owner
Participants) is given to such assignment, conveyance or other transfer.
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SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior
to the termination of this Trust Agreement there is more than one Owner
Participant, then during such time, if any action is required to be taken by all
Owner Participants and whenever any direction, authorization, approval, consent,
instruction, or other action is permitted to be given or taken by the Owner
Participant it shall be given or taken only upon unanimous agreement of all
Owner Participants; provided, however, that the termination of this Trust
Agreement pursuant to Section 11.01 hereof may be effected upon the election of
any Owner Participant.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to the Owner Participant, the
Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such resignation to
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b) hereof. In addition, the Owner Participant may at any time
remove the Owner Trustee without cause by a notice in writing delivered to the
Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture
has not been fully discharged) and Lessee (so long as the Lease is in effect),
such removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or
removal of the Owner Trustee, the Owner Participant may appoint a successor
Owner Trustee by an instrument signed by the Owner Participant. If a successor
Owner Trustee shall not have been appointed within thirty (30) days after such
notice of resignation or removal, the Owner Trustee, the Owner Participant,
Lessee or the Indenture Trustee may apply to any court of competent jurisdiction
to appoint a successor Owner Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Owner Participant an instrument accepting such appointment, and
thereupon such successor Owner Trustee, without further act, shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts
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hereunder with like effect as if originally named the Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee will execute such documents as are provided to it by such successor
Owner Trustee and will take such further actions as are requested of it by such
successor Owner Trustee as are reasonably required to cause registration of the
Aircraft included in the Trust Estate to be transferred upon the records of the
Federal Aviation Administration, or other governmental authority having
jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without
further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee
shall have been directed to do so by the Owner Participant, the Owner Trustee
and the Owner Participant shall execute and deliver an agreement supplemental
hereto and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons (any and all of
which shall be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement) approved by the Owner
Trustee and the Owner Participant, either to act as co-trustee, jointly with the
Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or
separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE").
In the event an Indenture
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Event of Default not arising from a Lease Event of Default shall occur and be
continuing, the Owner Trustee may act under the foregoing provisions of this
Section 9.02 without the concurrence of the Owner Participant; and the Owner
Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to
act for it under the foregoing provisions of this Section 9.02 in such
contingency.
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and
management of monies, the Aircraft or documents authorized to
be delivered hereunder or under the Participation Agreement
shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed
upon and exercised or performed by the Owner Trustee and such
additional trustee jointly, except to the extent that under
any law of any jurisdiction in which any particular act or
acts are to be performed (including the holding of title to
the Trust Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised
hereunder by such additional trustee, except jointly with, or
with the consent in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in
writing may remove any such additional trustee unless such
additional trustee was appointed by the Owner Trustee without
the concurrence of the Owner Participant during the occurrence
of an Indenture Event of Default not arising from a Lease
Event of Default, in which case the Owner Trustee shall have
the power to remove any such additional trustee without the
concurrence of the Owner Participant; and the Owner
Participant hereby appoints the Owner Trustee its
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agent and attorney-in-fact for it in such connection in such
contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or
otherwise affect any of the terms of, the Trust Indenture or
affect the interests of the Indenture Trustee or the holders
of the Secured Certificates in the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS.
(a) Supplements and Amendments. This Trust Agreement may not be
amended, supplemented or otherwise modified except by an instrument in writing
signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02
hereof and the first sentence of Section 10 of the Participation Agreement, the
Owner Trustee will execute any amendment, supplement or other modification of
this Trust Agreement or of any other Operative Document to which the Owner
Trustee is a party which it is requested to execute by the Owner Participant,
except that the Owner Trustee shall not execute any such amendment, supplement
or other modification which, by the express provisions of any of the above
documents, requires the consent of any other party unless such consent shall
have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A signed
copy of each amendment or supplement referred to in Section 10.01(a) hereof
shall be delivered by the Owner Trustee to the Indenture Trustee and each holder
of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
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SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution
by the Owner Trustee of any document entered into pursuant to Section 10.01
hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST
SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01
hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and
Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and
the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest execution
of this Trust Agreement by any party hereto, but if this Trust Agreement and the
trusts created hereby shall be or become authorized under applicable law to be
valid for a period commencing on the 21st anniversary of the death of such last
survivor (or, without limiting the generality of the foregoing, if legislation
shall become effective providing for the validity of this Trust Agreement and
the trusts created hereby for a period in gross exceeding the period for which
this Trust Agreement and the trusts created hereby are hereinabove stated to
extend and be valid), then this Trust Agreement and the trust created hereby
shall not terminate under this subsection (b) but shall extend to and continue
in effect, but only if such nontermination and extension shall then be valid
under applicable law, until the day preceding such date as the same shall, under
applicable law, cease to be valid; otherwise this Trust Agreement and the trusts
created hereby shall continue in full force and effect
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in accordance with the terms hereof, subject to the Owner Participant's right to
revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust
Indenture) to be distributed.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE.
The Owner Participant shall not have legal title to any part of the Trust
Estate. [No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate] this Trust Agreement or the trusts hereunder or entitle
any successors or transferees of the Owner Participant to an accounting or to
the transfer of legal title to any part of the Trust Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY.
Except for the terms of Section 8(n) of the Participation Agreement incorporated
in Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing herein, whether expressed or implied, shall be construed to give
any Person other than the Owner Trustee and the Owner Participant any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement;
but this Trust Agreement shall be held to be for the sole and exclusive benefit
of the Owner Trustee and the Owner Participant.
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) 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
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this Section
11.05(a). Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section 11.05(a), notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee,
the Loan Participants, the Indenture Trustee or the Owner Participant, to the
respective addresses set forth below the signatures of such parties on the
signature page of the Participation Agreement, or (B) if to a Subsequent Owner
Participant, addressed to such Subsequent Owner Participant at such address as
such Subsequent Owner Participant shall have furnished by notice to the
22
<PAGE> 23
parties hereto or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the secured certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that the Participation Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of any
thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
SECTION 11.08. COUNTERPARTS. This Trust 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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII hereof, its assigns. Any
request, notice, direction, consent, waiver or other instrument or action by the
Owner Participant shall bind its successors and assigns. Any Owner Participant
which shall cease to have any Ownership Interest shall thereupon cease to be a
party hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
23
<PAGE> 24
SECTION 11.10. HEADINGS; REFERENCES. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of
the Owner Trustee in its individual capacity or as Owner Trustee hereunder or
under any other Operative Document or other document contemplated herein, may be
performed by the Owner Participant and any such performance shall not be
construed as a revocation of the trust created hereby.
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
[Owner Participant]
By______________________________
Title:__________________________
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By______________________________
Title:__________________________
25
<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1996 C]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 C], dated as
of June 12, 1996, between [_____________], a [_________] corporation (the "OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "FSBU") and otherwise not in
its individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Trust Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner
Participant, the Owner Trustee, [______________________], as the loan
participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street
Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered
into the Participation Agreement [NW 1996 C], dated as of April 26, 1996 (the
"ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one
Boeing 757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to
<PAGE> 2
Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft
commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 C], dated as of
April 26, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 C], dated April 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant
to which the Owner Trustee issued to the Original Loan Participants secured
certificates substantially in the form set forth in Article II thereof (the
"ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the
Original Loan Participants in participating in the payment of Lessor's Cost;
WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor,
the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee,
the Owner Participant, the Indenture Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as Subordination Agent, have
entered into the Refunding Agreement [NW 1996 C], dated as of June 3, 1996 (the
"REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by
Section 17 of the Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 C], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 C], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE"); and
WHEREAS, the Owner Participant and the Owner Trustee wish to
amend the Original Trust Agreement as set forth herein to give effect to the
transactions contemplated by the Refunding Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Trust Agreement is
amended as follows:
SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by
adding the following clause to the end thereof after the word "distributed":
"provided, however, such right is subject to the provisions of Section 10 of the
Participation Agreement."
SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by
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<PAGE> 3
deleting the word "Participation" in clause (A) of the second sentence thereof
and substituting therefor the word "Refunding".
SECTION 3. DIRECTION. Pursuant to and in conformity with
Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests
the Owner Trustee to execute this Amendment.
SECTION 4. RATIFICATION. Except as hereby modified, the
Original Trust Agreement shall continue in full force and effect as originally
executed. From and after the date of this Amendment, each and every reference in
the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof"
or similar words or phrases referring to the Trust Agreement or any word or
phrase referring to a section or provision of the Trust Agreement is deemed for
all purposes to be a reference to the Trust Agreement or such section or
provision as amended pursuant to this Amendment.
SECTION 5. MISCELLANEOUS. This Amendment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
By:
--------------------------------
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By:
--------------------------------
Name:
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 C]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996
C], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have entered into
the Trust Agreement whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner Participant
subject, however, to the Trust Indenture Estate created pursuant hereto for the
use and benefit of, and with the priority of payment to, the holders of Secured
Certificates issued hereunder, and (ii) the Owner Trustee has been authorized
and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into
the Trust Indenture and Security Agreement [NW 1996 C] dated as of April 26,
1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust
Agreement and Indenture Supplement [NW 1996 C] (the "SUPPLEMENT") dated April
29, 1996 to the Original Indenture, (iii) the Original Indenture and the
Supplement were recorded by the Federal Aviation Administration on May 3, 1996
and were assigned Conveyance No. E21277 and (iv) the Lease Agreement [NW 1996 C]
dated as of even date with the Original Indenture between the Owner Trustee and
Lessee and the Lease Supplement No. 1 [NW 1996 C] were recorded by the Federal
Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21276
and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Loan Participants Secured Certificates (as defined in the Original
Indenture);
WHEREAS, the parties have agreed that subject to certain conditions,
Lessee shall have the right to cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Secured Certificates
issued to the Loan Participants pursuant to the Original Indenture shall be
redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES")
shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner Trustee for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount
of, interest on, Make-Whole Amount, if any, and all other amounts due with
respect to, all Secured Certificates from time to time outstanding hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions herein and in the Participation Agreement and the
Secured Certificates contained, for the benefit of the Certificate Holders and
the prompt payment of all amounts from time to time owing under the
Participation Agreement to the Certificate Holders by the Owner Trustee and for
the uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the Secured Certificates by the holders thereof, and for other
good and valuable consideration the receipt and adequacy whereof are hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors in trust and assigns, for the security and
benefit of the Certificate Holders, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, other than
Excluded Payments (which collectively, excluding Excluded Payments but including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Agreement and Indenture Supplement or any mortgage
supplemental hereto, are included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor to which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding all Excluded Payments;
(7) all monies and securities from time to time deposited or required
to be deposited with the Indenture Trustee pursuant to any terms of this
Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the Owner
Trustee has delivered to the Indenture Trustee the original executed counterpart
of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper
receipt is attached), and executed copies of the Participation Agreement, and
the Purchase Agreement Assignment with the Consent and Agreement attached
thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Loan Participants and the Certificate Holders, except as
provided in Section 2.15 and Article III hereof without any preference,
distinction or priority of any one Secured Certificate over any other by reason
of priority of time of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and purposes and in all
cases and as to all property specified in paragraphs (1) through (8) inclusive
above, subject to the terms and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the extent prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Certificate Holders shall
have no obligation or liability under the Indenture Agreements, by reason of or
arising out of the assignment hereunder, nor shall the Indenture Trustee or the
Certificate Holders be required or obligated in any manner to perform or fulfill
any obligations of the Owner Trustee under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Subject to the terms hereof, the Owner Trustee does hereby constitute
the Indenture Trustee the true and lawful attorney of the Owner Trustee,
irrevocably, granted for good and valuable consideration and coupled with an
interest and with full power of substitution, and with full power (in the name
of the Owner Trustee or otherwise) to ask for, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies (in
each case including insurance and requisition proceeds but in all cases
excluding Excluded Payments) due and to become due under or arising out of the
Indenture Agreements, and all other property which now or hereafter constitutes
part of the Trust Indenture Estate, to endorse any checks or other instruments
or orders in connection therewith and to file any claims or to take any action
or to institute any proceedings which the Indenture Trustee may deem to be
necessary or advisable in the premises. Without limiting the generality of the
foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or
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<PAGE> 5
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents (other than Excluded Payments) and other
sums and the security intended to be afforded hereby; provided, however, that no
action of the Indenture Trustee pursuant to this paragraph shall increase the
obligations or liabilities of the Owner Trustee to any Person beyond those
obligations and liabilities specifically set forth in this Trust Indenture and
in the other Operative Documents. Under the Lease, Lessee is directed, so long
as this Trust Indenture shall not have been fully discharged, to make all
payments of Rent (other than Excluded Payments) and all other amounts which are
required to be paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by, the Indenture
Trustee at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Trust Indenture. The Owner Trustee agrees that
promptly upon receipt thereof, it will transfer to the Indenture Trustee any and
all monies from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Indenture Trustee pursuant to this
Trust Indenture, except that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee, and that it will not, except as otherwise provided in this Trust
Indenture and except with respect to Excluded Payments, (i) accept any payment
from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) except as set forth in Section 8(bb) of the Participation
Agreement, collect or agree to the receipt or collection of any
payment of Rent, including Interim Rent, Basic Rent, Stipulated
Loss Value, Termination Value or any other payment to be made
pursuant to Section 9 or 10 of the Lease but excluding any
Excluded Payment prior to the due date for the payment thereof
provided for by the Lease or assign, transfer or hypothecate
(other than to the Indenture Trustee hereunder) any payment of
Rent, including Interim Rent, Basic Rent, Stipulated Loss Value,
Termination Value or any other payment to be made pursuant to
Section 9 or 10 of the Lease but excluding any Excluded Payment,
then due or to accrue in the future under the Lease in respect of
the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage,
transfer, assign or hypothecate (other than to the Indenture
Trustee hereunder) its interest in the Airframe and Engines or any
part
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<PAGE> 6
thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
Notwithstanding the Granting Clause or any of the foregoing paragraphs,
there is hereby excluded from the foregoing sale, transfer, assignment, grant,
pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee
or Indenture Trustee, as the case may be, actual knowledge of a Responsible
Officer in the Trust Office of the Owner Trustee or in the Corporate Trust
Office of the Indenture Trustee, as the case may be, and (ii) as it applies to
the Owner Participant, actual knowledge of a vice president or other higher
officer of the Owner Participant having responsibility for the transactions
contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Date on the Amortization
Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed shall
be the date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Secured Certificate.
"REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at the redemption
date of such Secured Certificate, shall be the number of days equal to the
quotient obtained by dividing (a) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one or
more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) hereof.
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"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee and each Certificate Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture.
"Default" means any event or condition that with the giving of notice
or the lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Enforcement Date" shall have meaning specified in Section 4.03 hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i)(A) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b) and 7(c) of
the Participation Agreement and (B) any other payment to the Owner Participant
pursuant to any provision of any Operative Document, (ii) proceeds of public
liability insurance (or proceeds of governmental indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims made, or losses
suffered, by the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by any of the Owner Indemnitees, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) and permitted under Section
11(e) of the Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee and all payments of Supplemental Rent by Lessee in
respect of any amounts payable under the Tax Indemnity Agreement, (v) all
Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the
Indenture Trustee pursuant to the last sentence of Section 7(c) of the
Participation Agreement, (vii) provided that the Secured Certificates shall have
been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable
to the Owner Trustee pursuant to the third sentence of Section 19(d) of the
Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest
accrued on any of the above, and (x) any right to enforce the payment of any
amount described in clauses (i) through (ix) above.
"Government Entity" means (a) 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 (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
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"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 C], dated as
of April 26, 1996, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery of the Original Trust Indenture, as said Lease
Agreement has been, or may from time to time be, supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Indenture. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Default" shall mean any event or condition that with the giving
of notice or the lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" shall mean an "Event of Default" as defined in
the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a particular date
of determination shall mean the holders of more than a majority in aggregate
unpaid Principal Amount of all Secured Certificates outstanding as of such date
(excluding any Secured Certificates held by the Owner Trustee or the Owner
Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any Affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate, the
amount (as determined by an independent investment banker selected by Lessee and
reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield (plus, in the case of Series C
Secured Certificates, 75 basis points) exceeds (b) the outstanding principal
amount of such Secured Certificate plus accrued interest. For purposes of
determining the Make-Whole Amount, "TREASURY YIELD" at the time of determination
with respect to any Secured Certificate means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Secured Certificate and
trading in the public securities market either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Secured Certificate and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Secured Certificate,
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<PAGE> 9
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in Section 3.03
hereof.
"Owner Indemnitee" shall have the meaning specified in the definition
of Excluded Payments herein.
"Owner Participant" shall mean [ ], so long as
such party shall have any interest in the Trust Estate, and transferees thereof
as permitted by Section 8 of the Participation Agreement.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1996 C], dated as of April 26, 1996, among the Owner Trustee, the
Indenture Trustee, Lessee and the Participants, as the same may from time to
time be supplemented or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured Certificates,
the rate per annum equal to 2% over the Debt Rate as in effect from time to
time.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with the
Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
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<PAGE> 10
"Secured Certificates" shall mean and include any Secured Certificates
issued hereunder, and issued in exchange therefor or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section 2.06
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the Participation
Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement to
the Trust Agreement and to this Indenture, in substantially the form of Exhibit
A hereto, which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture", and "the Indenture" shall mean this Amended and
Restated Trust Indenture and Security Agreement [NW 1996 C] as it may from time
to time be supplemented or amended as herein provided, including supplementing
by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form set forth
below:
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<PAGE> 11
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 C] DATED AS OF APRIL 26, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N539US.
No.____ Date: [______,__]
$_________________
INTEREST RATE MATURITY DATE
------------- -------------
[________] [________,_______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 C], dated as of
April 26, 1996, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of June
12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the
"INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to
time. All other capitalized terms used in this Secured Certificate and not
defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if any,
and other amounts, if any, to be made by the Owner Trustee hereunder and under
the Trust Indenture or the Participation Agreement
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<PAGE> 12
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Trust Indenture and each holder hereof, by its acceptance of
this Secured Certificate, agrees that (A) it will look solely to the income and
proceeds from the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided, (B) neither the Owner
Trustee nor the Indenture Trustee is personally liable or liable in any manner
to the holder hereof for any amounts payable or any liability under this Secured
Certificate or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust Indenture or the
Participation Agreement, and (C) the Owner Participant is not personally liable
or liable in any manner to the holder hereof for any amounts payable or any
liability under this Secured Certificate or, except as provided in the
Participation Agreement, for any liability under the Participation Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
the right of the Indenture Trustee, subject always to the terms and provisions
of the Trust Indenture, to accelerate the maturity of this Secured Certificate
upon occurrence of an Event of Default under the Trust Indenture in accordance
with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder shall
be payable in Dollars in immediately available funds at the Corporate Trust
Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred to
in the Trust Indenture which have been or are to be issued by the Owner Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Indenture Trustee as security, in part, for the Secured Certificates. The
provisions of this Secured Certificate are subject to the Trust Indenture.
Reference is hereby made to the Trust Indenture and the Participation Agreement
for a complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Secured Certificate and the rights
and obligations of the holders of, and the nature and extent of the security
for, any other Secured Certificates executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the Trust
created by the Trust Indenture, to all of which terms and conditions in the
Trust Indenture and the Participation Agreement each holder hereof agrees by its
acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Secured Certificate is exchangeable for a like aggregate
Principal Amount of Secured Certificates of different authorized denominations,
as requested by the holder surrendering the same.
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<PAGE> 13
Prior to due presentment for registration of transfer of this Secured
Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person
in whose name this Secured Certificate is registered as the owner hereof for all
purposes whether or not this Secured Certificate be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates]1[Series A and Series B Secured Certificates]2, and this Secured
Certificate is issued subject to such provisions. The Certificate Holder of this
Secured Certificate, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Trust Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed by or
on behalf of the Indenture Trustee by manual signature, this Secured Certificate
shall not be entitled to any benefit under the Trust Indenture or be valid or
obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ---------------
1 To be inserted in the case of a Series B Secured Certificate.
2 To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any
Series A Secured Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By___________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By___________________________________
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATE AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance thereof,
shall be issued in three separate series consisting of Series A, Series B and
Series C and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Certificate Holders under this
Trust Indenture, each Certificate Holder, by its acceptance of a Secured
Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the Participation Agreement
or any of the other Operative Documents or under the Secured Certificates except
as expressly provided herein or in the Participation Agreement; provided,
however, that nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms of this Trust
Indenture or such other agreements of rights and remedies against the Trust
Estate. These provisions are not intended as any release or discharge of the
indebtedness represented by the Secured Certificates and the Trust Indenture,
but are intended only as a covenant not to sue the Owner Trustee or the
Indenture Trustee in their individual capacities, except as expressly provided
herein or in the Participation Agreement, or the Owner Participant, except as
expressly provided in the Participation Agreement, for a deficiency with respect
to such indebtedness, the indebtedness represented by this Trust Indenture and
the Secured Certificates to remain in full force and effect as fully as though
these provisions were not contained in this Trust Indenture. The Owner Trustee
hereby acknowledges that the Certificate Holders have expressly reserved all
their rights and remedies against the Trust Indenture Estate, including the
right, in the event of a default in the payment of all or part of the Principal
Amount of, interest on, Make-Whole Amount, if any, or any other amount due with
respect to any Secured Certificate within the periods provided for in Section
4.02(b) hereof, or upon the occurrence and continuation of any other Event of
Default under this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate and otherwise to
enforce any other right under this Trust Indenture. Nothing in this Section
2.03(a) shall (x) release the Owner Participant from personal liability, or
constitute a covenant not to sue the Owner Participant, for any breach by it of
any of its covenants, representations or warranties contained in the
Participation Agreement for the benefit of the Indenture Trustee or the
Certificate Holders or for any of the payments it has agreed to make to the
Indemnitee Trustee or the Certificate Holders pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders or (z) release the
Owner Trustee in its individual capacity from personal liability, or constitute
a covenant not to sue the Owner Trustee in its individual capacity for any
breach by it of any representations, warranties or covenants of the Owner
Trustee made in its individual capacity in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders.
(b) If (i) all or any part of the Trust Estate becomes the property of,
or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant
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to such reorganization provisions, including Section 1111(b) of the Bankruptcy
Code, the Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to any Certificate
Holder or the Indenture Trustee, directly or indirectly (other than the recourse
liability of (x) the Owner Trustee (in its individual capacity) under the
Participation Agreement or this Trust Indenture or by separate agreement or (y)
the recourse liability of the Owner Participant under the Participation
Agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Secured
Certificates, (iii) the Certificate Holders shall have or shall have been
permitted to foreclose the Lien of this Trust Indenture, and (iv) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount
by which such payment exceeds the amount that would have been received by a
Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a
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registered Certificate Holder, all payments to it shall be made to the account
of such Certificate Holder specified in Schedule I thereto and otherwise in the
manner provided in or pursuant to the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement) unless it
shall have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificate Holders, that it will file any necessary United States withholding
tax returns or statements when due, and that as promptly as possible after the
payment thereof it will deliver to each Certificate Holder (with a copy to the
Owner Trustee and Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such Certificate
Holder may reasonably request from time to time. The Indenture Trustee and each
Certificate Holder agree that (i) no such withholding or action with respect
thereto shall constitute or give rise to any Event of Default and (ii) in the
event of the failure of the Indenture Trustee to withhold and pay over any such
taxes to the appropriate taxing authority, no indemnity will be sought from the
Owner Trustee, the Owner Participant or the Trust Estate.
If a Certificate Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law. The Indenture Trustee and each Certificate Holder agree that (i)
no such withholding or action with respect thereto shall constitute or give rise
to any Event of Default and (ii) in the event of the failure of the Indenture
Trustee to withhold and pay over any such taxes to the appropriate taxing
authority, no indemnity will be sought from the Owner Trustee, the Owner
Participant or the Trust Estate.
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SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured Certificate
(as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid (provided
that such Secured Certificate shall not be subject to redemption except as
provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.
A Certificate Holder shall not, as such, have any further interest in,
or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE
REGISTER") in which the Indenture Trustee shall provide for the registration of
Secured Certificates and the registration of transfers of Secured Certificates.
No such transfer shall be given effect unless and until registration hereunder
shall have occurred. The Secured Certificate Register shall be kept at the
Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby
appointed "Secured Certificate Registrar" for the purpose of registering Secured
Certificates and transfers of Secured Certificates as herein provided. A holder
of any Secured Certificate intending to exchange such Secured Certificate shall
surrender such Secured Certificate to the Indenture Trustee at the Corporate
Trust Office, together with a written request from the registered holder thereof
for the issuance of a new Secured Certificate, specifying, in the case of a
surrender for transfer, the name and address of the new holder or holders. Upon
surrender for registration of transfer of any Secured Certificate, the Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Secured
Certificates of a like aggregate Principal Amount and of the same series. At the
option of the Certificate Holder, Secured Certificates may be exchanged for
other Secured Certificates of any authorized denominations of a like aggregate
Principal Amount, upon surrender of the Secured Certificates to be exchanged to
the Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture,
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as the Secured Certificates surrendered upon such registration of transfer or
exchange. Every Secured Certificate presented or surrendered for registration of
transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee and Lessee of each registration
of a transfer of a Secured Certificate. Any such transferee of a Secured
Certificate, by its acceptance of a Secured Certificate, agrees to the
provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t),
8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have
represented and warranted (except as provided above), and covenanted, to the
parties to the Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participants in the Participation Agreement.
Subject to compliance by the Certificate Holder and its transferee (if any) of
the requirements set forth in this Section 2.07, the Indenture Trustee and the
Owner Trustee shall use all reasonable efforts to issue new Secured Certificates
upon transfer or exchange within 10 Business Days of the date a Secured
Certificate is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the holder of such
Secured Certificate, execute and the Indenture Trustee shall authenticate and
deliver in replacement thereof a new Secured Certificate, payable in the same
Principal Amount dated the same date and captioned as issued in connection with
the Aircraft. The Indenture Trustee shall authenticate each replacement Secured
Certificate on request by the Owner Trustee and shall make a notation on each
replacement Secured Certificate of the aggregate amount of all payments of
Principal Amount previously made on the mutilated, destroyed, lost or stolen
Secured Certificate with respect to which the replacement Secured Certificate is
issued and the date to which interest on such mutilated, destroyed, lost or
stolen Secured Certificate has been paid. If the Secured Certificate being
replaced has become mutilated, such Secured Certificate shall be surrendered to
the Indenture Trustee and a photocopy thereof shall be furnished to the Owner
Trustee. If the Secured Certificate being replaced has been destroyed, lost or
stolen, the holder of such Secured Certificate shall furnish to the Owner
Trustee and the Indenture Trustee such security or indemnity as may be required
by them to save the Owner Trustee and the Indenture Trustee harmless and
evidence satisfactory to the Owner Trustee and the Indenture Trustee of the
destruction, loss or theft of such Secured Certificate and of the ownership
thereof. If a "qualified institutional buyer" of the type referred to in
paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a
"QIB") is the holder of any such destroyed, lost or stolen Secured Certificate,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory to Lessee, the
Owner Trustee and the Indenture Trustee shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall be required as
a condition to the execution and delivery of such new Secured Certificate.
Subject to compliance by the Certificate Holder of the requirements set forth in
this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
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SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear any such costs of registration, transfer or exchange
including, without limitation, in connection with the consummation of the
Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by Lessee
pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed
all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13
hereof and to Section 8(x) of the Participation Agreement, on the date the Lease
is so terminated all the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with accrued interest thereon to the date of redemption and all other amounts
payable hereunder or under the Participation Agreement to the Certificate
Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
All of the Secured Certificates may be redeemed by the Owner Trustee in
connection with a transaction described in, and subject to the terms and
conditions of, Section 17 of the Participation Agreement upon at least 30 days'
revocable prior written notice to the Indenture Trustee and the Certificate
Holders, and the Secured Certificates shall, as provided in Section 17 of the
Participation Agreement, be redeemed in whole at a redemption price equal to
100% of the unpaid Principal Amount thereof, together with accrued interest
thereon to the date of redemption and all other amounts payable hereunder or
under the Participation Agreement to the Certificate Holders plus Make-Whole
Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any purchase
by the Owner Trustee of any Secured Certificate may be made except to the extent
and in the manner expressly permitted by this Trust Indenture. No purchase of
any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and
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payable upon each such Secured Certificate, and that, if any such Secured
Certificates are then outstanding, interest on such Secured Certificates shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Secured Certificates are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Secured Certificates to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption
date in immediately available funds the redemption price of the Secured
Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at any office or agency maintained for such purposes pursuant to Section 2.07,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation Agreement, and
subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
The Owner Trustee and the Owner Participant may, upon the events and
subject to the terms and conditions and for the price set forth in this Section
2.14, purchase all but not less than all of the Secured Certificates outstanding
hereunder, and each Certificate Holder agrees that it will, upon such events and
subject to such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee (without recourse
or warranty of any kind other than (i) of title to the Secured Certificates so
conveyed and (ii) against Liens on such Secured Certificates arising by, through
or under such holder), all of the right, title and interest of such Certificate
Holder in and to the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there
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shall have occurred and be continuing a Lease Event of Default, provided that if
such option is exercised pursuant to this clause (ii) at a time when there shall
have occurred and be continuing for less than 120 days a Lease Event of Default,
the purchase price thereof shall equal the price provided in the preceding
sentence plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Trustee or the Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur pursuant to the terms
of the preceding sentence. Such election to purchase the Secured Certificates
shall become irrevocable upon the sixteenth day preceding the date specified in
the written notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date of
such purchase shall so request, the Certificate Holders will comply with all the
provisions of Section 2.07 to enable new Secured Certificates to be issued to
the Owner Trustee or the Owner Participant or its nominee in such denominations
as the Owner Trustee or the Owner Participant shall request. All taxes, charges
and expenses required pursuant to Section 2.09 in connection with the issuance
of such new Secured Certificate shall be borne by the Owner Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured Certificates of
any Series, each Certificate Holder of such Series, hereby agree that no payment
or distribution shall be made on or in respect of the Secured Obligations owed
to such Certificate Holder of such Series, including any payment or distribution
of cash, property or securities after the commencement of a proceeding of the
type referred to in Section 4.02(g) hereof, except as expressly provided in
Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series (other
than Series A), each Certificate Holder of such Series agrees that in the event
that such Certificate Holder, in its capacity as a Certificate Holder, shall
receive any payment or distribution on any Secured Obligations in respect of
such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean,
(i) the Certificate Holders of Series A until the Secured Obligations in respect
of Series A Secured Certificates have been paid in full and (ii) after the
Secured Obligations in respect of Series A Secured Certificates have been paid
in full, the Certificate Holders of Series B until the Secured Obligations in
respect of Series B Secured Certificates have been paid in full.
SECTION 2.16. DEFEASANCE.
(a) The Owner Trustee will be deemed to have paid and will be
discharged from any and all obligations in respect of the Secured Certificates
on the 90th day (or such other period as may be specified in the relevant
provision of the United States Bankruptcy Code) (such period being the
"Preference Period") after the date of the deposit referred to in clause (i) of
this Section 2.16(a) if:
(i) with reference to this Section 2.16(a), the Owner Trustee has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee (or another trustee satisfying the requirements of Section
8.02) and conveyed all right, title and interest for the benefit of the
Certificate Holders, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Indenture Trustee, which provides
irrevocable instructions therein to apply such money or the proceeds of
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such U.S. Government Obligations to the payment of such principal and
interest with respect to the Secured Certificates, as trust funds in trust,
specifically entrusted to the Indenture Trustee for the benefit of the
Certificate Holders for payment of the principal of and interest, if any, on
the Secured Certificates, and dedicated solely to, the benefit of the
Certificate Holders, in and to (A) money in an amount, (B) U.S. Government
Obligations that, through the payment of interest, and principal in respect
thereof in accordance with their terms, will provide, not later than one day
before the due date of any payment referred to in this clause (i), money in
an amount or (C) a combination thereof in an amount sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Indenture
Trustee, to pay and discharge, without consideration of the reinvestment of
such interest and after payment of all federal, state and local withholding
taxes or other similar charges and assessments in respect thereof payable by
the Indenture Trustee with respect to the amounts deposited pursuant to
clause (A), (B) or (C), the principal of and accrued interest on the
outstanding Secured Certificates at the maturity of such principal or
interest;
(ii) the Owner Trustee shall have delivered to the Indenture Trustee
(A) either (1) a ruling directed to the Indenture Trustee received from the
Internal Revenue Service to the effect that the Certificate Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of the Owner Trustee's exercise of its option under this Section 2.16(a) and
will be subject to federal income tax on that same amount and in the same
manner and at the same times as would have been the case if such option had
not been exercised or (2) an Opinion of Counsel to the same effect as the
ruling described in clause (1) above accompanied by a ruling to that effect
published by the Internal Revenue Service, unless there has been a change in
the applicable federal income tax law since the date of this Indenture such
that a ruling from the Internal Revenue Service is no longer required and
(B) an Opinion of Counsel to the effect that (1) the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and (2)
after the passage of the Preference Period, the trust funds will not be
subject to the effect of Section 547 of the United States Bankruptcy Code
(or any successor or replacement provision) in a case commenced by or
against the Owner Trustee or Lessee under either such statute, and either
(I) the trust funds will no longer remain the property of the Owner Trustee
or Lessee (and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally) or (II) if a court were to rule under any such law in any
case or proceeding that the trust funds remained the property of the Owner
Trustee or Lessee (y) assuming such funds remained in the possession of the
Indenture Trustee prior to such court ruling to the extent not paid to the
Certificate Holders, the Indenture Trustee will hold, for the benefit of the
Certificate Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise except for the effect
of Section 552(b) of the United States Bankruptcy Code (or any successor or
replacement provision) on interest on the trust funds accruing after the
commencement of a case under such statute and (z) the Certificate Holders
will be entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding; and
(iii) the Owner Trustee shall have made arrangements reasonably
satisfactory to the Indenture Trustee for payment or satisfaction of all
amounts due under the third paragraph of Section 2.02.
After any such irrevocable deposit and satisfaction of the condition
precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee
upon request shall execute and deliver appropriate instruments to release the
Lien of this Trust Indenture in accordance with Section 10.01 and shall
acknowledge in writing the discharge of the Owner Trustee's obligations under
the Secured Certificates and this Trust Indenture except for those surviving
obligations in the immediately succeeding paragraph.
Notwithstanding the foregoing, prior to the end of the Preference
Period, none of the Owner Trustee's obligations under this Trust Indenture shall
be discharged. Subsequent to the end of the Preference Period, the Owner
Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured
Certificates are no longer outstanding.
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(b) In lieu of satisfying its obligations set forth in Section 2.16(a),
the Owner Trustee may elect, in its sole discretion, to satisfy the conditions
specified in clauses (i) and (ii) of Section 2.16(a) without regard to the
requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying
the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of
Counsel to the effect that the Certificate Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Owner Trustee's
providing of the deposit referred to in Section 2.16(a)(i) and will be subject
to federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit had not been made. If the
Owner Trustee elects such option, then the Indenture Trustee upon request shall
execute and deliver appropriate instruments to release the Lien of this Trust
Indenture in accordance with Section 10.01 and the Owner Trustee shall be
released from its obligations set forth in Section 4.01 (other than Section
4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in
full force and effect. For the avoidance of doubt, the effect of the Owner
Trustee's exercise of its option set forth in this subsection (b) shall be to
create an economic defeasance rather than the legal defeasance that would result
if the option set forth in subsection (a) above were to be exercised.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each installment
of Basic Rent or Interim Rent, any payment of interest on overdue installments
of Basic Rent and any payment received by the Indenture Trustee pursuant to
Section 4.03 hereof shall be promptly distributed in the following order of
priority:
FIRST, (i) so much of such installment or payment as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series A Secured Certificates
shall be distributed to the Certificate Holders of Series A
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each
Series A Secured Certificate bears to the aggregate amount of the
payments then due under all Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series B Secured Certificates shall be
distributed to the Certificate Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount
of such payment or payments then due under each Series B Secured
Certificate bears to the aggregate amount of the payments then due
under all Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on
any overdue Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series C Secured Certificates shall be
distributed to the Certificate Holders of Series C ratably,
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without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C
Secured Certificate bears to the aggregate amount of the payments
then due under all Series C Secured Certificates; and
SECOND, the balance, if any, of such installment remaining thereafter shall
be distributed to the Owner Trustee; provided, however, that if an
Event of Default shall have occurred and be continuing, then such
balance shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 5.09
hereof until whichever of the following shall first occur: (i) all
Events of Default shall have been cured or waived, in which event
such balance shall be distributed as provided in this clause
"Second", (ii) Section 3.03 hereof shall be applicable, in which
event such balance shall be distributed in accordance with the
provisions of such Section 3.03, or (iii) the 120th day after the
receipt of such payment in which case such payment shall be
distributed as provided in this clause "Second".
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for
any reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents and then (b) to
pay any other amounts then due to the Indenture Trustee and the
Certificate Holders under this Trust Indenture, the Participation
Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due and
payable in respect of the Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series C Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and
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such investment earnings) shall be released to Lessee at Lessee's written
request upon the release of such damaged Airframe or Engine and the replacement
thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after an Event of
Default shall have occurred and be continuing and after the occurrence of an
Indenture Trustee Event, as well as all payments or amounts then held by the
Indenture Trustee as part of the Trust Indenture Estate, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to reimburse
the Indenture Trustee for any tax, expense or other loss (including,
without limitation, all amounts to be expended at the expense of, or
charged upon the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate (all such
property being herein called the "MORTGAGED PROPERTY") pursuant to
Section 4.05(b) hereof) , but other than income tax on, or measured by,
fees payable to the Indenture Trustee in its individual capacity
pursuant to the Operative Documents to which it is a party incurred by
the Indenture Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, reasonable attorneys'
fees and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Certificate Holders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture
Trustee or any Certificate Holder, liquidated or otherwise, upon such
Event of Default shall be applied by the Indenture Trustee as between
itself and the Certificate Holders in reimbursement of such expenses
and any other expenses for which the Indenture Trustee or the
Certificate Holders are entitled to reimbursement under any Operative
Document and in the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid, then ratably, without priority of one
over the other, in proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be required to
reimburse the then existing or prior Certificate Holders for payments
made pursuant to Section 5.03 hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Certificate Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Certificate Holder pursuant to said Section 5.03
hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be required
to pay in full the aggregate unpaid Principal Amount of all Series
A Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole Amount which
shall not be due and payable) and all other Secured Obligations in
respect of the Series A Secured Certificates (other than
Make-Whole Amount) to the date of distribution, shall be
distributed to the Certificate Holders of Series A, and in case
the aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of one
over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series A Secured Certificates held by each
holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if any) to
the date of distribution, bears to the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date of
distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series B Secured
Certificates, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations in respect
of the Series B Secured Certificates [(other than Make-Whole
Amount)] to the date of distribution, shall be distributed to the
Certificate Holders of Series B, and in case the aggregate amount
so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal Amount of
all Series B Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if any) to the date
of distribution, bears to the aggregate unpaid Principal Amount
of all Series B Secured Certificates held by all such holders
plus the accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) to the date of
distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Secured
Certificates, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations in respect
of the Series C Secured Certificates (other than Make-Whole
Amount) to the date of distribution, shall be distributed to the
Certificate Holders of Series C, and in case the aggregate amount
so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal Amount of
all Series C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if any) to the date
of distribution, bears to the aggregate unpaid Principal Amount
of all Series C Secured Certificates held by all such holders
plus the accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) to the date of
distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the
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Intercreditor Agreement, and any payment received by the Indenture Trustee under
clause (c) of the third paragraph of Section 2.02 shall be distributed directly
to the Persons entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this Trust
Indenture, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made in the
Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any
other Operative Document shall be distributed by the Indenture Trustee to the
extent received or realized at any time (i) prior to the payment in full of all
Secured Obligations due the Certificate Holders, in the order of priority
specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after
payment in full of all Secured Obligations due the Certificate Holders, in the
following order of priority:
FIRST, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of Section
3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the
Indenture Trustee under the Lease or otherwise with respect to the
Aircraft (including, without limitation, all amounts realized upon the
sale or release of the Aircraft after the termination of the Lease with
respect thereto), to the extent received or realized at any time after
payment in full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of priority
specified in clause (ii) of the immediately preceding sentence of this
Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to the Owner
Trustee shall be paid to the Owner Trustee (within the time limits contemplated
by Section 2.04(a)) by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
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All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal Amount
of, Make-Whole Amount, if any, and interest on and other amounts due under
the Secured Certificates and hereunder in accordance with the terms of the
Secured Certificates and this Trust Indenture and all amounts, if any,
payable by it to the Certificate Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and agrees
that it shall not, directly or indirectly, cause or permit to exist a
Lessor Lien attributable to it in its individual capacity with respect to
the Aircraft or any other portion of the Trust Estate; that it will
promptly, at its own expense, take such action as may be necessary to duly
discharge such Lessor Lien attributable to it in its individual capacity;
and that it will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from such Lessor
Liens attributable to it in its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default or an Event of Loss, the Owner Trustee will give prompt
written notice of such Event of Default or Event of Loss to the Indenture
Trustee, each Certificate Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Certificate Holders and the
Indenture Trustee, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each report or
notice received pursuant to Section 9(a) and 11(c) of the Lease to the
extent that the same shall not have been furnished to the Certificate
Holders or the Indenture Trustee pursuant to the Lease;
(e) except with the consent of the Indenture Trustee (acting pursuant
to instructions given in accordance with Section 9.01 hereof), the Owner
Trustee will not contract for, create, incur, assume or suffer to exist any
Debt (other than the Secured Certificates), and will not guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so
doing, or otherwise), endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the Debt of any other
person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law
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or pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or
the Owner Participant when due any amount that is included in the definition
of Excluded Payments shall not constitute an Event of Default unless notice
is given by the Owner Trustee to the Indenture Trustee that such failure
shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other amount
due and payable under any Secured Certificate or hereunder (other than any
such failure arising by virtue of a tax withheld pursuant to Section 2.04(b)
hereof or as a result of a Lease Event of Default or a Lease Default) and
such failure shall have continued unremedied for ten Business Days in the
case of any payment of Principal Amount or interest or Make-Whole Amount, if
any, thereon and, in the case of any other amount, for ten Business Days
after the Owner Trustee or the Owner Participant receives written demand
from the Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual
or trust capacity pursuant to Section 8(h) of the Participation Agreement,
or by the Owner Participant pursuant to Section 8(h) of the Participation
Agreement shall remain undischarged for a period of 30 days after the Owner
Trustee or the Owner Participant, as the case may be, shall have received
written notice from the Indenture Trustee or any Certificate Holder of such
Lien; or
(d) any representation or warranty made by the Owner Participant or the
Owner Trustee herein, in the Participation Agreement (or, upon consummation
of the Refinancing Transaction, the Refunding Agreement) or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents shall prove to have
been false or incorrect when made in any material respect and continues to
be material; and if such misrepresentation is capable of being corrected and
if such correction is being sought diligently, such misrepresentation shall
not have been corrected within 60 days (or, without affecting Section
4.02(f) hereof, in the case of the representations made in Section 8(c) of
the Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as soon
as is reasonably practicable but in any event within 60 days) following
notice thereof from the Indenture Trustee or any Certificate Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform in any material
respect any other covenant or obligation of the Owner Trustee or Owner
Participant, as the case may be, for the benefit of the Indenture Trustee or
the Certificate Holders contained in the Participation Agreement, Section
4.01(a) of the Trust Agreement, the Secured Certificates or this Trust
Indenture which is not remedied within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant (or,
if such failure cannot be remedied during such 60-day period and the Owner
Trustee and/or the Owner Participant have been and are diligently proceeding
to remedy such failure, such additional period not in excess of 120 days, if
such failure is capable of being remedied during such additional period, as
may be necessary to remedy such failure); or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the Aircraft
under the Federal Aviation Act, and regulations then applicable thereunder,
shall cease to be effective; provided that no Event of Default shall be
deemed to have occurred under this paragraph (f)
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unless such circumstances continue unremedied for more than 60 days after
the Owner Participant has Actual Knowledge of the state of facts that
resulted in such ineffectiveness and of such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or
other proceeding in respect of the Owner Participant, the Owner Trustee or
the Trust Estate under the federal bankruptcy Laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or seeking the winding-up or liquidation of its affairs and the continuation
of any such case or other proceeding undismissed and unstayed for a period
of 90 consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or other
similar Law in the United States, or the consent by the Owner Participant,
the Owner Trustee or the Trust Estate to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its property,
or the making by the Owner Participant, the Owner Trustee or the Trust
Estate of any assignment for the benefit of creditors or the Owner
Participant or the Owner Trustee shall take any action to authorize any of
the foregoing; provided, however, that an event referred to in this Section
4.02(g) with respect to the Owner Participant shall not constitute an Event
of Default if within 30 days of the commencement of the case or proceeding
(A) a final non-appealable order, judgment or decree shall be entered in
such case or proceeding by a court or a trustee, custodian, receiver or
liquidator, or (B) an opinion of counsel, reasonably satisfactory to the
Indenture Trustee, shall be provided by the Owner Participant, in each case
to the effect that, no part of the Trust Estate (except for the Owner
Participant's beneficial interest therein) and no right, title or interest
under the Trust Indenture Estate shall be included in, or be subject to, any
declaration or adjudication of, or proceedings with respect to, the
bankruptcy, insolvency or liquidation of the Owner Participant referred to
in this Section 4.02(g); provided further that an event referred to in this
Section 4.02(f) with respect to the Owner Participant shall not constitute
an Event of Default if, not later than 90 days following such event, the
Owner Participant has been replaced with an entity eligible to act as Owner
Participant in accordance with Section 8(n) of the Participation Agreement.
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the Owner
Trustee and the Owner Participant prompt written notice of any Event of Default
of which the Indenture Trustee has Actual Knowledge and, if any such Event of
Default results from a Lease Event of Default that can be cured by the payment
of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied), shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days' prior written notice of the date
(the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of
the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the
Indenture Trustee shall have insufficient funds to make any payment of Principal
Amount and interest on any Secured Certificate on the day it becomes due and
payable, the Owner Trustee may, without the consent or concurrence of any
Certificate Holder, but shall not be obligated to, pay the Indenture Trustee
prior to the Enforcement Date, in the manner provided in Section 2.04 hereof,
for application in accordance with Section 3.01 hereof, an amount equal to the
portion of the Principal Amount and interest (including interest, if any, on any
overdue payments of such portion of Principal Amount and interest) then due and
payable on the Secured Certificates, and, unless the Owner Trustee has cured
Events of Default in respect of
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payments of Basic Rent on each of the three immediately preceding Basic Rent
payment dates, or the Owner Trustee has cured six previous Events of Default in
respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would otherwise have arisen on account of the nonpayment
by Lessee of such installment of Interim Rent or Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money
(it being understood that defaults requiring action such as the obtaining of
insurance and the procuring of maintenance services can be so remedied) has
occurred, the Owner Trustee may, without the consent or concurrence of any
Certificate Holder, but shall not be obligated to, cure such Event of Default by
making such payment prior to the Enforcement Date as is necessary to accomplish
the observance or performance of the defaulted covenant, condition or agreement
to the party entitled to the same.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the
first or second preceding paragraphs of this Section 4.03, the Owner Trustee
shall be subrogated to the rights of the Indenture Trustee and the Certificate
Holders in respect of the Interim Rent or Basic Rent which was overdue at the
time of such payment and interest payable by Lessee on account of its being
overdue and any Supplemental Rent in respect of the reimbursement of amounts
paid by Owner Trustee pursuant to the immediately preceding paragraph (but in
either case shall have no rights as a secured party hereunder), and thereafter,
the Owner Trustee shall be entitled to receive such overdue Interim Rent or
Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Indenture Trustee; provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Interim Rent, Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not be
entitled to seek to recover any such payment (or any payment in lieu thereof)
except pursuant to the foregoing right of subrogation until payment of the
Principal Amount and interest that has become due in accordance with Section
4.04(b) hereof.
SECTION 4.04. REMEDIES.
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Indenture Trustee may, subject to the second paragraph of this Section 4.04(a),
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code and, in
the event such Event of Default is also a Lease Event of Default, any and all of
the remedies pursuant to Section 15 of the Lease and may take possession of all
or any part of the properties covered or intended to be covered by the Lien
created hereby or pursuant hereto and may exclude the Owner Participant, the
Owner Trustee and Lessee and all persons claiming under any of them wholly or
partly therefrom, provided, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft or foreclose the Lien of this Trust Indenture.
Unless an Event of Default not resulting from or relating to a Lease Event of
Default has occurred and is continuing, the Owner Participant may bid at any
public sale and become the purchaser. Without limiting any of the foregoing but
subject to the immediately succeeding paragraph, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder as a
result of an Event of Default which arises solely by reason of one
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or more events or circumstances which constitute a Lease Event of Default unless
the Indenture Trustee as security assignee of the Owner Trustee shall have
exercised or concurrently be exercising one or more of the remedies provided for
in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is
not subsequently re-leased to Lessee or an Affiliate thereof) or take possession
and/or sell the Aircraft with respect to the Aircraft; provided, however, that
such requirement to exercise one or more of such remedies under the Lease shall
not apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under the Lease (a
"CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to
exercise one or more of such remedies under the Lease shall nonetheless be
applicable during a Continuous Stay Period subsequent to the expiration of the
Section 1110 Period to the extent that the continuation of such Continuous Stay
Period subsequent to the expiration of the Section 1110 Period (A) results from
an agreement by the trustee or the debtor-in-possession in such proceeding
during the Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy
Code and continues to perform as required by Section 1110(a)(1)(A-B) of the
Bankruptcy Code or (B) is an extension of the Section 1110 Period with the
consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy
Code or (C) results from Lessee's assumption during the Section 1110 Period with
the approval of the relevant court of the Lease pursuant to Section 365 of the
Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure
to give any requisite notice to any person. In the event that the applicability
of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by
Lessee in judicial proceedings, so long as the Indenture Trustee fails to
participate in such proceedings, the Owner Trustee shall have the right (without
affecting in any way any rights or remedy of the Indenture Trustee hereunder) to
participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Indenture Trustee may (and shall, upon receipt of a
written demand therefor from a Majority in Interest of Certificate Holders),
subject to Section 4.03 hereof, at any time, by delivery of written notice or
notices to the Owner Trustee and the Owner Participant, declare all the Secured
Certificates to be due and payable, whereupon the unpaid Principal Amount of all
Secured Certificates then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if at
any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) The Certificate Holders shall be entitled, at any sale pursuant to
Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
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(d) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon (without Make-Whole Amount), and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Certificate Holder, the Indenture Trustee will not be authorized or empowered to
acquire title to any Mortgaged Property or take any action with respect to any
Mortgaged Property so acquired by it if such acquisition or action would cause
any Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing and
the Indenture Trustee shall have foreclosed, or shall concurrently be
foreclosing, the Lien of this Trust Indenture and shall be taking steps for the
sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the
request of the Indenture Trustee, the Owner Trustee shall promptly execute and
deliver to the Indenture Trustee such instruments of title and other documents
as the Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Mortgaged Property included in the
Trust Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
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SECTION 4.06. REMEDIES CUMULATIVE.
Subject to the other provisions of Article IV hereof, each and every
right, power and remedy given to the Indenture Trustee specifically or otherwise
in this Trust Indenture shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the Indenture Trustee, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or
omission by the Indenture Trustee in the exercise of any right, remedy or power
or in the pursuance of any remedy shall impair any such right, power or remedy
or be construed to be a waiver of any default on the part of the Owner Trustee
or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Owner
Participant, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Owner Participant, the Indenture
Trustee or Lessee shall continue as if no such proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default or Event of Default
hereunder and its consequences and upon any such waiver such Default or Event of
Default shall cease to exist and any Event of Default arising from any such
Default shall be deemed to have been cured for every purpose of this Trust
Indenture, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon; provided, that in the
absence of written instructions from all the Certificate Holders, the Indenture
Trustee shall not waive any Default or Event of Default (i) in the payment of
the Principal Amount, Make-Whole Amount, if any, and interest and other amounts
due under any Secured Certificate then outstanding, or (ii) in respect of a
covenant or provision hereof which, under Article IX hereof, cannot be modified
or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE,
ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee the true
and lawful attorney-in-fact of the Owner Trustee in its name and stead and on
its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
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and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture, the right
of any Certificate Holder to receive payment of principal of, and premium, if
any, and interest on a Secured Certificate on or after the respective due dates
expressed in such Secured Certificate, or to bring suit for the enforcement of
any such payment on or after such respective dates in accordance with the terms
hereof, shall not be impaired or affected without the consent of such
Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay Rent, the Indenture
Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner
Participant, Lessee, and each Certificate Holder. Subject to the terms of
Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such
action, or refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture Trustee, which failure
shall constitute knowledge of a Default) unless notified in writing by Lessee,
the Owner Trustee, the Owner Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01
and 5.03 hereof, upon the written instructions at any time and from time to time
of a Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
or any other part of the Trust Indenture Estate as shall be specified in such
instructions; and (iii) after the occurrence and during the continuance of an
Event of Default, approve as satisfactory to the Indenture Trustee all matters
required by the terms of the Lease to be satisfactory to the Owner Trustee, it
being understood that without the written instructions of a Majority in Interest
of Certificate Holders, the Indenture Trustee shall not approve any such matter
as satisfactory to the Indenture Trustee; provided,
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that anything contained in this Trust Indenture, the Lease or the other
Operative Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, at all times
without the consent of the Indenture Trustee, (A) to the exclusion of the
Indenture Trustee demand, collect, sue for or otherwise obtain all amounts
included in Excluded Payments from Lessee, (B) unless the Lien of this Trust
Indenture shall have been foreclosed upon, grant or withhold its consent to
amendments or supplements to Indenture Agreements required in accordance
with Article IX hereof and (C) seek legal or equitable remedies to require
Lessee to maintain the insurance coverage referred to in Section 11 of the
Lease; provided, that the rights referred to in this clause (1) shall not be
deemed to include the exercise of any remedies provided for in Section 15 of
the Lease other than the right to proceed by appropriate court action,
either at law or in equity, to enforce payment by Lessee of such amounts
included in Excluded Payments or performance by Lessee of such insurance
covenant or to recover damages for the breach thereof;
(2) at all times prior to the foreclosure of the Lien of this Trust
Indenture, the Indenture Trustee shall not, without the consent of the Owner
Trustee, which consent shall not be unreasonably withheld if no right or
interest of the Owner Trustee or the Owner Participant shall be diminished
or impaired thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the provisions of
the Lease, or (ii) approve any accountants, engineers, appraisers or counsel
as satisfactory to render services for or issue opinions to the Owner
Trustee pursuant to the Operative Documents;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, each of the Owner Trustee, the
Owner Participant and, except with respect to clauses (iii) and (iv), the
Indenture Trustee shall have the right (i) to receive from Lessee all
notices, certificates, reports, filings, opinions of counsel and other
documents and all information which any thereof is permitted or required to
give or furnish to the Owner Trustee or Lessor pursuant to any Operative
Document (including pursuant to Section 7(b) of the Participation
Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the
Lease, (iii) to retain all rights with respect to insurance maintained for
its own account which Section 11(e) of the Lease specifically confers on
Lessor, and (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor under
Section 21 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall at all
times, to the exclusion of the Indenture Trustee, have the right to adjust
Rent, Stipulated Loss Values and Termination Values as provided in Section
3(d) of the Lease;
(5) unless an Indenture Trustee Event shall have occurred, to exercise
all of the rights of Lessor under Section 7(b) of the Lease;
(6) whether or not a Default or Event of Default shall have occurred
and is continuing, the Owner Trustee may, without the consent of the
Indenture Trustee, (i) solicit and make bids with respect to the Aircraft
under Section 9 of the Lease in respect of a termination of the Lease by
Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales
value" and "fair market rental value" under Section 19 of the Lease for all
purposes except following an Event of Default pursuant to Section 15 of the
Lease, and (iii) make an election pursuant to and in accordance with the
provisions of Section 9(c) of the Lease; and
(7) so long as no Event of Default shall have occurred and be
continuing, all other rights of the "Lessor" under the Lease shall be
exercised by the Owner Trustee to the exclusion of the Indenture Trustee
including, without limitation, the right to (i) exercise all rights with
respect to Lessee's use and
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operation, modification or maintenance of the Aircraft and any Engine which
the Lease specifically confers on Lessor, (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease and (iii) request further
assurances pursuant to Section 16 of the Lease; provided that the foregoing
shall not limit (A) any rights separately granted to the Indenture Trustee
under the Operative Agreements or (B) the right of the Indenture Trustee to
receive any funds to be delivered to the "Lessor" under the Lease (except
with respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein (including
this Section 5.02), the Indenture Trustee shall have the right, to the exclusion
of the Owner Trustee and the Owner Participant (other than with respect to
Excluded Payments), to (A) declare the Lease to be in default under Section 15
thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and
2.14 hereof, exercise the remedies set forth in such Section 15 (other than in
connection with Excluded Payments) at any time that a Lease Event of Default
shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be continuing
and the Owner Trustee shall not have cured fully such Lease Event of Default
under and in accordance with Section 4.03 hereof, on request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall declare the Lease
to be in default pursuant to Section 15 thereof and exercise those remedies
specified by such Certificate Holders. The Indenture Trustee agrees to provide
to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee
concurrently with such declaration by the Indenture Trustee, notice of such
declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture or any other Operative Document and nothing
herein or therein shall require the Indenture Trustee to expend or risk its own
funds or otherwise incur the risk of any financial liability in the performance
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it (the written indemnity of any
Certificate Holder who is a QIB, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to Indenture Trustee
shall be accepted as reasonable assurance of adequate indemnity). The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
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written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or pursuant
to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if
no Lease Event of Default is continuing, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of
this Trust Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid, but only upon compliance by Lessee with the applicable
provisions of Section 10 of the Lease and upon receipt by or deposit with the
Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such release
specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee stating
the following:
A. With respect to any Replacement Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to be received
(including the manufacturer, model, FAA registration number
(or other applicable registration information) and
manufacturer's serial number) as consideration for the
Airframe to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Airframe the Owner
Trustee will be the legal owner of such Replacement Airframe
free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Airframe will
on such date be in good working order and condition, and
that such Replacement
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Airframe has been or, substantially concurrently with such
withdrawal, will be duly registered in the name of the Owner
Trustee under the Federal Aviation Act or under the law then
applicable to the registration of the Airframe and that an
airworthiness certificate has been duly issued under the
Federal Aviation Act (or such other applicable law) with
respect to such Replacement Airframe, and that such
registration and certificate is in full force and effect,
and that Lessee will have the full right and authority to
use such Replacement Airframe;
(iv) the existence of the insurance required by Section 11 of the
Lease with respect to such Replacement Airframe and the
payment of all premiums then due thereon;
(v) that the Replacement Airframe is of the same or an improved
model as the Airframe requested to be released from this
Indenture;
(vi) the fair market value of the Replacement Airframe as of the
date of such certificate (which in the judgment of Lessee
shall be not less than the then fair market value of the
Airframe requested to be released (assuming such Airframe
was in the condition and repair required to be maintained
under the Lease));
(vii) the fair market value of the Airframe immediately prior to
the date the Airframe suffered an Event of Loss (assuming
that such Airframe was in the condition and repair required
under the Lease);
(viii) that no Lease Event of Default and no event which, with
lapse of time or notice, or both, would become a Lease Event
of Default, has occurred which has not been remedied or
waived, and that Lessee will not be in default, by the
making and granting of the request for release and the
addition of a Replacement Airframe, in the performance of
any of the terms and covenants of the Lease; and
(ix) that the release of the Airframe so to be released will not
be in contravention of any of the provisions of this
Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's serial number;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) as consideration for
the Engine to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Engine the Owner
Trustee will be the legal owner of such Replacement Engine
free and clear of all Liens except as are permitted by
Section 6 of the Lease, that such Replacement Engine will on
such date be in good working order and condition and that
such Replacement Engine is substantially the same as the
Engine to be released (or as improved model);
(iv) the fair market value of the Replacement Engine as of the
date of such certificate (which value shall not be less than
the then fair market value of the Engine to be released
(assuming such Engine was in the condition and repair
required to be maintained under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered by such
Engine and assuming that such Engine was in the condition
and repair required under the Lease);
(vi) that each of the conditions specified in Section 10(b) of
the Lease with respect to such Replacement Engine have been
satisfied and that Lessee will not be in default, by the
making and granting of the request for release and the
addition of the Replacement Engine, in the performance of
any of the terms and covenants of the Lease;
(vii) that, with respect to the replacement of an Engine pursuant
to Section 9(d) of the Lease, no Lease Event of Default and
no event which, with lapse of time or notice, or both, would
become a Lease Event of Default has occurred which has not
been remedied or waived; and
(viii) that the release of the Engine so to be released will not be
in contravention of any of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting
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such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this Indenture
as deemed necessary or desirable by counsel for the Indenture Trustee to protect
the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and
deposited with the Indenture Trustee conform to the
requirements of this Trust Indenture and the Lease and, upon
the basis of such application, the property so sold or
disposed of may be lawfully released from the lien of this
Trust Indenture and all conditions precedent herein provided
for relating to such release have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the lien of this Indenture and covered by
the Lease, the instruments subjecting such Replacement
Airframe or Replacement Engine to the Lease and to the Lien of
this Trust Indenture, as the case may be, have been duly filed
for recordation pursuant to the Federal Aviation Act or any
other law then applicable to the registration of the Aircraft,
and no further action, filing or recording of any document is
necessary or advisable in order to establish and perfect the
right, title, estate and interest of the Owner Trustee to and
the lien of this Trust Indenture on such Replacement Aircraft
or Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being substituted as
contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Certificate Holders and Lessee, subject to
fulfillment of the conditions precedent and compliance by Lessee with its
obligations set forth in Section 10 of the Lease and the requirements of Section
5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to
execute and deliver a Lease Supplement and a Trust Agreement and Indenture
Supplement, as applicable, as contemplated by Section 10 of the Lease.
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SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and applicable
to it and agrees to perform the same but only upon the terms of this Trust
Indenture and agrees to receive and disburse all monies constituting part of the
Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee,
in its individual capacity, and the Indenture Trustee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for their own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) in the case of the Indenture Trustee, as
provided in the fourth sentence of Section 2.04(a) hereof and the last sentence
of Section 5.04 hereof, and (iii) for liabilities that may result, in the case
of the Owner Trustee, from the inaccuracy of any representation or warranty of
the Owner Trustee expressly made in its individual capacity in the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished
to the Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents) or, in the case of the
Indenture Trustee (in its individual capacity), from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement) or expressly made hereunder. Neither the
Owner Trustee nor the Indenture Trustee shall be liable for any action or
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inaction of the other or of the Owner Participant. The Owner Trustee shall not
be deemed to be a trustee for the Certificate Holders for any purpose.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03 and 5.04
hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR
THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN,
QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual capacity
warrants that (i) the Owner Trustee has received on the Delivery Date whatever
title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the Owner
Trustee in its individual capacity. Neither the Owner Trustee, in its individual
capacity or as Owner Trustee under the Trust Agreement, nor the Indenture
Trustee, in its individual or trust capacities, makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as
to the correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Indenture Trustee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement). The Loan Participants, the Certificate
Holders and the Owner Participant make no representation or warranty hereunder
whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest
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all monies held as directed by Lessee so long as no Lease Event of Default or
Lease Default has occurred and is continuing (or in the absence of such
direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
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instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to
assume liability for, and does hereby indemnify, protect, save and keep harmless
the Indenture Trustee (in its individual and trust capacities), and its
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder except only in the case of willful misconduct or gross negligence (or
negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in Section 8 of the Participation Agreement or Section 6.03 hereof, or as
provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof,
or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the
Participation Agreement from Lessee's indemnities under such Sections; provided
that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise
prohibited by law, shall not make any claim under this Section 7.01 for any
claim or expense without first making demand on Lessee for the payment on behalf
of Lessor of such claim or expense pursuant to the Lease or the Participation
Agreement, including, without limitation, Section 7(b) or 7(c) of the
Participation Agreement. In addition, if necessary, the Indenture Trustee shall
be entitled to indemnification from the Trust Indenture Estate for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In
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addition, a Majority in Interest of Certificate Holders may at any time (but
only with the consent of Lessee, which consent shall not be unreasonably
withheld, except that such consent shall not be necessary if a Lease Event of
Default is continuing) remove the Indenture Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the Owner
Participant and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Certificate Holder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a Majority in
Interest of Certificate Holders may appoint a successor Indenture Trustee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Indenture Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the
Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate
Holder may apply to any court of competent jurisdiction to appoint a successor
Indenture Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee
an instrument accepting such appointment and assuming the obligations of the
Indenture Trustee under the Participation Agreement arising from and after the
time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a bank
or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act, except that such Person shall give prompt subsequent notice of such
transaction to the Owner Trustee and the Owner Participant.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or
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one or more persons approved by the Indenture Trustee, either to act jointly
with the Indenture Trustee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Indenture
Trustee or a Majority in Interest of Certificate Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional and separate trustee,
subject in each case to the remaining provisions of this Section 8.03. If the
Owner Trustee shall not have taken any action requested of it under this Section
8.03(a) that is permitted or required by its terms within 15 days after the
receipt of a written request from the Indenture Trustee so to do, or if an Event
of Default shall have occurred and be continuing, the Indenture Trustee may act
under the foregoing provisions of this Section 8.03(a) without the concurrence
of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which
appointment is coupled with an interest) the Indenture Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute, deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee
appointed under this Section 8.03(a) shall die, become incapable of acting,
resign or be removed, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall revert to the
Indenture Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise any
of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
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ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees
it shall not enter into any amendment of or supplement to the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or execute and deliver any written waiver or modification of,
or consent under, the terms of the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Guarantee, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee and a Majority in Interest of Certificate
Holders. Anything to the contrary contained herein notwithstanding, without the
necessity of the consent of any of the Certificate Holders or the Indenture
Trustee, (i) any Excluded Payments payable to the Owner Participant may be
modified, amended, changed or waived in such manner as shall be agreed to by the
Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under
Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such
amendments, modifications and changes do not and would not affect the time of,
or reduce the amount of, Rent payments (other than Excluded Payments) until
after the payment in full of all Secured Obligations or otherwise adversely
affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof, the
Indenture Trustee agrees with the Certificate Holders that it shall not enter
into any amendment, waiver or modification of, supplement or consent to this
Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Guarantee or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Certificate Holders, or does not adversely
effect the Certificate Holders, but upon the written request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Manufacturer; provided, however, that, without the
consent of each holder of an affected Secured Certificate then outstanding, no
such amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Guarantee or the Participation Agreement or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or
Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add
an Event of Default) of the Lease, the definitions of "Event of Default",
"Default", "Lease Event of Default", "Lease Default", "Majority in Interest of
Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the
percentage of Certificate Holders required to take or approve any action
hereunder, (ii) reduce the amount, or change the time of payment or method of
calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or
interest with respect to any Secured Certificate, or alter or modify the
provisions of Article III hereof with respect to the order of priorities in
which distribution thereunder shall be made as among the Certificate Holders,
the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in
favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders
(except that the Owner Trustee (in its individual capacity) or the Indenture
Trustee, as the case may be, may consent to any waiver or reduction of an
indemnity payable to it), (iv) consent to any change in the Trust Indenture or
the Lease which would permit redemption of Secured Certificates earlier than
permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured
Certificates other than as permitted by Section 2.14 hereof, (v) except as
contemplated by the Lease or the Participation Agreement, reduce the amount or
extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value,
or Termination Value for the Aircraft in each case as set forth in the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the
Aircraft or altering the absolute and unconditional character of the obligations
of Lessee to pay Rent as set forth in Sections
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3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date of the consummation of the Refinancing
Transaction, the Owner Trustee and the Indenture Trustee may enter into one or
more agreements supplemental hereto without the consent of any Certificate
Holder for any of the following purposes: (i) (a) to cure any defect or
inconsistency herein or in the Secured Certificates, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee under the
Trust Agreement or the institution acting as Indenture Trustee hereunder, any
document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the Certificate
Holders or the Owner Participant pursuant to Section 9.01 hereof shall be
required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale,
the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment
with the Consent and Agreement attached thereto from the assignment and pledge
thereof hereunder and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and give written notice thereof to Lessee; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Indenture Trustee of all property
constituting part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all monies or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Trust Indenture and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE
HOLDERS.
No holder of a Secured Certificate shall have legal title to any part
of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of
any Secured Certificate or other right, title and interest of any Certificate
Holder in and to the Trust Indenture Estate or hereunder shall operate to
terminate this Trust Indenture or entitle such holder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or any part
thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE
TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
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addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-54-
<PAGE> 55
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a vote of a
Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-55-
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture
to be duly executed by their respective officers thereof duly authorized as of
the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee, as Owner Trustee
By:__________________________
Name:________________________
Title:
STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee
By:__________________________
Name:________________________
Title:
-56-
<PAGE> 57
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 C]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 C], dated
_________, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain
Trust Agreement [NW 1996 C] dated as of April 26, 1996 (the "TRUST AGREEMENT"),
between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 C], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft (such term and
other terms used but not defined herein having the respective meanings ascribed
thereto in the Trust Indenture), and shall specifically mortgage such Aircraft
to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
<PAGE> 58
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in and
to all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts).
As further security for the obligations referred to above and secured
by the Trust Indenture and hereby, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Loan Participants and of the Certificate Holders, in
the trust created by the Trust Indenture, all of the right, title and interest
of the Owner Trustee in, to and under the Lease Supplement [of even date
herewith] covering the property described above subject, however, to all of the
terms of the Trust Indenture including, without limitation, the rights of the
Owner Trustee and the Owner Participant under Section 5.02 of the Trust
Indenture.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except
EXHIBIT A-2
<PAGE> 59
as provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental to
the Trust Indenture and shall form a part thereof. The Trust Indenture is each
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
This Trust Indenture Supplement is being delivered in the State of New
York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 60
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity, but
solely as Owner Trustee,
Owner Trustee
By:__________________________
Name:
Title:
EXHIBIT A-4
<PAGE> 61
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A $25,196,968 7.67%
Series B $ 8,272,791 8.07%
Series C $ 6,530,241 8.97%
</TABLE>
<PAGE> 62
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N539US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.50247046%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.05203261%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.05202864%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.05202864%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.05203261%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.05203261%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.05203261%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.05203261%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.05202864%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.05203261%
Jul 2, 2007 0.00000000%
Jan 2, 2008 2.05202864%
Jul 2, 2008 0.00000000%
Jan 2, 2009 2.18793785%
Jul 2, 2009 0.00000000%
Jan 2, 2010 11.84974716%
Jul 2, 2010 0.00000000%
Jan 2, 2011 12.75862239%
Jul 2, 2011 0.00000000%
Jan 2, 2012 13.73721235%
Jul 2, 2012 17.12663603%
Jan 2, 2013 15.83719914%
Jul 2, 2013 0.87462111%
Jan 2, 2014 3.60524330%
</TABLE>
<PAGE> 63
SERIES B
AIRCRAFT: N539US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.08332351%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.08332351%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.08332351%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.08332351%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.08333560%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.08332351%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.08333560%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.08332351%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.08332351%
Jul 2, 2007 0.00000000%
Jan 2, 2008 11.71053397%
Jul 2, 2008 0.00000000%
Jan 2, 2009 26.21972440%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 39.20766281%
Jul 2, 2014 4.11214305%
</TABLE>
<PAGE> 64
SERIES C
AIRCRAFT: N539US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.54168261%
Jul 2, 1999 0.00000000%
Jan 2, 2000 3.58983688%
Jul 2, 2000 0.00000000%
Jan 2, 2001 4.73212244%
Jul 2, 2001 0.00000000%
Jan 2, 2002 5.97686977%
Jul 2, 2002 0.00000000%
Jan 2, 2003 7.33328219%
Jul 2, 2003 0.00000000%
Jan 2, 2004 8.81135934%
Jul 2, 2004 0.00000000%
Jan 2, 2005 10.42201965%
Jul 2, 2005 0.00000000%
Jan 2, 2006 5.35591259%
Jul 2, 2006 0.00000000%
Jan 2, 2007 11.62116375%
Jul 2, 2007 0.00000000%
Jan 2, 2008 11.57707656%
Jul 2, 2008 0.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 0.00000000%
Jul 2, 2014 0.83237357%
Jan 2, 2015 27.20630066%
</TABLE>
<PAGE> 65
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as of
June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as of
June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1C, dated as of
June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 C]
This LEASE AGREEMENT [NW 1996 C], dated as of April 26, 1996,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. The following terms shall have the
following meanings for all purposes of this Lease Agreement [NW 1996 C] and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Administrative Agent" means [_____________], a
[_________] banking corporation, as administrative agent
pursuant to the Participation Agreement, and any successor
acting as administrative agent.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"After-Tax Basis" means an additional amount which
when added to the amount of payment otherwise required to be
made on an After-Tax Basis, after deduction of all Federal,
state, local and foreign taxes required to be paid by or on
behalf of a Person in respect of the receipt or realization of
any such amounts, results in a sum equal to the payment
required under the provisions of the Operative Documents to be
made on an After-Tax Basis. Any payment under the Operative
Documents which does not actually result in an increase (or a
decrease in a refund) of the Owner Participant's Federal,
state, local or foreign income tax liability for the year of
the accrual or receipt of such payment but which reduces any
net operating loss or business credit or foreign tax credit
carryover of the recipient shall be treated as giving rise to
an actual increase in (or a decrease in a refund of) tax
liability for the year in which such tax attribute if not
reduced thereby would have given rise to a reduction in such
recipient's tax liability (or such recipient's allowable
refund in respect of any
<PAGE> 2
such taxes). With respect to the Owner Participant, for
purposes of this definition, it shall be assumed that United
States federal, state, local and foreign income taxes are
payable at the Highest Marginal Rate (as defined in the Tax
Indemnity Agreement) then applicable to the Owner Participant.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the two Engines initially leased
hereunder (or any engine substituted for either of such
Engines pursuant to the terms hereof), whether or not any of
such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after
removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at
such time as an aircraft (except Engines or engines from time
to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but
-2-
<PAGE> 3
subject always to the provisions of Section 3(d)(v) hereof
and, for any Renewal Term, Basic Rent determined pursuant to
Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on January 2, 2019, or such
earlier date as this Lease may be terminated in accordance
with the provisions hereof.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Bill of Sale, free
and clear of all liens, encumbrances and rights of others
except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston,
Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota
and, in connection with any payment of Rent and so long as any
Secured Certificate is a Eurodollar Loan (as defined in the
Trust Indenture), such day is also a day for trading by and
between banks in the interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the
United States holding a carrier operating certificate issued
by the Secretary of Transportation pursuant to Chapter 447 of
Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo or
that otherwise is certified or registered to the extent
required to fall within the purview of 11 U.S.C. Section 1110
or any analogous successor provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning
specified in Section 40102(a)(15) of Title 49 of the United
States Code or any similar legislation of the United States of
America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil
Reserve Air Fleet Program currently administered by the United
States Air Force Air Mobility Command pursuant to Executive
Order No. 11490, as amended, or any substantially similar
program.
"Code" means the Internal Revenue Code of 1986, as
amended.
-3-
<PAGE> 4
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be,
to finance the Owner Trustee's payment of Lessor's Cost for
the Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1996 C], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated
as of November 2, 1995, among Lessee, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, [____________], as documentation
agent, [____________], as administrative agent, and
[___________], as syndication agent, as the same may be
amended, supplemented or otherwise modified from time to
time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default.
"Delivery Date" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 2003, provided,
however, that if the chief legal officer or chief tax officer
of Lessee has actual knowledge that the Depreciation Period is
other than the period specified in the Tax Assumptions as a
result of an "Operative Event" (as defined in the Tax
Indemnity Agreement), then ending on the last day of the Owner
Participant's taxable year in which a depreciation or cost
recovery deduction is allowed or allowable with respect to the
Aircraft.
"Documentation Agent" means [__________], a bank
organized under the laws of [__________], as
documentation agent pursuant to the Participation Agreement,
and any successor acting as documentation agent.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the two Pratt & Whitney
Model PW2037 engines listed by manufacturer's serial number in
the initial Lease Supplement,
-4-
<PAGE> 5
whether or not from time to time thereafter installed on the
Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for either of such
two engines, together in each case with any and all Parts
incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine; provided, however,
that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term
"Engines" means, as of any date of determination, all Engines
then leased hereunder.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any agency
or instrumentality of any thereof whose obligations are backed
by the full faith and credit of such government) which in the
case of any event referred to in this clause (iii) (other than
a requisition of title) shall have resulted in the loss of
possession of such property by Lessee for a period in excess
of 180 consecutive days or, if earlier, until the end of the
Term or, in the case of a requisition of title by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and designated therein as a "Specified Country" or
any agency or instrumentality of any thereof whose obligations
are backed by the full faith and credit of such government, as
the case may be, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of
title or, if earlier, at the end of the Term (it being
understood that a requisition of title by any government other
than as expressly provided above shall constitute an immediate
Event of Loss); (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration
or other governmental body of the government of registry of
the Aircraft having jurisdiction, the use of such property in
the normal course of the business of air transportation shall
have been prohibited for a period of 180 consecutive days,
unless Lessee, prior to the
-5-
<PAGE> 6
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward in a manner that does not
discriminate against the Aircraft all steps which are
necessary or desirable to permit the normal use of such
property by Lessee, and, within one year of such prohibition,
Lessee shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of
the same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the
Aircraft by Lessee, provided, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss
if such use shall have been prohibited for a period of two
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any
instrumentality or agency of any thereof whose obligations are
backed by the full faith and credit of such government, which
shall have occurred during the Basic Term (or the Interim Term
or any Renewal Term) and shall have continued for thirty (30)
days beyond the Term, provided, however, that no Event of Loss
pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section
10(d) hereof; (vi) any divestiture of title to or interest in
an Engine treated as an Event of Loss pursuant to Section 7(b)
hereof; and (vii) the operation of or location of the
Aircraft, while under requisition for use by any government,
in an area excluded from coverage by any insurance policy in
effect with respect to the Aircraft required by this
Agreement, unless in the case of a requisition by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and is designated a "Specified Country" or any
agency or instrumentality of any thereof whose obligations are
backed by the full faith and credit of such government, Lessee
shall have obtained an indemnity in lieu thereof from such
government or such agency or instrumentality. 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 Airframe.
"Excess Amount" for the Transition Date means an
amount equal to the amount determined by multiplying Lessor's
Cost by the percentage set forth in Exhibit B hereto under the
heading "Excess Amount" opposite the Transition Date;
provided, however, that, to the extent that the aggregate
amount of interest due and payable on the Transition Date on
the Secured Certificates for the period from and including the
Delivery Date to but excluding the Transition Date is less
than the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the
Transition Date if such Secured Certificates had borne
interest at the Assumed Interest Rate for such period, the
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corresponding percentage set forth in Exhibit B shall be
decreased by the amount which when multiplied by Lessor's Cost
will equal such differential.
"Expenses" has the meaning specified in Section 7(c)
of the Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the
United States Code comprising those provisions formerly
referred to as the Federal Aviation Act of 1958, as amended,
or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency
or instrumentality of the United States government succeeding
to their functions.
"Funding Loss Amount" has the meaning assigned to
that term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 C], dated as
of the date hereof, made by the Guarantor in favor of the
Parties, as such Guarantee may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of
their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
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"Indenture Trustee's Liens" means any Lien which
arises as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by,
or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 of the
Participation Agreement pursuant to said Section 7, or (D)
claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust
Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of
the Lease or Article IV or V of the Trust Indenture, or a
transfer of the Aircraft pursuant to Section 15 of the Lease
while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due
pursuant to the Trust Indenture.
"Interest Period" means Interest Period as defined in
the Trust Indenture.
"Interim Rent" means the rent payable for the
Aircraft for the Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1996 C] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date and each
succeeding period commencing on the date immediately following
the preceding Lease Period Date.
"Lease Period Date" means July 2, 1997 and each
succeeding January 2 and July 2, to and including the last
such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the
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<PAGE> 9
Delivery Date for the purpose of leasing the Aircraft under
and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with
the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it relates to the Aircraft),
the FAA Bill of Sale, the Bill of Sale, the Purchase Agreement
Assignment and the Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
First Security Bank of Utah, National Association, in its
individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii)
any act or omission of the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) claims
against the Owner Participant, Lessor, or First Security Bank
of Utah, National Association, in its individual capacity,
with respect to Taxes or Expenses against which Lessee is not
required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising
out of any transfer by Lessor or the Owner Participant of all
or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of
the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or pursuant to the
exercise of the remedies set forth in Section 15 hereof,
provided, however, that any Lien which is attributable solely
to First Security Bank of Utah, National Association or the
Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the
use, possession, operation, or quiet enjoyment of the Aircraft
by Lessee (or any Sublessee), (3) the existence of such Lien
does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First
Security Bank of Utah, National Association or the Owner
Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a
material risk of interference with the payment of Rent (other
than Excluded Payments in favor of First Security Bank of
Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
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<PAGE> 10
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub-sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in
Section 10(a) hereof.
"Majority in Interest of Certificate Holders" has the
meaning assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Economic Return" shall have the meaning ascribed
to such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net after-tax
present value, as of the Delivery Date, of Basic Rent set
forth in Exhibit B hereto through and including the date on
which the Special Purchase Price is payable pursuant to
Section 19(d) hereof, and the Special Purchase Price payable
as of such date, computed on the basis of the same
methodology, constraints and assumptions as were utilized in
determining Basic Rent, the Special Purchase Price, Stipulated
Loss Value and Termination Value percentages as of the
Delivery Date.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement
covering the Aircraft, the Secured Certificates, the Bill of
Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as
it relates to the Aircraft), the Guarantee, the Owner
Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
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<PAGE> 11
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
Person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust
Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement
and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
"Owner Participant Guarantor" means the entity
executing the Owner Participant Guaranty as guarantor
thereunder.
"Owner Participant Guaranty" means the Owner
Participant Guaranty [NW 1996 C], dated as of the date hereof,
made by the Owner Participant Guarantor in favor of Lessee,
Lessor, the Loan Participants and the Indenture Trustee, as
such Owner Participant Guaranty may be amended or supplemented
from time to time pursuant to the applicable provisions
thereof.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1996 C], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture
Trustee and the Participants.
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<PAGE> 12
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum (calculated based on the actual
number of days elapsed in a year consisting of 365 days or 366
days, as the case may be) equal to (x) 1% over the Base Rate
for the first 5 Business Days from the date such payment
became due, and (y) 3% over the Base Rate thereafter.
"Permitted Carrier" means an air carrier domiciled
and principally based in a country set forth on Exhibit C to
the Participation Agreement and designated therein as a
"Specified Country".
"Permitted Lien" means any Lien referred to in
clauses (i) through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a
country listed in Exhibit C to the Participation Agreement.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section
3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1996 C], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
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<PAGE> 13
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Interim Rent, Basic Rent and
Supplemental Rent, collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Restricted Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Return Site" means a major airport on Lessee's route
system located within the forty-eight contiguous states of the
United States.
"S&P" means Standard & Poor's Corporation.
"Secured Certificates" has the meaning assigned to
that term in the Trust Indenture.
"Special Purchase Price" shall mean the amount
denominated as such in Exhibit B hereto.
"Specified Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost for
the Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease
Period in which such Stipulated Loss Value Date occurs up to
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential. "Stipulated
Loss Value" as of any date after January 2, 2019 shall be the
amount determined as provided in Section 19(a) hereof.
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<PAGE> 14
"Stipulated Loss Value Date" means the 2nd calendar
day of each calendar month during the Interim Term, Basic Term
and any Renewal Term.
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Interim Rent and Basic Rent) which
Lessee assumes or agrees to pay to Lessor or others hereunder,
under the Participation Agreement, under the Tax Indemnity
Agreement or under any of the other Operative Documents. The
parties acknowledge that Supplemental Rent is a general
category and, accordingly, agree that any provision of any
Operative Document which calls for the payment of Supplemental
Rent and also calls for the payment of specific items which
are includable in Supplemental Rent is not to be interpreted
as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
the Loan Participants and each other Certificate Holder, and
each of their respective Affiliates, successors and permitted
assigns.
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1996 C], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, receipts,
sales, rental, use, turnover, value added, property (tangible
and intangible), excise and stamp taxes), license, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a
"TAX").
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
"Termination Value" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of
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<PAGE> 15
Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D hereto opposite the Termination Date with respect to
which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof
and in Section 7 of the Tax Indemnity Agreement). In the event
that the Termination Date with respect to which Termination
Value is determined is a date on which Basic Rent is payable
in advance as indicated on Exhibit B, to the extent that the
actual amount of interest paid and to be paid on the Secured
Certificates during the Lease Period ending on such
Termination Date is greater or less than the amount included
in calculating the corresponding percentage set forth in
Exhibit D with respect to such Termination Date on account of
such interest, the corresponding percentage set forth in
Exhibit D shall be adjusted appropriately to compensate for
such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under
the Trust Agreement, such information to be furnished by the
Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees,
taxes and other charges payable in connection with the
recording or filing of instruments and financing statements
(but excluding any sales, use and other transfer taxes which
apply to the Aircraft), such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, and the
reasonable out-of-pocket expenses of the Owner Participant,
such information to be furnished by the Owner Participant,
(iv) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture, such
information to be furnished by the Indenture Trustee, (v) the
fees of Aeroeconomics, Inc. and BK Associates, Inc. with
respect to the appraisals of the Aircraft pursuant to Sections
4(a)(xx) and 4(a)(xxix), respectively, of the Participation
Agreement, such information to be furnished by the Owner
Participant in the case of Aeroeconomics, Inc. and by the
Documentation Agent in the case of BK Associates, Inc., (vi)
the reasonable and actual fees, expenses and disbursements of
Dewey Ballantine, special counsel to the Owner Participant,
such information to be furnished by the Owner Participant,
(vii) the fee and reasonable disbursements of Babcock and
Brown Financial Corporation, such information to be furnished
by Lessee, and (viii) the fee payable to the Loan Participants
on the Delivery Date.
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<PAGE> 16
"Transition Date" means the date designated as such
in Exhibit B hereto.
"Trust Agreement" means that certain Trust Agreement
[NW 1996 C], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National
Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without
limitation, supplementation thereof by one or more Trust
Supplements entered into pursuant to the applicable provisions
thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1996 C], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier
as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations
under the Federal Aviation Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or
engines installed thereon to a third party pursuant to which
such Airframe and Engines or engines (i) shall be operated
solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be
required under the Federal Aviation Act or, if the Aircraft is
not registered in the United States, all certificates and
licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions
within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not
be regular employees of Lessee (or any Sublessee)) and (ii)
shall be maintained by Lessee (or any Sublessee) in accordance
with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject
to satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
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<PAGE> 17
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AMD RENT. (a) Interim Term and Basic Term. The
Interim Term shall commence on the Delivery Date and end on and include the day
immediately preceding the Commencement Date unless earlier terminated pursuant
to the provisions hereof. The Basic Term shall commence on the Commencement Date
and end on January 2, 2019, or such earlier date as this Lease may be terminated
in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the
Commencement Date in an amount equal to Lessor's Cost multiplied by the
percentage specified in Exhibit B hereto for Interim Rent on the Commencement
Date.
Although the Interim Rent percentage set forth in Exhibit B
hereto has been computed on the assumption that the rate of interest on the
Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee
recognize that the actual rate of interest on the Secured Certificates may be a
rate from time to time which may be greater or less than the Assumed Interest
Rate and that the related basis upon which interest on the Secured Certificates
will be computed will be as provided in the Trust Indenture. Accordingly, the
Interim Rent payable on the Commencement Date shall be increased or decreased
(but not below zero) by the difference between (i) the aggregate amount of
interest due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to but excluding the
Commencement Date and (ii) the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the Secured Certificates on
the Commencement Date relating to the period from the Transition Date to the
Commencement Date if such Secured Certificates had borne interest at the Assumed
Interest Rate. If the amount determined in accordance with clause (i) of the
preceding sentence shall be greater than the amount determined in accordance
with clause (ii) of such sentence, the amount of Interim Rent payable on the
Commencement Date shall be increased by such difference. If the amount
determined in accordance with clause (i) of the preceding sentence shall be less
than the amount determined in accordance with clause (ii) of such sentence, the
amount of Interim Rent payable on the Commencement Date shall be decreased (but
not below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect to
each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 6.5% per annum, computed on the
basis of a 360-day year of twelve 30-day
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<PAGE> 18
months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the
actual rate of interest on the Secured Certificates may be a rate from time to
time which may be greater or less than the Assumed Interest Rate and that the
related basis upon which interest on the Secured Certificates will be computed
will be as provided in the Trust Indenture. Accordingly, each installment of
Basic Rent shall be increased or decreased (but not below zero), as the case may
be, by the Rent Differential Amount (as defined herein). For purposes hereof,
"RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect
to the Basic Term, the difference between (i) the aggregate amount of interest
due and payable on such Lease Period Date on the Secured Certificates, and (ii)
the aggregate amount of interest on the Secured Certificates that would have
been due and payable on such Lease Period Date if such Secured Certificates had
borne interest at the Assumed Interest Rate, in each case for the period from
and including the Lease Period Date (or the Commencement Date in the case of the
first Lease Period) next preceding such Lease Period Date to but excluding such
Lease Period Date. If, as of any Lease Period Date, the amount determined in
accordance with clause (i) of the immediately preceding sentence shall be
greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Basic Rent payable on such Lease Period Date shall be
increased by the Rent Differential Amount. If, as of any Lease Period Date, the
amount determined in accordance with such clause (ii) shall exceed the amount
determined in accordance with such clause (i), the amount of Basic Rent due on
such Lease Period Date shall be decreased (but not below zero) by the Rent
Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs other
than on April 29, 1996, or (B) Transaction Expenses paid by
Lessor pursuant to Section 16 of the Participation Agreement
are determined to be other than 1.0% of Lessor's Cost, then in
each case the Basic Rent percentages set forth in Exhibit B
and Stipulated Loss Value percentages set forth in Exhibit C,
the Termination Value percentages set forth in Exhibit D and
the Special Purchase Price shall be recalculated on or prior
to November 15, 1996 using the same methods and assumptions
used to calculate original Basic Rent, Stipulated Loss Value
and Termination Value percentages and Special Purchase Price,
in order to: (1) maintain the Owner Participant's Net Economic
Return and (2) minimize the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (1)
hereof.
(ii) (A) In the event of a refinancing as contemplated by
Section 17 of the Participation Agreement, then the Basic Rent
percentages set forth in Exhibit B, the Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value
percentages set forth in Exhibit D and the Special Purchase
Price shall be recalculated (upwards or downwards) by the
Owner Participant as contemplated by such Section to (1)
maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee and (B) in
the event that Lessee elects, subject to the Owner
Participant's consent, which the Owner
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<PAGE> 19
Participant may withhold in its sole discretion, to satisfy
any indemnity obligation under the Tax Indemnity Agreement
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement,
then the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by Owner Participant, using the same methods and
assumptions (except to the extent such assumptions shall be
varied to take into account the Loss (as defined in the Tax
Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used to
calculate the Basic Rent percentages, the Stipulated Loss
Value percentages and the Termination Value percentages and
the Special Purchase Price on the Delivery Date, in order to
(1) maintain the Owner Participant's Net Economic Return and
(2) to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant to
this Section 3(d), the Owner Participant shall redetermine the
Excess Amount set forth in Exhibit B in a manner consistent
with such recalculation. In addition, (X) any recalculation of
Basic Rent, Stipulated Loss Value or Termination Value
percentages made pursuant to this Section 3(d) shall take into
account any decrease in the Excess Amount with respect to the
Transition Date required by the proviso to the definition of
"Excess Amount", (Y) after January 31, 1997 but prior to July
2, 1997, the Basic Rent percentages set forth in Exhibit B,
the Stipulated Loss Value percentages set forth in Exhibit C
and the Termination Value percentages set forth in Exhibit D
shall be recalculated to take into account any decrease in
Excess Amount with respect to the Transition Date that has not
theretofore been taken into account in accordance with clause
(X) of this sentence, and (Z) at the time of any payment of
Stipulated Loss Value or Termination Value, the Stipulated
Loss Value percentage set forth in Exhibit C or the
Termination Value percentage set forth in Exhibit D, by
reference to which the amount of such payment is determined
shall be recalculated to take into account any decrease in the
Excess Amount with respect to the Transition Date that has not
theretofore been taken into account in accordance with clause
(X) or clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess Amount,
Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price pursuant to this Section 3(d) shall
be determined by the Owner Participant and shall be subject to
the verification procedures set forth in Exhibit E hereto. In
addition, notwithstanding any other provisions herein, in no
event shall the Special Purchase Price be adjusted to an
amount that is less than the greater of (A) the Termination
Value as of July 2, 2012, (B) the estimated fair market value
of the Aircraft on July 2, 2012, determined as of the Delivery
Date and set forth in the opinion received from Aeroeconomics,
Inc. pursuant to Section
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<PAGE> 20
4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and
(C) 101% multiplied by the present value as of July 2, 2012 of
(x) the remaining scheduled Basic Rent through the end of the
Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair
market value of the Aircraft as of the end of the Basic Term
as set forth in the Appraisal) (the present value calculation
described in this clause (C) shall utilize a semi-annual
compounded discount rate no lower than that utilized by the
Owner Participant in determining the Special Purchase Price as
of the Delivery Date, but in no event shall such discount rate
be less than 11.8% per annum). Such recalculated Basic Rent,
Excess Amount and Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price shall be set forth
in a Lease Supplement or an amendment to this Lease.
(v) Anything contained in the Participation Agreement
or this Lease to the contrary notwithstanding, each
installment of Interim Rent and Basic Rent payable hereunder,
whether or not adjusted in accordance with this Section 3(d),
shall, together with the amount of the Excess Amount in
respect of the date on which such installment is payable, and
each payment of Termination Value and Stipulated Loss Value,
whether or not adjusted in accordance with this Section 3(d),
shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in
any event, in an amount at least sufficient to pay in full, on
the date on which such amount of Rent is due, any payments
then required to be made on account of the principal of,
premium, if any, and interest on the Secured Certificates. It
is agreed that no installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased
or adjusted by reason of (i) any attachment or diversion of
Rent on account of (A) Lessor Liens or (B) any Loan
Participant Lien or other Lien on or against the Trust Estate,
any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to
the transactions contemplated by the Operative Documents, (ii)
any modification of the payment terms of the Secured
Certificates made without the prior written consent of Lessee
or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of
Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section
3(d) shall be (A) in compliance with the tests of Sections
4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with
Section 467 of the Internal Revenue Code of 1986, as amended,
as each is then in effect as long as the Schedule of Basic
Rent was in compliance with Section 467 of the Code as in
effect on the Closing Date, it being understood that, to the
extent that any grandfather, effective date, or similar
provisions in any regulations under Section 467 or other
administrative pronouncement interpreting Section
467 promulgated or issued after the Closing
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<PAGE> 21
Date causes such regulations or pronouncement not to be
applicable to the Schedule of Basic Rent in effect on the
Closing Date, such Schedule shall be deemed to be in
compliance with Section 467 as in effect on the Closing Date
(provided that the test of Rev. Proc. 75-28 Section 4.08(1)
and Section 467 shall be applied on a prospective basis from
the date of such adjustment if and to the extent permitted by
applicable law, as then in effect) and (B) subject to
verification pursuant to Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting Stipulated Loss Value or Termination Value as the
same shall become due and owing and all other amounts of Supplemental Rent
within five days after demand or within such other relevant period as may be
provided in any Operative Document, and in the event of any failure on the part
of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or in any other Operative Document or by
law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall
pay, on behalf of Lessor, as Supplemental Rent when due any amount of premium
payable when due under the Trust Indenture and shall pay on behalf of Lessor
amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02
of the Trust Indenture, as and when the same shall become due and payable.
Lessee also will pay to Lessor, or to whomsoever shall be entitled thereto, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate on any part of any installment of Interim Rent and
Basic Rent not paid when due for any period for which the same shall be overdue
and on any payment of Supplemental Rent not paid when due for the period until
the same shall be paid.
(f) Payments in General. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by wire
transfer of immediately available funds prior to 10:30 A.M., New York time, on
the date of payment, to Lessor at its account at First Security Bank of Utah,
National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1996 C (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby
irrevocably directs and Lessee agrees, that, unless the Indenture Trustee shall
otherwise direct, all Rent payable to Lessor and assigned to the Indenture
Trustee pursuant to the Trust Indenture shall be paid prior to 10:30 A.M., New
York time on the due date thereof in funds of the type specified in this
Section 3(f) directly to the Indenture Trustee at its account at State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA
No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department,
Reference: Northwest/NW 1996 C (or such other account of the Indenture Trustee
in the continental United States as the Indenture Trustee shall direct in a
notice to Lessee at least 10 Business Days prior to the date such payment of
Rent is due). All payments of Supplemental Rent owing to the Indenture Trustee
or to a Loan Participant or any other Certificate Holder pursuant to the
Participation Agreement shall be made in Dollars in immediately available funds
prior to 10:30 A.M., New
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<PAGE> 22
York time, on the due date thereof at the office of the Indenture Trustee or
at such other office of such other financial institution located in the
continental United States as the party entitled thereto may so direct at least
10 Business Days prior to the due date thereof. All payments of Supplemental
Rent payable to the Owner Participant, to the extent that such amounts
constitute Excluded Payments (as defined in the Trust Indenture), shall be made
in Dollars in immediately available funds prior to 10:30 A.M., New York time,
on the due date thereof, to the account of the Owner Participant specified in
Schedule I to the Participation Agreement (or to such other account as may be
specified in writing by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if
any, that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by 10:30 A.M.,
New York time, on the Transition Date from Lessor an amount equal to the Excess
Amount for such date, Lessee shall on the Transition Date, prepay on the
Transition Date a portion of Basic Rent equal to the Excess Amount not so paid
(the amount of such Basic Rent to be prepaid by Lessee being herein called
"PREPAID RENT"); provided that Lessee shall, under all circumstances and whether
or not an Event of Default shall be continuing on the Transition Date, pay as
Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to
the excess, if any, of the interest on the Secured Certificates relating to the
period from and including the Delivery Date to but excluding the Transition Date
over the Excess Amount payable on the Transition Date; provided, further, that
Lessee will also pay to the Indenture Trustee, on demand, as Supplemental Rent,
to the extent permitted by applicable law, interest at the Past Due Rate in
effect from time to time on any part of any Prepaid Rent and on the amount, if
any, payable pursuant to the immediately preceding proviso not paid when due for
any period for which the same shall be overdue. Lessor agrees to reimburse
Lessee in the manner provided in the following sentence for (x) the Prepaid Rent
so paid by Lessee, plus (y) any Supplemental Rent paid with respect to Prepaid
Rent by Lessee pursuant to this Section 3(g), plus (z) accrued interest on the
unreimbursed portion thereof at a rate equal to the Base Rate as in effect from
time to time plus 5% per annum from the date such amount is paid by Lessee to
but not including the date of each such reimbursement (such amounts to be
reimbursed being herein called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to
Lessee, in funds of the type specified in Section 3(f) hereof, within five days
after Lessor, the Owner Participant and the Indenture Trustee shall have
received written notice from Lessee demanding payment, the Reimbursement Amount.
In addition, if, for any reason, Lessor shall fail to pay to Lessee the
Reimbursement Amount as above provided, Lessee shall be entitled to offsets
(without duplication) against each succeeding payment (other than as limited by
the proviso to this sentence) due from Lessee to Persons other than the Loan
Participants, the Indenture Trustee
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<PAGE> 23
and the Owner Trustee in its individual capacity (including, without limitation,
Basic Rent, payments due under Section 9, 10, 15 and 19 hereof, payments due
under the Tax Indemnity Agreement and payments due to Persons other than the
Loan Participants, the Indenture Trustee and Lessor in its individual capacity
under Section 7 of the Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however, that in the case of
any payment due from Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right of offset shall be limited to amounts distributable to
Lessor thereunder. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any installment of Interim Rent or Basic Rent
to an amount insufficient, together with the Excess Amount and all other amounts
payable simultaneously by Lessee, to pay in full the payments then required to
be made on account of the principal of and interest on (and premium, if any, due
with respect to) the Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR
LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS."
NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that First
Security Bank of Utah, National Association, in its individual capacity, (i)
represents and warrants that on the Delivery Date, Lessor shall have received
whatever title to the Aircraft was conveyed to it by Lessee, (ii) represents and
warrants that on the Delivery Date the Aircraft shall be free of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) attributable to it, (iii) covenants that it
will not, through its own actions or inactions, interfere in Lessee's quiet
enjoyment of the Aircraft during the Term, (iv) agrees that it will not directly
or indirectly create, incur, assume or suffer to exist any Lessor Lien
attributable to it on or with respect to the Airframe or any Engine or any
portion of the Trust Estate and (v) represents and warrants that it is a Citizen
of the United States without making use of a voting trust, voting powers
agreement or similar arrangement, and agrees that if at any time it shall cease
to be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the Federal
Aviation Act as in effect at such time or, if it is not necessary, if and so
long as the Owner Trustee's citizenship would have any material adverse effect
on the Loan Participants, the Owner Participant or Lessee), effective upon the
appointment of a successor Owner Trustee in accordance with Section 9.01 of the
Trust Agreement. None of the provisions of this Lease shall be deemed to amend,
modify or
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<PAGE> 24
otherwise affect the representations, warranties or other obligations (express
or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not, through its own actions or inactions, interfere
in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and agrees
that it will not directly or indirectly create, incur, assume or suffer to exist
any Lessor Lien attributable to it on or with respect to the Airframe or any
Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return.
Unless purchased by Lessee pursuant to Section 19 hereof, upon the termination
of this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c) or 15, Lessee, at its own expense, will return the Airframe to
Lessor at a Return Site then being serviced by Lessee's 757-200 aircraft, which
Return Site shall be chosen by Lessor and reasonably acceptable to Lessee
(provided, that at Lessor's request, Lessee will consider in good faith a Return
Site not then being serviced by Lessee's 757-200 aircraft, provided, further,
that, in the case of a return to a Return Site not then being serviced by
Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately
following a revenue passenger flight with the Airframe to such Return Site), and
Lessor will give Lessee at least ten (10) days' prior written notice of the
Return Site; provided, however, that if Lessor shall have made the request for
storage pursuant to Section 5(d) hereof, Lessee shall return the Airframe to
Lessor at the site of the storage at the end of the storage period. At the time
of such return, Lessee will, unless otherwise requested by Lessor at least
ninety (90) days prior to the return hereunder, cause the Aircraft, if it is not
then so registered, to be registered under the laws of the United States with
the Federal Aviation Administration in the name of the Lessor or its designee,
provided that Lessee shall be relieved of its obligations under this sentence if
(i) such registration is prohibited by reason of the failure of Lessor or its
designee to be eligible on such date to own an aircraft registered with the
Federal Aviation Administration or (ii) such registration is otherwise
prohibited by applicable law and not due to any act or failure to act on the
part of Lessee; the Airframe will be fully equipped with the Engines (or other
Pratt & Whitney Model PW2037 engines or two engines of the same or another
manufacturer of not less than equivalent utility, fair market sales value and
remaining useful life, and suitable for installation and use on the Airframe
without impairing the value, utility or remaining useful life of the Aircraft;
provided that both engines shall be of the same make and model) duly installed
thereon. Also, at the time of such return, such Airframe and Engines or engines
(i) shall be certified (or, if not then registered under the Federal Aviation
Act, shall be eligible for certification) as an airworthy aircraft by the
Federal Aviation Administration without the necessity of any further expense
being incurred by Lessor, (ii) shall be free and clear of all Liens (other than
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Indenture Trustee's Liens
and Loan Participant Liens) and rights of third parties under pooling,
interchange, overhaul, repair or other similar agreements or arrangements, (iii)
shall be in as good an operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, or, in the case of any such engines
owned by Lessee, shall have a value, utility and remaining useful life at least
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<PAGE> 25
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit F. Lessor agrees to pay Lessee those
amounts specified in Exhibit F to be for the cost, expense or account of Lessor.
During the last six (6) months of the Term (unless Lessee
shall have elected to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease), with reasonable notice, Lessee will cooperate,
and cause any Sublessee to cooperate, in all reasonable respects with the
efforts of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not interfere
with the operation or maintenance of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not
owned by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the return
of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessee shall invoice Lessor, and Lessor shall pay Lessee, as compensation
for any fuel or oil contained in the fuel or oil tanks of such Airframe, the
value of such fuel or oil at the price paid by Lessee for such fuel or oil, as
the case may be, and (ii) Lessee shall deliver or cause to be delivered to
Lessor all logs, manuals and data and inspection, modification and overhaul
records required to be maintained with respect thereto under applicable rules
and regulations of each country under the laws of which the Aircraft has been
registered during the period of operation thereof, which logs, manuals, data and
records, if not maintained in English, shall be translated into English at
Lessee's expense.
(d) Storage Upon Return. If, at least thirty (30) days prior
to termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with free parking
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<PAGE> 26
facilities for the Aircraft (maintenance costs and other out-of-pocket costs
other than parking fees incurred by Lessee in connection with such storage to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such period
not exceeding thirty (30) days and be reimbursed by Lessor for the premiums
thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of Lessee
(or any Sublessee) either not yet due or being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of Lessee's (or, if a Sublease is then in effect, the Sublessee's)
business (including those arising under maintenance agreements entered into in
the ordinary course of business) securing obligations that are not overdue for a
period of more than forty-five (45) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any
judgment or award against Lessee (or any Sublessee), unless the judgment secured
shall not, within sixty (60) days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within sixty (60) days after the expiration
of such stay, (vii) any other Lien with respect to which Lessee (or any
Sublessee) shall have provided a bond, cash collateral or other security
adequate in the reasonable opinion of Lessor, and (viii) Liens approved in
writing by Lessor. Lessee will promptly, at its own expense, take (or cause to
be taken) such actions as may be necessary duly to discharge any such Lien not
excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION
AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance. Lessee, at its
own cost and expense, shall (or shall cause any Sublessee to): (i) forthwith
upon the delivery thereof hereunder, cause the Aircraft to be duly registered
in the name of Lessor, and, subject to the second paragraph of this Section
7(a) and Section 8(f) of the Participation Agreement, to remain duly registered
in the name of Lessor under the Federal Aviation Act, provided that Lessor
shall execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not
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<PAGE> 27
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section
8(f) of the Participation Agreement and shall cause the Trust Indenture to be
duly recorded and maintained of record as a first mortgage on the Aircraft; (ii)
maintain, service, repair and overhaul (or cause to be maintained, serviced,
repaired and overhauled) the Aircraft so as to keep the Aircraft in as good an
operating condition as delivered to Lessee hereunder, ordinary wear and tear
excepted, and as may be necessary to enable the applicable airworthiness
certification for the Aircraft to be maintained in good standing at all times
(other than during temporary periods of storage in accordance with applicable
regulations or during maintenance or modification permitted hereunder) under the
Federal Aviation Act, except when all Boeing 757-200 aircraft powered by engines
of the same type as those with which the Airframe shall be equipped at the time
of such grounding and registered in the United States have been grounded by the
FAA (although such certification need actually be maintained only during such
periods as the Aircraft is registered in the United States), or the applicable
laws of any other jurisdiction in which the Aircraft may then be registered from
time to time in accordance with Section 8(f) of the Participation Agreement,
utilizing, except during any period that a Sublease is in effect, the same
manner and standard of maintenance, service, repair or overhaul used by Lessee
with respect to similar aircraft operated by Lessee in similar circumstances and
utilizing, during any period that a Sublease is in effect, the same manner and
standard of maintenance, service, repair or overhaul used by the Sublessee with
respect to similar aircraft operated by the Sublessee in similar circumstances
or such manner as shall have been approved by the Owner Participant pursuant to
Section 7(b)(x) and without in any way discriminating against the Aircraft, by
reason of its leased status, including, without limitation, the termination of
airworthiness directives; provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Sublessee) in accordance with
maintenance standards required by, or substantially equivalent to those required
by, the FAA or the central civil aviation authority of Canada, France, Germany,
Japan, the Netherlands or the United Kingdom; (iii) maintain or cause to be
maintained all records, logs and other materials required to be maintained in
respect of the Aircraft by the FAA or the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered (which
records, logs and other materials, as between Lessor and Lessee and all parties
claiming through Lessee, shall be the property of Lessor but shall be maintained
by Lessee during the Term and shall become the property of Lessee upon Lessee's
purchase of the Aircraft pursuant to the terms of this Lease or upon the
occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof);
and (iv) promptly furnish or cause to be furnished to Lessor and the Owner
Participant such information as may be required to enable Lessor to file any
reports required to be filed by Lessor or the Owner Participant with any
governmental authority because of Lessor's ownership of the Aircraft. (II)
Operation. Lessee will not maintain, use, service, repair, overhaul or operate
the Aircraft (or permit any Sublessee to maintain, use, service, repair,
overhaul or operate the Aircraft) in violation of any law or any rule,
regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law,
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rule, regulation or order in any reasonable manner which does not materially
adversely affect Lessor or the Owner Participant or, so long as any Secured
Certificates shall be outstanding, the first priority Lien of the Trust
Indenture and does not involve any material risk of sale, forfeiture or loss of
the Aircraft. Lessee will not operate the Aircraft, or permit any Sublessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 11; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in the
ordinary course of the regular operations of Lessee (or any Sublessee) and in
each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions required to change the registration of the Aircraft to another
country.
(b) Possession and Subleases. Lessee will not, without the
prior written consent of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of the Airframe or any Engine or install or
permit any Engine to be installed on any airframe other than the Airframe or
enter into any Wet Lease; provided that, so long as no Default of the type
referred to in Section 14(a) or 14(e) or Event of Default shall have occurred
and be continuing at the time of such sublease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority lien of the Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7(b)) any Engine, and so long
as Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a)
and 11 hereof, Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines
then installed thereon to normal interchange agreements or any
Engine to normal pooling or similar arrangements, in each case
customary in the airline industry and entered into by Lessee
(or any Sublessee) in the ordinary course of its business;
provided that (A) no such agreement or arrangement
contemplates or requires the transfer of title to the
Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Permitted Carrier;
(ii) deliver possession of the Airframe or any Engine
to the manufacturer thereof (or for delivery thereto) or to
any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work
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<PAGE> 29
on the Airframe or Engine or any part of any thereof or for
alterations or modifications in or additions to such Airframe
or Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii) install an Engine on an airframe owned by Lessee
(or any Sublessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines
(other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the
first priority Lien of the Trust Indenture shall not be
divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to Lessee
(or any Sublessee) or purchased by Lessee (or any Sublessee)
subject to a conditional sale or other security agreement,
provided that (x) such airframe is free and clear of all
Liens, except: (A) the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and (y)
such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee
(or any Sublessee), leased to Lessee (or any Sublessee) or
purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b) hereof,
subject any appliances, Parts or other equipment owned by
Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
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<PAGE> 30
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program
and transfer (or permit any Sublessee to transfer) possession
of the Airframe or any Engine to the United States of America
or any instrumentality or agency thereof pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee (or any
Sublessee) shall (A) promptly notify Lessor upon subjecting
the Airframe or any Engine to the Civil Reserve Air Fleet
Program in any contract year and provide Lessor with the name
and address of the Contracting Office Representative for the
Air Mobility Command of the United States Air Force to whom
notice must be given pursuant to Section 15 hereof, and (B)
promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the
Term, enter into a Wet Lease (which, if entered into with
tax-exempt entities during the Depreciation Period, may not
exceed three years) for the Airframe and Engines or engines
then installed thereon with any third party; provided that if
Lessee (or any Sublessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options)
Lessee shall provide Lessor written notice of such Wet Lease
(such notice to be given prior to entering into such Wet
Lease, if practicable, but in any event promptly after
entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the
Term, transfer possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency
thereof pursuant to a contract (the term of which, during the
Depreciation Period, may not exceed three years), a copy of
which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease
with (1) a U.S. Air Carrier, (2) any Person approved in
writing by the Owner Participant and the Indenture Trustee in
their sole discretion, or (3) after the Depreciation Period,
any Permitted Sublessee if (A) in any such case, the Sublessee
under such sublease is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into,
(B) in the event that the Sublessee under such sublease is a
foreign air carrier (other than a foreign air carrier
principally based and domiciled in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based and domiciled at the
time such sublease is entered into (or, in the case of a
sublease to a proposed Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in
effect on the Delivery Date) and (C) in the event that the
Sublessee under such sublease is domiciled and principally
based in a country listed on Exhibit C to the Participation
Agreement and designated therein as a "Restricted Country",
Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee to the effect that (I) the terms
of the proposed
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<PAGE> 31
sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally)
enforceable against the proposed Sublessee in the country in
which the proposed Sublessee is principally based and
domiciled, (II) there exist no possessory rights in favor of
the Sublessee under such Sublease under the laws of such
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee and assuming at such
time such Sublessee is not insolvent or bankrupt, prevent the
return or repossession of the Aircraft in accordance with the
terms of this Lease, (III) the laws of such Sublessee's
country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into Dollars for the loss of use of the Aircraft
in the event of the requisition by such government of such
use, (IV) the laws of such Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to
the registry of the Aircraft in the name of Lessor (or Lessee,
as "lessee", or the proposed Sublessee, as "sublessee", as
appropriate) and to the Lien of the Trustee Indenture, (V)
such Sublease will not result in a risk of unindemnified Taxes
to Lessor or the Owner Participant (it being agreed that in
the event such opinion cannot be given in a form reasonably
satisfactory to the Owner Participant, such opinion will be
waived if (A) the Owner Participant has received assurances
satisfactory to it to the effect that such Sublease will not
result in any such risk, or (B) Lessee shall have entered into
a binding agreement to indemnify in a manner satisfactory in
form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant for such
unindemnified Taxes; provided, however, that if (a) Lessee
(or, so long as the Guarantee remains in full force and
effect, the Guarantor) has outstanding publicly issued or
privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (b) Lessee
provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and substance
to Lessor, the amount of which is sufficient (as determined by
the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner
Participant has been indemnified by Lessee under the Operative
Documents in addition to any additional adverse tax
consequences resulting from such subleasing or (c) the
anticipated indemnified amount (as determined by the Owner
Participant in its reasonable judgment) is less than $50,000,
then, in determining whether the indemnity to be provided by
Lessee is satisfactory in form and substance to the Owner
Participant, the Owner Participant will not take into account
the creditworthiness of Lessee), (VI) none of the Owner
Trustee, the Owner Participant or the Indenture Trustee will
be required to register to do business in such country as a
result of such sublease, after (A) taking into account any
other contacts of the Owner Trustee and the Owner Participant
with such jurisdiction (provided, that upon request by Lessee
(such request having been acknowledged by the Owner
Participant's general counsel), the Owner Trustee and the
Owner Participant must respond
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<PAGE> 32
within fourteen (14) Business Days after receipt of such
request describing its contacts in such jurisdiction, or else
such party shall be deemed for purposes of this clause (VI) to
have no such contacts) and (B) assuming that the Indenture
Trustee has no other contacts with such jurisdiction, and
(VII) there is no tort liability for owners not in possession
of aircraft in such country more onerous than under the laws
of the United States or any state thereof (it being agreed
that in the event such opinion cannot be given in a form
reasonably satisfactory to the Owner Participant, such opinion
will be waived if insurance reasonably satisfactory to the
Owner Participant is provided to cover the risk of such tort
liability), provided, however, that no sublease entered into
pursuant to this clause (x) shall extend beyond the expiration
of the Basic Term or any Renewal Term then in effect unless
Lessee shall have irrevocably committed to purchase the
Aircraft; provided, further, that in the event the Sublessee's
maintenance program for the Airframe will be a block overhaul
program, a sublease entered into pursuant to this clause (x)
to such Sublessee shall not extend beyond the date which is
six months prior to the expiration of the Basic Term or any
Renewal Term then in effect (and Lessee, if the last Sublessee
was not a U.S. Air Carrier, shall upon expiration of the
sublease to such Sublessee (1) incorporate the Aircraft into
Lessee's approved maintenance program for aircraft of the same
make and model and in active commercial service and (2) place
the Aircraft into active passenger service or, in lieu
thereof, upon the return of the Aircraft to Lessor pursuant to
Section 5, Lessee shall comply with those return conditions
that would have been applicable had Lessee adopted a block
overhaul program) unless either the Owner Participant shall
have previously approved in writing the maintenance procedures
of the Sublessee or Lessee shall have irrevocably committed to
purchase the Aircraft at, or extend the Term of this Lease by
a period of at least six months from, the end of the Basic
Term or such Renewal Term, as the case may be.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant to
Section 15 hereof and to avoid such Sublease upon such repossession, and Lessee
shall remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such Sublease or transfer had not
occurred, and, except as otherwise provided herein, the terms of any such
Sublease shall not permit any Sublessee to take any action not permitted to be
taken by Lessee in this Lease with respect to the Aircraft. No pooling
agreement, sublease or other relinquishment of possession of the Airframe or any
Engine or Wet Lease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any sublease permitted under Section 7(b) shall expressly
prohibit any further sub-sublease by the Sublessee. Lessor agrees, for the
benefit of Lessee (and any Sublessee) and for the benefit of any mortgagee or
other holder of a
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<PAGE> 33
security interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee (or
any Sublessee) and any conditional vendor of any engine (other than an Engine)
purchased by Lessee (or any Sublessee) subject to a conditional sale agreement
or any other security agreement, that no interest shall be created hereunder in
any engine so owned, leased or purchased and that none of Lessor, its successors
or assigns will acquire or claim, as against Lessee (or any Sublessee) or any
such mortgagee, lessor or conditional vendor or other holder of a security
interest or any successor or assignee of any thereof, any right, title or
interest in such engine as the result of such engine being installed on the
Airframe; provided, however, that such agreement of Lessor shall not be for the
benefit of any lessor or secured party of any airframe (other than the Airframe)
leased to Lessee (or any Sublessee) or purchased by Lessee (or any Sublessee)
subject to a conditional sale or other security agreement or for the benefit of
any mortgagee of or any other holder of a security interest in an airframe owned
by Lessee (or any Sublessee), unless such lessor, conditional vendor, other
secured party or mortgagee has expressly agreed (which agreement may be
contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as against
Lessor, any right, title or interest in an Engine as a result of such Engine
being installed on such airframe. Lessee shall provide to the Owner Participant
and the Indenture Trustee (i) written notice of any Sublease hereunder (such
notice to be given not later than (A) fifteen (15) days prior to entering into
any Sublease with a term of more than one (1) year, (B) five (5) Business Days
prior to entering into any Sublease with a term equal to or less than one (1)
year with a Permitted Sublessee and (C) five (5) days prior to entering into any
Sublease with a term equal to or less than one (1) year with any proposed
Sublessee other than a Permitted Sublessee, if practicable, but in any event
promptly after entering into any such Sublease) and (ii) a copy of each Sublease
which has a term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
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<PAGE> 34
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe
or any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost
and expense, replace such Parts as promptly as practicable. All replacement
Parts shall be free and clear of all Liens (except for Permitted Liens and
pooling arrangements to the extent permitted by paragraph (b) of this Section 8
and except in the case of replacement property temporarily installed on an
emergency basis) and shall be in as good operating condition as, and shall have
a value and utility at least equal to, the Parts replaced assuming such
replaced Parts were in the condition and repair required to be maintained by
the terms hereof. Except as otherwise provided in paragraph (c) of this Section
8, all Parts at any time removed from the Airframe or any Engine shall remain
the property of Lessor, no matter where located, until such time as such Parts
shall be replaced by Parts which have been incorporated or installed in or
attached to the Airframe or such Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement part
becoming incorporated or installed in or attached to the Airframe or any Engine
as above provided, without further act (subject only to Permitted Liens and any
pooling arrangement to the extent permitted by paragraph (b) of this Section 8
and except in the case of replacement property temporarily installed on an
emergency basis), (i) title to such replacement Part shall thereupon vest in
Lessor, (ii) such replacement Part shall become subject to this Lease and be
deemed part of the Airframe or such Engine for all purposes hereof to the same
extent as the Parts originally incorporated or installed in or attached to the
Airframe or such Engine, and (iii) title to the replaced Part shall thereupon
vest in Lessee (or, if a Sublease is then in effect, any Sublessee), free and
clear of all rights of Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in paragraph (a) of this Section 8 may be subjected by
Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part
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<PAGE> 35
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) and by causing title to such further
replacement Part to vest in Lessor in accordance with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its
own expense, will make (or cause to be made) such alterations and modifications
in and additions to the Airframe and Engines as may be required from time to
time to meet the applicable standards of the FAA or any applicable regulatory
agency or body of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not adversely
affect Lessor, the Owner Participant, or, so long as any Secured Certificates
are outstanding, the Indenture Trustee. In addition, Lessee (or any Sublessee),
at its own expense, may from time to time add further parts or accessories and
make such alterations and modifications in and additions to the Airframe or any
Engine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee (or
any Sublessee) has determined in its reasonable judgment to be obsolete or no
longer suitable or appropriate for use on the Airframe or such Engine (such
parts, "OBSOLETE PARTS"); provided that no such alteration, modification or
addition shall diminish the value, utility or remaining useful life of the
Airframe or such Engine, or materially impair the condition or airworthiness
thereof, below the value, utility, remaining useful life, condition or
airworthiness thereof immediately prior to such alteration, modification or
addition, assuming the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Lease, except that the value (but
not the utility or remaining useful life) of the Airframe or any Engine may be
reduced by the value of Obsolete Parts which shall have been removed so long as
the aggregate original cost of all Obsolete Parts which shall have been removed
and not replaced shall not exceed $500,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (the "ADDITIONAL PARTS") shall,
without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such Additional Part (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or substitution for, any such
Part, (ii) is not required to be incorporated or installed in or attached or
added to the Airframe or
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<PAGE> 36
any Engine pursuant to the terms of Section 7 hereof or the first sentence of
this paragraph (c) and (iii) can be removed from the Airframe or such Engine
without diminishing or impairing the value, utility, remaining useful life,
condition or airworthiness which the Airframe or such Engine would have had at
the time of removal had such alteration, modification or addition not occurred,
assuming that such Airframe or Engine was in the condition and repair required
to be maintained by the terms hereof. Upon the removal by Lessee (or Sublessee)
of any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed. Any Part not
removed by Lessee (or any Sublessee) as above provided prior to the return of
the Airframe or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this
Lease on any Lease Period Date occurring on or after January 2, 2003 if Lessee
shall have made the good faith determination, which shall be evidenced by a
resolution duly adopted by its Board of Directors (or the Executive Committee
thereof), that the Aircraft is obsolete or surplus to its needs.
(3) Lessee shall give to Lessor at least one hundred twenty
(120) days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) that Lessee has determined that the Aircraft is obsolete or surplus to its
needs. Any Termination Notice shall become irrevocable fifteen (15) days prior
to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee
shall have exercised its right to terminate this Lease under Section 9(a)(2),
then during the period from the giving of the notice referred to in Section
9(a)(3) until the proposed Termination Date (unless Lessee shall have revoked
the Termination Notice specifying such proposed Termination Date), Lessee, as
agent for Lessor and at no expense to Lessor, shall use its best efforts to
obtain bids in Dollars in the worldwide market for the purchase of the Aircraft
and, in the event it receives any bid, Lessee shall, within five Business Days
after receipt thereof and at least ten Business Days prior to the proposed
Termination Date, certify to Lessor in writing the amount and terms of such bid,
and the name and address of the party or parties (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an
arrangement or understanding regarding the future use, lease or ownership of the
Aircraft by Lessee or any such Affiliate but who may be the Owner Participant,
any Affiliate thereof or any Person contacted by the Owner Participant)
submitting such bid. After Lessee shall have certified to Lessor all bids
received, the Owner Participant, any Affiliate thereof or any Person contacted
by the Owner Participant may submit a further
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bid or bids to Lessee not later than five Business Days prior to the Termination
Date proposed by Lessee (unless Lessee shall have revoked the Termination Notice
specifying such proposed Termination Date). Subject to the next succeeding
sentence, on or before the Termination Date, subject to the release of all
mortgage and security interests with respect to the Aircraft under the Trust
Indenture: (1) Lessee shall deliver the Aircraft, or cause the Aircraft to be
delivered, to the bidder(s), if any, which shall have submitted the highest cash
bid therefor (net of any brokerage commissions) at least ten (or, in the case of
the Owner Participant, any Affiliate thereof, or Person contacted by the Owner
Participant, five) Business Days prior to such Termination Date, in the same
manner and in the same condition and otherwise in accordance with all the terms
of this Lease as if delivery were made to Lessor pursuant to Section 5, and
shall duly transfer to Lessor title to any engines not owned by Lessor all in
accordance with the terms of Section 5, (2) Lessor shall comply with the terms
of the Trust Indenture and shall, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), subject to prior
or concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total sales price realized at such
sale to be retained by Lessor, and (3) Lessee shall simultaneously pay or cause
to be paid to Lessor in funds of the type specified in Section 3(f) hereof, an
amount equal to the sum of (A) the excess, if any, of (i) the Termination Value
for the Aircraft, computed as of the Termination Date, over (ii) the sale price
of the Aircraft sold by Lessor after deducting the reasonable expenses incurred
by Lessor, the Owner Participant or the Indenture Trustee in connection with
such sale, (B) all unpaid Basic Rent with respect to the Aircraft due prior to
such Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect to
the Aircraft, and (C) on behalf of Lessor, the premium and Funding Loss Amount,
if any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor shall
give to Lessee written notice of such election at least five Business Days prior
to the Termination Date accompanied by an irrevocable undertaking by the Owner
Participant to make available to the Lessor for payment to the Indenture Trustee
on the Termination Date the amount required to pay in full the unpaid principal
amount of the Secured Certificates outstanding on the Termination Date plus
interest accrued thereon through the Termination Date. Upon receipt of notice of
such an election by Lessor and the accompanying undertaking by the Owner
Participant, Lessee shall cease its efforts to obtain bids as provided above and
shall reject all bids theretofore or thereafter received. On the Termination
Date, Lessor shall (subject to the payment by Lessee of all Rent due on or prior
to such date as set forth below) pay in full the unpaid principal amount of the
Secured Certificates outstanding on the Termination Date plus interest accrued
thereon through the Termination Date together with all premium and Funding Loss
Amount, if any, due on the Secured Certificates and, so long as
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the Secured Certificates are paid as aforesaid, Lessee shall deliver the
Airframe and Engines or engines to Lessor in accordance with Section 5 and shall
pay all Basic Rent due prior to the Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all Supplemental Rent (other than Termination Value) due
on or prior to the Termination Date. If no sale shall have occurred on the
Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, if Lessee revokes
its Termination Notice or, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the
effect that payment by Lessee of the amount specified in clause (3)(A) above in
connection with a termination where Lessor has not elected to retain title will
not constitute a preference under applicable U.S. bankruptcy laws, a Default or
an Event of Default of the type referred to in Section 14(e) hereof shall exist
on such Termination Date (unless, in the case of any such Default or Event of
Default, Lessee has obtained an order from the applicable bankruptcy court
approving the payment of any such amount), this Lease shall continue in full
force and effect as to the Aircraft, Lessee shall pay the reasonable costs and
expenses incurred by the Owner Participant, the Indenture Trustee and Lessor
(unless such failure to terminate the Lease is a consequence of the failure of
Lessor or the Owner Participant without due cause to make, or cause to be made,
the payment referred to in the immediately preceding sentence, in which case
Lessee shall pay only the reasonable costs and expenses of the Indenture
Trustee), if any, in connection with preparation for such sale and Lessee may
give one or more additional Termination Notices in accordance with Section
9(a)(2), subject to the last sentence of this Section 9(c). In the event of any
such sale or such retention of the Aircraft by Lessor and upon compliance by
Lessee with the provisions of this paragraph, Basic Rent or any other amounts
hereunder arising subsequent to such date of sale or retention shall cease to
accrue, Lessee shall have no further obligation in this respect and this Lease
shall terminate. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise take any action
in connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft,
against receipt of the payments provided herein. Lessee may revoke a Termination
Notice given pursuant to Section 9(a)(2) no more than two times during the Term
and a Termination Notice may be given not more than once during any 365-day
period.
If (x) there is a sale of the Aircraft pursuant to this
Section 9(c), (y) an Event of Default of the type described in Section 14(c)
relating to Section 7(a) or Section 8 shall have occurred and be continuing on
the date of such sale and (z) the fair market sales value of the Aircraft on the
date of such sale is lower than it would have been had no such Event of Default
occurred, Lessee shall pay to Lessor, in addition to any other amounts due
hereunder, the amount in excess of Termination Value that Lessor would have
received had no such Event of Default occurred. Lessor and Lessee shall confer
in good faith with a view to reaching agreement on what the fair market sales
value of the Aircraft would have been in the absence of such Event of Default.
If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or
the Owner Participant of the occurrence of such Event of Default, the question
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shall be determined by an appraisal in accordance with the procedures described
in Section 19(c).
(d) Termination as to Engines. So long as no Event of Default
shall have occurred and be continuing, Lessee shall have the right at its option
at any time during the Term, on at least thirty (30) days' prior written notice,
to terminate this Lease with respect to any Engine. In such event, and prior to
the date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and Lessor shall transfer such
right, title and interest as it may have to the replaced Engine as provided in
Section 5(b). No termination of this Lease with respect to any Engine as
contemplated by this Section 9(d) shall result in any reduction of Interim Rent
or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of
Loss with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen
(15) days after such occurrence) give Lessor written notice of such Event of
Loss, and within forty-five (45) days after such Event of Loss Lessee shall
give Lessor written notice of its election to perform one of the following
options (it being agreed that if Lessee shall not have given such notice of
election within such period, Lessee shall be deemed to have elected the option
set forth in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in
which event not later than the earlier of (x) the Business Day
next succeeding the 120th day following the occurrence of such
Event of Loss or (y) the third Business Day following the
receipt of insurance proceeds in respect of such occurrence
(but not earlier than thirty (30) days after such occurrence)
(the "LOSS PAYMENT DATE") Lessee shall pay or cause to be paid
to Lessor in funds of the type specified in Section 3(f)
hereof, an amount equal to the Stipulated Loss Value of the
Aircraft corresponding to the Stipulated Loss Value Date
occurring on or immediately following the Loss Payment Date;
provided, however, that if the Commencement Date or a Lease
Period Date shall occur prior to the Loss Payment Date with
respect to which Stipulated Loss Value is determined, Lessee
shall pay on such Lease Period Date an amount equal to the
Interim Rent or Basic Rent that would have been due on the
Commencement Date or such Lease Period Date as if such Event
of Loss had not occurred, or
(ii) so long as no Default of the type referred to in
Section 14(a) or 14(e) or Event of Default shall have occurred
and be continuing, substitute an aircraft or an airframe or an
airframe and one or more engines, as the case may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee
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shall pay or cause to be paid to Lessor on the Business Day next succeeding the
120th day following the occurrence of such Event of Loss the amount specified in
clause (i) above.
At such time as Lessor shall have received the amounts
specified in subparagraph (i) above, together with all other amounts that then
may be due hereunder (including, without limitation, all Basic Rent due before
the date of such payment, and, if Basic Rent is payable in arrears on the date
of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment
date, and all Supplemental Rent), under the Participation Agreement and under
the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss
Value, Termination Value or any other amount due hereunder shall cease to
accrue, and Lessee shall have no further obligation in any such respect,
provided, that the obligations of Lessee under the other Operative Documents
which, by their express terms, are stated to survive shall not be terminated,
(2) this Lease shall terminate, (3) Lessor will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest in and to the
Airframe and any Engines subject to such Event of Loss, as well as any Engines
not subject to such Event of Loss, and furnish to or at the direction of Lessee
a bill of sale in form and substance reasonably satisfactory to Lessee (or any
Sublessee), evidencing such transfer, and (4) Lessee will be subrogated to all
claims of Lessor, if any, against third parties, for damage to or loss of the
Airframe and any Engines which were subject to such Event of Loss to the extent
of the then insured value of the Aircraft. Notwithstanding anything to the
contrary contained in the foregoing, in the event that any payment of Stipulated
Loss Value is to be made pursuant to this Section 10(a) on a date that is
subsequent to the scheduled expiration of the Term, then Lessee shall, in
addition to any other amounts payable pursuant to this Section 10(a), pay on the
relevant Loss Payment Date such additional amount as is necessary to preserve
the Owner Participant's Net Economic Return. Any calculation of any such
additional amount shall be made by the Owner Participant and shall be subject to
the verification procedures set forth in Exhibit E hereto.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or an
airframe or an airframe and one or more engines which, together with the Engines
constituting a part of the Aircraft but not installed thereon at the time of
such Event of Loss constitute the Aircraft) free and clear of all Liens (other
than Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Aircraft subject to such Event of Loss (Lessee shall in
connection therewith provide the certificate or the appraisal described in
Section 5.06(4) of the Trust Indenture) assuming that the Aircraft had been
maintained in accordance with this Lease; provided that any aircraft, airframe
or engine so substituted hereunder shall be of the same or improved model as
those initially leased hereunder and any airframe so substituted hereunder shall
have a year of manufacture after December 31, 1994 and (B) prior to or at the
time of any such substitution, Lessee (or any Sublessee), at its own expense,
will (1) furnish Lessor with a full warranty bill of sale and a
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Federal Aviation Administration bill of sale, in form and substance reasonably
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to Lessee
(or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion
of counsel (which shall be Cadwalader, Wickersham & Taft and, if not, other
counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the substitute aircraft, provided that such
opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, (7)(x) furnish Lessor with an opinion of tax counsel
chosen by the Owner Participant and reasonably acceptable to Lessee to the
effect that such substitution will not result in any adverse tax consequences to
the Owner Participant or (y) indemnify the Owner Participant as to such tax
consequences in a manner reasonably satisfactory in form and substance, which
may include consideration of the creditworthiness of Lessee, to the Owner
Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee
remains in full force and effect, the Guarantor) has outstanding publicly issued
or privately placed unsecured indebtedness (excluding any short-term commercial
paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long
as the rating by the other agency is not less than "BBB" or "Baa2", as the case
may be, or (b) Lessee provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and substance to Lessor, the
amount of which is sufficient (as determined by the Owner Participant in its
reasonable judgment) to cover any anticipated adverse tax consequences for which
the Owner Participant has been indemnified by Lessee under the Operative
Documents in addition to any additional adverse tax consequences resulting from
such substitution or (c) the anticipated indemnified amount (as determined by
the Owner Participant in its reasonable judgment) is less than $50,000, then, in
determining whether the indemnity to be provided by Lessee is satisfactory in
form and substance to the
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Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee, and (8) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe or
the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60) days
after the occurrence of such Event of Loss, convey or cause to be conveyed to
Lessor, as replacement for the Engine with respect to which such Event of Loss
occurred, title to another Pratt & Whitney Model PW2037 engine (or engine of the
same or another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft, and Lessee shall in connection
therewith provide the certificate or appraisal described in Section
5.06(2)(B)(iv) of the Trust Indenture; provided that both Engines shall be of
the same make and model) free and clear of all Liens (other than Permitted
Liens, which engine may upon its transfer to Lessor become subject to any and
all Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Engine subject to such Event of Loss assuming that such
Engine had been maintained in accordance with this Lease. Prior to or at the
time of any such conveyance, Lessee, at its own expense, will (i) furnish Lessor
with a warranty (as to title) bill of sale, in form and substance reasonably
satisfactory to Lessor, with respect to such replacement engine, (ii) cause a
Lease Supplement and Trust Supplement to be duly executed by Lessee and to be
filed for recording pursuant to the Federal Aviation Act, or the applicable
laws, rules and regulations of any other jurisdiction in which the Airframe may
then be registered as permitted by Section 8(f) of the Participation Agreement,
(iii) furnish Lessor with such evidence of compliance with the insurance
provisions of Section 11 hereof with respect to such replacement engine as
Lessor may reasonably request and furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor will comply with the terms of the Trust Indenture
and transfer to or at the direction of Lessee without recourse or warranty
(except as to absence of Lessor Liens, including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens) all
of Lessor's right, title and interest, if any, in and to (A) the Engine with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee, evidencing such transfer and (B) all claims, if any, against third
parties, for damage to or loss of the Engine subject to such Event of Loss, and
such Engine shall thereupon cease to be the Engine leased hereunder. For all
purposes hereof, each such replacement engine shall, after such conveyance, be
deemed part of the property leased hereunder, and shall be deemed an
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"ENGINE". No Event of Loss with respect to an Engine under the circumstances
contemplated by the terms of this paragraph (b) shall result in any reduction in
Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement)
and the Owner Participant for reasonable costs and expenses,
so much of such payments remaining as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a), shall be applied in reduction of Lessee's
obligation to pay Stipulated Loss Value, if not already paid
by Lessee, or, if already paid by Lessee, shall be applied to
reimburse Lessee for its payment of Stipulated Loss Value, and
following the foregoing application, the balance, if any, of
such payments will be paid to Lessor and Lessee, as their
interests may appear; provided that Lessee shall have fully
performed or, concurrently therewith, will fully perform the
terms of the last paragraph of Section 10(a) with respect to
the Event of Loss for which such payments are made; and
(ii) if such payments are received with respect to an
Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after reimbursement
of Lessor (as provided for in Section 7.01 of the Trust
Agreement) and the Owner Participant for reasonable costs and
expenses shall be paid over to, or retained by, Lessee,
provided that Lessee shall have fully performed, or
concurrently therewith will perform, the terms of Section
10(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft which is a Specified
Country. In the event of the requisition for use of the Airframe and the
Engines or engines installed on the Airframe during the Term by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any instrumentality or agency of any thereof whose
obligations are backed by the full faith and credit of such government, Lessee
shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government, instrumentality or agency, as the case may be, prior to the
end of the Term, Lessee shall be obligated to return the Airframe and such
Engines or engines to Lessor
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pursuant to, and in all other respects in compliance with the provisions of,
Section 5 promptly on the date of such return by such government,
instrumentality or agency. If, in the event of any such requisition, Lessee
shall fail to return the Aircraft on or before the thirtieth day beyond the end
of the Term, such failure shall constitute an Event of Loss which shall be
deemed to have occurred on the last day of the Term and in such event Lessee
shall make the payment contemplated by Section 10(a)(i) in respect of such Event
of Loss; provided, however, that Lessor may notify Lessee in writing on or
before the twentieth day prior to the last day of the Term that, in the event
Lessee shall fail by reason of such requisition to return the Airframe and such
Engines or engines on or before the thirtieth day beyond the end of the Term,
such failure shall not be deemed an Event of Loss. Upon the giving of such
notice and such failure to return by the thirtieth day beyond the end of the
Term, Lessee shall be relieved of all of its obligations pursuant to the
provisions of Section 5 (including Exhibit F) but not under any other Section,
except that if any engine not owned by Lessor shall then be installed on the
Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be furnished,
to Lessor a full warranty (as to title) bill of sale with respect to each such
engine, in form and substance reasonably satisfactory to Lessor (together with
an opinion of counsel to the effect that such full warranty bill of sale has
been duly authorized and delivered and is enforceable in accordance with its
terms and that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), against receipt from Lessor of a bill of
sale evidencing the transfer, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), by Lessor to
Lessee or its designee of all of Lessor's right, title and interest in and to
any Engine constituting part of the Aircraft but not then installed on the
Airframe. All payments received by Lessor or Lessee from such government for the
use of such Airframe and Engines or engines during the Term shall be paid over
to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and all
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines after the end of the Term shall be paid over to,
or retained by, Lessor unless Lessee shall have exercised its purchase option
hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft which is a Specified
Country. In the event of the requisition for use of an Engine by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any agency or instrumentality of any thereof whose
obligations are backed by the full faith and credit of such government (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with
the terms of Section 10(b) to the same extent as if an Event of Loss had
occurred with respect thereto, and, upon compliance with Section 10(b) hereof,
any payments received by Lessor or Lessee from such government with respect to
such requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any
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Sublessee) shall not be paid to or retained by Lessee (or such Sublessee) if at
the time of such payment or retention, an Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or such Sublessee) under this Lease and, if Lessor
declares this Lease to be in default pursuant to Section 15 hereof, applied
against Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Default, such amount shall
be paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property
Damage Insurance. (I) Except as provided in clause (II) of this Section 11(a),
Lessee will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by Lessee (or any Sublessee) with respect to
other aircraft owned or leased, and operated by Lessee (or such Sublessee) on
the same routes) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an
amount not less than the greater of (x) the amount of public liability and
property damage insurance from time to time applicable to aircraft owned or
operated by Lessee of the same type as the Aircraft and (y) such amount per
occurrence as may have been agreed to on the Delivery Date by the Owner
Participant and (ii) cargo liability insurance, in the case of both clause (i)
and clause (ii), (A) of the type and covering the same risks as from time to
time applicable to aircraft operated by Lessee of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name Lessor, in its individual capacity
and as owner trustee, the Indenture Trustee and the Owner Participant (but
without imposing on any such parties liability to pay the premiums for such
insurance) (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds as their respective
interests may appear, (B) shall provide that in respect of the respective
interests of Lessor, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if any Sublease is then in effect, any Sublessee) or
any other Person and shall insure Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee (or, if
any Sublease is then in effect, any Sublessee), (C) may provide for
self-insurance to the extent permitted by Section 11(d) and (D) shall provide
that if the insurers cancel such insurance for any reason whatever or if any
material change is made in such insurance which adversely affects the interest
of Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), or
such insurance shall lapse for non-payment of premium, such cancellation, lapse
or change shall not be effective as to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) for thirty (30) days (seven (7) days
in the case of war risk and allied perils coverage) after
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issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (2) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, and (3) shall
waive any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
Lessor or the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) to
the extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and
not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I)
Except as provided in clause (II) of this Section 11(b), Lessee shall maintain
or cause to be maintained in effect, at its or any Sublessee's expense, with
insurers of recognized responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk ground and flight coverage of
Engines and Parts while temporarily removed from the Aircraft and not replaced
by similar components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, any Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned by Lessee of the same type as the Aircraft;
provided that such insurance shall at all times while the Aircraft is subject to
this Lease be for an amount (subject to self-insurance to the extent permitted
by Section 11(d)) not less than the Stipulated Loss Value for the Aircraft. Any
policies carried in accordance with this paragraph (b) covering the Aircraft and
any policies taken out in substitution or replacement for any such policies (i)
shall name Lessor, as owner trustee, the Indenture
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Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds,
as their respective interests may appear (but without imposing on any such party
liability to pay premiums with respect to such insurance), (ii) may provide for
self-insurance to the extent permitted in Section 11(d), (iii) shall provide
that (A) in the event of a loss involving proceeds in excess of $3,500,000 (or,
if the Aircraft is then under a Sublease, in excess of $2,000,000), the proceeds
in respect of such loss up to an amount equal to the Stipulated Loss Value for
the Aircraft shall be payable to Lessor (or, so long as the Trust Indenture
shall not have been discharged, the Indenture Trustee) (except in the case of a
loss with respect to an Engine installed on an airframe other than the Airframe,
in which case Lessee (or any Sublessee) shall arrange for any payment of
insurance proceeds in respect of such loss to be held for the account of Lessor
(or, so long as the Trust Indenture shall not have been discharged, the
Indenture Trustee) whether such payment is made to Lessee (or any Sublessee) or
any third party), it being understood and agreed that in the case of any payment
to Lessor (or the Indenture Trustee) otherwise than in respect of an Event of
Loss, Lessor (or the Indenture Trustee) shall, upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have been
repaired or that such payment shall then be required to pay for repairs then
being made, pay the amount of such payment to Lessee or its order, and (B) the
entire amount of any loss involving proceeds of $3,500,000 (or, if the Aircraft
is then under a Sublease, of $2,000,000) or less or the amount of any proceeds
of any loss in excess of the Stipulated Loss Value for the Aircraft shall be
paid to Lessee or its order unless an Event of Default or a Default of the type
referred to in Section 14(a) or 14(e) shall have occurred and be continuing and
the insurers have been notified thereof by Lessor or the Indenture Trustee, (iv)
shall provide that if the insurers cancel such insurance for any reason
whatever, or such insurance lapses for non-payment of premium or if any material
change is made in the insurance which adversely affects the interest of Lessor,
the Indenture Trustee or the Owner Participant, such cancellation, lapse or
change shall not be effective as to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) for thirty (30) days (seven (7) days in the case
of hull war risk and allied perils coverage) after issuance to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), respectively,
of written notice by such insurers of such cancellation, lapse or change,
provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable, (v) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if a Sublease is then in effect, any
Sublessee) or any other Person and shall insure the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), as
they appear, regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee), (vi) shall be primary without any right of contribution
from any other insurance which is carried by Lessor, the Owner Participant or
the Indenture Trustee (or, if
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any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), and
(viii) shall waive any right of the insurers to set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee or
the Owner Participant. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Lessor shall hold any payment to it
of any insurance proceeds in respect of such loss for the account of Lessee or
any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed thereon),
(i) unless such property is replaced pursuant to the last
paragraph of Section 10(a), so much of such payments
remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) and the Owner Participant
for reasonable costs and expenses, as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a) hereof shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if not
already paid by Lessee, or, if already paid by Lessee, shall
be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such
payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee);
or (ii) if such property is replaced pursuant to the last
paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), provided that Lessee shall have fully performed
or, concurrently therewith, will fully perform the terms of
the last paragraph of Section 10(a) with respect to the Event
of Loss for which such payments are made; and
(y) if such payments are received with respect to an
Engine under the circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) and the Owner Participant for reasonable
costs and expenses, shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided
that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any
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<PAGE> 49
balance (or if already paid for by Lessee (or any Sublessee), all such insurance
proceeds) remaining after compliance with such Sections with respect to such
loss shall be paid to Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and
not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type of
insurance shall be the same as from time to time applicable to aircraft owned by
Lessee of the same type similarly on the ground and not in operation, provided
that Lessee shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft during
such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants or
the Owner Participant to anyone except (A) to permitted transferees of Lessor's,
the Loan Participants', the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to Lessor's, the
Loan Participants', the Owner Participant's or the Indenture Trustee's counsel
or independent certified public accountants or independent insurance advisors
who agree to hold such information confidential or (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation. Lessee will cause such Insurance Brokers to agree to advise Lessor,
the Indenture Trustee and the Owner Participant in writing of any default in the
payment of any premium and of any other act or omission on the part of Lessee of
which it has knowledge and which might invalidate or render unenforceable, in
whole or in part, any insurance on the Aircraft. To the extent such agreement is
reasonably obtainable, Lessee will also cause such Insurance Brokers to agree to
advise Lessor, the Indenture Trustee and the Owner Participant in writing at
least thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage), prior to the expiration or termination date of any insurance carried
and maintained on the Aircraft pursuant to this Section 11. In addition, Lessee
will also cause such Insurance Brokers to deliver to Lessor, the Indenture
Trustee and the Owner Participant, on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form as delivered by
Lessee to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or the
Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or the
Indenture Trustee, as the case may be, without waiver of
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any other rights Lessor or the Indenture Trustee may have; provided, however,
that no exercise by Lessor or the Indenture Trustee, as the case may be, of said
option shall affect the provisions of this Lease, including the provisions of
Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to this
Section 11 under a program applicable to all aircraft in Lessee's fleet, but in
no case shall the aggregate amount of self-insurance in regard to Section 11(a)
and Section 11(b) exceed during any policy year, with respect to all of the
aircraft in Lessee's fleet (including, without limitation, the Aircraft), the
lesser of (a) 50% of the largest replacement value of any single aircraft in
Lessee's fleet or (b) 1-1/2% of the average aggregate insurable value (during
the preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written consent
of Lessor, other government of registry of the Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee (or any Sublessee)
with respect to the Aircraft (including permitted self-insurance) shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default or a Default of the type referred to in Section
14(a) or 14(e) shall have occurred and be continuing, but shall be held by or
paid over to Lessor as security for the obligations of Lessee (or any Sublessee)
under this Lease and, if Lessor declares this Lease to be in default pursuant to
Section 15 hereof, applied against Lessee's obligations hereunder as and when
due. At such time as there shall not be continuing
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any such Event of Default or Default, such amount shall be paid to Lessee (or
such Sublessee) to the extent not previously applied in accordance with the
preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, and upon at
least 15 days' prior written notice to Lessee, Lessor, the Owner Participant or
the Indenture Trustee or their respective authorized representatives may (not
more than once every calendar year (unless an Event of Default has occurred and
is continuing when such inspection right shall not be so limited)) inspect the
Aircraft and inspect and make copies (at Lessor's, the Owner Participant's or
the Indenture Trustee's expense, as the case may be unless an Event of Default
shall have occurred and be continuing) of the books and records of Lessee
relating to the maintenance of the Aircraft; any such inspection of the Aircraft
shall be limited to a visual, walk-around inspection and shall not include
opening any panels, bays or the like without the express consent of Lessee;
provided that no exercise of such inspection right shall interfere with the
operation or maintenance of the Aircraft by, or the business of, Lessee (or any
Sublessee). Upon receipt by Lessee of a written request from the Owner
Participant specifying that the Owner Participant desires to have an authorized
representative observe the next scheduled major overhaul to be performed on the
Aircraft, Lessee shall cooperate with the Owner Participant to enable the Owner
Participant's authorized representative to observe the next scheduled major
overhaul to be performed on the Aircraft; provided that Lessee shall be required
to so cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe one scheduled major overhaul during each
three-year period of the Term; provided that the Owner Participant's authorized
representative shall merely observe such major overhaul, shall not interfere
with or extend in any manner the conduct or duration of the major overhaul and
shall not be entitled to direct any of the work performed in connection with
such overhaul. None of Lessor, the Owner Participant or the Indenture Trustee
shall have any duty to make any such inspection nor shall any of them incur any
liability or obligation by reason of not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein,
Lessee will not, without prior written consent of Lessor, assign in whole or in
part any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
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(a) Lessee shall not have made a payment of Interim
Rent, Basic Rent or Stipulated Loss Value within ten (10) days
after the same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for
ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax
Indemnity Agreement or any failure of Lessee to pay to Lessor
or the Owner Participant when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(c) Lessee shall have failed to perform or observe (or
caused to be performed and observed) in any material respect
any covenant or agreement (except the covenants set forth in
the Tax Indemnity Agreement and in clauses (i)(B) and (ii) of
the first sentence of second paragraph of Exhibit F) to be
performed or observed by it under any Operative Document, and
such failure shall continue unremedied for a period of thirty
(30) days after receipt by Lessee of written notice thereof
from Lessor or the Indenture Trustee; provided, however, that
if Lessee shall have undertaken to cure any such failure which
arises under clause (ii) or clause (iii) of the first sentence
of Section 7(a), or under the second sentence of Section 7(a)
as it relates to maintenance, service, repair or overhaul or
under Section 8 and, notwithstanding the diligence of Lessee
in attempting to cure such failure, such failure is not cured
within said thirty day period but is curable with future due
diligence, there shall exist no Event of Default under this
Section 14 so long as Lessee is proceeding with due diligence
to cure such failure and such failure is remedied not later
than one hundred eighty (180) days after receipt by Lessee of
such written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose and except the representations and warranties
in, or in connection with, the Credit Agreement) shall prove
to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the
interests of the Owner Participant, Lessor or the Certificate
Holders) within thirty (30) days after the receipt by Lessee
of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
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(e) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under
the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States or
seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of
Lessee or for all or substantially all of its property, or
seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed
and unstayed for a period of ninety (90) consecutive days or
an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing,
without the consent of Lessee, a receiver, trustee or
liquidator of Lessee, or of any substantial part of its
property, or sequestering any substantial part of the property
of Lessee and any such order, judgment or decree or
appointment or sequestration shall be final or shall remain in
force undismissed, unstayed or unvacated for a period of
ninety (90) days after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case
under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with
respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as Lessee
is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one or
more of the following with respect to all or any part of the Airframe and any or
all of the Engines as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable law then in effect; provided, however, that during any period the
Aircraft is subject to the Civil Reserve Air Fleet Program in accordance with
the provisions of Section 7(b) hereof and in possession of the United States
government or an agency or instrumentality of the United States, Lessor shall
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not, on account of any Event of Default, be entitled to do any of the following
in such manner as to limit Lessee's control under this Lease (or any Sublessee's
control under any Sublease) of any Airframe or any Engines installed thereon,
unless at least sixty (60) days' (or such lesser period, if any, as may then be
applicable under the Air Mobility Command program of the United States
Government) written notice of default hereunder shall have been given by Lessor
by registered or certified mail to Lessee (and any Sublessee) with a copy
addressed to the Contracting Office Representative for the Air Mobility Command
of the United States Air Force under any contract with Lessee (or any Sublessee)
relating to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's
expense, cause Lessee to return promptly, and Lessee shall
return promptly, the Airframe or any Engine as Lessor may so
demand to Lessor or its order in the manner and condition
required by, and otherwise in accordance with all the
provisions of, Section 5 as if such Airframe or Engine were
being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of
the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or
otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all
without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public or
private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Stipulated
Loss Value Date not earlier than ten days from the date of
such notice, may demand that the Lessee pay to Lessor, and
Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Interim Rent or Basic Rent for
the Aircraft due on or after the payment date specified in
such notice), any unpaid Interim Rent or Basic Rent due on the
payment date so specified (unless Basic Rent is payable in
advance on such date but including, without limitation, any
adjustments to Basic Rent payable pursuant to Section 3(d)),
plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from
such specified payment date until the date of actual payment
of such amount): (i) an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
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such notice, over the aggregate fair market rental value
(computed as hereafter in this Section 15 provided) of such
Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the
Stipulated Loss Value Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 3%;
or (ii) an amount equal to the excess, if any, of the
Stipulated Loss Value for such Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
such notice over the fair market sales value of such Aircraft
(computed as hereafter in this Section provided) as of the
Stipulated Loss Value Date specified as the payment date in
such notice;
(d) in the event Lessor, pursuant to paragraph (b)
above, shall have sold the Airframe and/or any Engine, Lessor,
in lieu of exercising its rights under paragraph (c) above
with respect to such Aircraft, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor,
on the date of such sale, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the installments of
Interim Rent or Basic Rent for the Aircraft due on or after
such date), any unpaid Interim Rent or Basic Rent with respect
to the Aircraft due prior to such date (including, without
limitation, any adjustments to Basic Rent payable pursuant to
Section 3(d)) plus the amount of any deficiency between the
net proceeds of such sale (after deduction of all reasonable
costs of sale) and the Stipulated Loss Value of such Aircraft,
computed as of the Stipulated Loss Value Date on or
immediately following the date of such sale together with
interest, if any, on the amount of such deficiency, at the
Past Due Rate, from the date of such sale to the date of
actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to the
Aircraft, and/or may exercise any other right or remedy which
may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller in possession under no compulsion
to sell, as the case may be, in each case based upon the actual condition and
location of the Aircraft and an all cash, contemporaneous sale, which value
shall be determined by mutual agreement or, in the absence of mutual written
agreement, pursuant to an appraisal prepared and delivered by a nationally
recognized firm of independent aircraft appraisers nominated by Lessor, and
Lessor shall immediately notify Lessee of such nomination. Unless Lessee shall
have objected in writing within ten days after its receipt of Lessor's notice,
Lessor's nomination shall be conclusive and binding. If Lessee shall object,
however, Lessor and Lessee shall endeavor, within ten days after such objection
is made, to
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select a mutually acceptable appraiser; provided that, if Lessee shall not so
endeavor to make such selection, Lessor's nomination referred to in the
preceding sentence hereof shall be conclusive and binding. If Lessor and Lessee
fail to reach agreement (except for the reason referred to in the proviso in the
preceding sentence), or if any appraiser selected fails to act for any reason,
then the question shall be determined by an appraisal (applying the definitions
of "fair market rental value" and "fair market sales value" as set forth above
based upon the actual condition of the Aircraft) mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the City
of New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business Days after
the appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. The cost of such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any and
all unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) or Lessee may bid for and purchase such property. Lessor will
endeavor to give Lessee at least fifteen (15) days' prior written notice of the
date fixed for any public sale of the Airframe or any Engine and any such public
sale shall be conducted in general so as to afford Lessee (and any Sublessee) a
commercially reasonable opportunity to bid (it being understood that Lessor
shall
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incur no liability for its failure to provide any such notice). Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Lessor
of any or all of such other remedies. No waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or amendment to be duly
filed and recorded, and maintained of record, in accordance with the applicable
laws of the government of registry of the Aircraft. In addition, Lessee will at
its expense promptly and duly execute and deliver to Lessor such further
documents and take such further action as Lessor or the Indenture Trustee may
from time to time reasonably request in order more effectively to carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor and the Indenture
Trustee hereunder, including, without limitation, if requested by Lessor or the
Indenture Trustee, at the expense of Lessee, the execution and delivery of
supplements or amendments hereto or to the Trust Indenture, each in recordable
form, subjecting to this Lease and the Trust Indenture, any airframe or engine
substituted for the Airframe or any Engine pursuant to the terms thereof and the
recording or filing of counterparts thereof, in accordance with the laws of such
jurisdictions as Lessor or the Indenture Trustee may from time to time deem
advisable. Lessee agrees to furnish to Lessor and the Indenture Trustee promptly
after execution and delivery of any supplement and amendment hereto and promptly
after the execution and delivery of any supplement and amendment to the Trust
Indenture (except for any such supplement or amendment which does not require or
receive the approval of Lessee pursuant to the Operative Documents and is not
required pursuant to the terms of the Operative Documents), an opinion of
counsel reasonably satisfactory to Lessor and the Indenture Trustee as to the
due recording or filing of such supplement or amendment. Commencing in 1997, on
or before April 30 of each year during the Term, Lessee will deliver to Lessor
and the Indenture Trustee a certificate of Lessee, signed by the President, a
Vice President or the Chief Financial Officer of Lessee to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and the
signer does not have actual knowledge of the existence, as of the date of such
certificate, of any condition or event which constitutes a Default or an Event
of Default. Lessee agrees that if the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer of Lessee
has actual knowledge of the existence of a Default, then Lessee shall promptly
give to Lessor, the Owner Participant and the Indenture Trustee notice thereof
and such other information relating thereto as Lessor, the Owner Participant or
the Indenture Trustee may reasonably request. Lessee agrees that if an officer
of Lessee has knowledge of the existence of an Event of
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Default, Lessee shall promptly give to Lessor and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor or the Indenture
Trustee may reasonably request. Lessee will deliver to Lessor, the Owner
Participant and the Indenture Trustee (i) within sixty (60) days after the end
of each of the first three quarterly periods of each fiscal year of the
Guarantor, the publicly filed Form 10-Q report of the Guarantor; and (ii) within
one hundred twenty (120) days after the close of such fiscal year, the publicly
filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight
courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota
55121, Attention: Senior Vice President-Finance and Treasurer
(Telecopy No. (612) 726-0665), or to such other address or
telecopy number as Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address or
telecopy number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee
or the Owner Participant, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at such address
or telecopy number as such Loan Participant, the Indenture
Trustee or the Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until an address is so
furnished, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at its address or telecopy
number set forth in Schedule I to the Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is a net
lease. All Rent shall be paid by Lessee to Lessor in funds of the type specified
in Section 3(f). Except as provided in Section 3(g) hereof, Lessee's obligation
to pay all Rent payable hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which Lessee may have
against Lessor, in its individual capacity or as Owner Trustee under the Trust
Agreement, the Indenture Trustee (in its individual capacity or as Indenture
Trustee), any Loan Participant, the Owner Participant, or anyone else for any
reason whatsoever (whether in connection with the transactions contemplated
hereby or any other transactions), including, without limitation, any breach by
Lessor or the Owner Participant of their respective warranties, agreements or
covenants contained in any of the Operative Documents,
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(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in or prohibition of the use or
possession thereof by Lessee (or any Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation or prohibition
resulting from the act of any government authority, (iii) any insolvency,
bankruptcy, reorganization or similar case or proceedings by or against Lessee
(or any Sublessee) or any other person, or (iv) any other circumstance,
happening, or event whatsoever, whether or not unforeseen or similar to any of
the foregoing. 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 without limitation of the other
rights or remedies of Lessor hereunder, subject to the rights of Lessee to
setoff under Section 3(g) hereof, to pay to Lessor an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Lease not been terminated in whole or in part.
Lessee hereby waives, to the extent permitted by applicable law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Lease except in accordance with the express terms hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION (a)
Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
renew this Lease for up to three consecutive one year renewal terms the first of
which shall commence only upon the expiration of the Basic Term (any such
renewal term, a "FIXED RENEWAL TERM"). Basic Rent during any Fixed Renewal Term
shall be payable in an amount and at the times specified in Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the third
Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the
option, upon compliance with the notice provisions set forth in Section 19(e)
hereof, to renew this Lease for a renewal term of not less than one year and not
more than three years for a Basic Rent equal to the "fair market rental value"
of the Aircraft for such period (any such renewal term, a "FAIR MARKET RENEWAL
TERM"). The aggregate length of all Fair Market Renewal Terms pursuant to this
Section 19(a)(2) may not exceed five years.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(e) on or before the day specified therefor, Lessee shall
be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Default of the type referred to
in Section 14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all
necessary governmental authorizations and approvals shall have been received and
that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease shall
continue in full force
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and effect during the Renewal Term, except that (x) Lessee shall pay Lessor
Basic Rent for the Aircraft during the Renewal Term in an amount equal to the
"fair market rental value" thereof determined in accordance with Section 19(c),
but not to exceed in the case of a Fixed Renewal Term one-half of the average
Basic Rent during the Basic Term (such average being determined as the total of
all payments of Basic Rent during the Basic Term added together and divided by
the number of payments of Basic Rent during the Basic Term), which Basic Rent
shall be payable in semi-annual installments in arrears unless any portion of
Basic Rent during the Basic Term was payable in advance, in which case the same
proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic
Term divided into the total Basic Rent payable in advance during the Basic Term)
shall be payable in advance during such Renewal Term, each such installment
being due and payable on each Lease Period Date occurring during the Renewal
Term, commencing with the Lease Period Date immediately following the
commencement of the Renewal Term, and (y) the Stipulated Loss Values applicable
during the Renewal Term shall be determined separately for each Renewal Term by
the Owner Participant in good faith to reflect Stipulated Loss Values determined
in accordance with the following sentence. Stipulated Loss Values during a
Renewal Term shall on the date on which such Renewal Term begins be equal to the
fair market sales value of the Aircraft as of such date, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof, and shall decline ratably on a monthly basis to the fair market sales
value of the Aircraft as of the last day of such Renewal Term, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the fair market sales value of the Aircraft;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the purchase price by Lessee will not constitute a
preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled
to purchase the Aircraft if there shall exist on such last Business Day of the
Basic Term or any Renewal Term, as the case may be, a Default of the type
referred to in Section 14(e) hereof. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) Valuation. For all purposes of this Section 19, including
the appraisal referred to in this Section 19(c), in determining "fair market
rental value" or "fair market sales value", the Aircraft shall be valued (i) as
if in the condition and otherwise in compliance with
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the terms of Section 5 upon a return of the Aircraft to the United States and as
if it had been maintained at all times as required in accordance with Section
7(a)(I) during periods when no Sublease was in effect, (ii) on the basis of the
value which would obtain in an arm's-length transaction between an informed and
willing buyer-user or lessee (other than a lessee or an Affiliate of a lessee
currently in possession or a used equipment scrap dealer) under no compulsion to
buy or lease and an informed and willing seller or lessor unaffiliated with such
buyer-user or lessee and under no compulsion to sell or lease and disregarding
this Lease, including the purchase and renewal options of Lessee provided in
this Lease, and (iii) in the case of such valuation for determining "fair market
rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of a notice from Lessee pursuant to Section 19(e) hereof, Lessor and
Lessee shall confer in good faith with a view to reaching agreement on the "fair
market rental value" or "fair market sales value" of the Aircraft. If the
parties have not so agreed by two hundred seventy (270) days prior to the end of
the Basic Term or the Renewal Term in question, then the question shall be
determined by an appraisal mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) Special Purchase Option. On July 2 , 2012 (or, if July 2,
2012 is not a Business Day, the Business Day immediately succeeding July 2,
2012), Lessee shall have the
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option, upon at least ninety (90) days' irrevocable prior notice to Lessor and,
if any Secured Certificates are then outstanding, the Indenture Trustee, to
purchase the Aircraft on such date for a purchase price equal to the Special
Purchase Price; provided that, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the
effect that the payment of the Special Purchase Price by Lessee will not
constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not
be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or,
if July 2, 2012 is not a Business Day, on the Business Day immediately
succeeding July 2, 2012) a Default of the type referred to in Section 14(e)
hereof. In addition, if on such date there shall be any Secured Certificates
outstanding, Lessee shall have the option to assume, pursuant to Section 8(x) of
the Participation Agreement and Section 2.15 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture. If such assumption is made,
Lessee shall pay Lessor a purchase price equal to (I) the Special Purchase Price
minus (II) an amount equal to principal of, and accrued but unpaid interest on,
any Secured Certificates that are outstanding on such date. Upon such payment in
full and payment of any other amounts then due hereunder (including costs or
expenses of the Owner Participant in connection with such purchase, any
installments of Basic Rent due prior to such date and, if Basic Rent is payable
in arrears on such date as indicated on Exhibit B, on such date (but not any
installment of Basic Rent due on such date if Basic Rent is payable in advance
on such date), and all unpaid Supplemental Rent due on or prior to such date),
Lessor will transfer to Lessee, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), all of Lessor's
right, title and interest in and to the Aircraft and under the Trust Indenture
and, unless there shall be any Secured Certificates outstanding after such
payment, exercise such rights as it has to cause the Aircraft to be released
from the Lien of the Trust Indenture.
(e) In order to exercise any right pursuant to Sections 19(a)
or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270
days prior to the expiration of the Basic Term or any Renewal Term, as the case
may be, deliver to Lessor a notice in writing stating that it intends to
exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any
such notice shall be revocable until the date that is 270 days prior to the
expiration of the Basic Term or such Renewal Term, as the case may be. Failure
to revoke any such notice prior to such 270th day prior to the end of the Basic
Term or such Renewal Term, as the case may be, shall constitute a binding and
irrevocable election by Lessee to exercise one of the options set forth in
Sections 19(a) or 19(b) hereof. In the event that any such notice has so been
provided to Lessor, Lessee shall, no earlier than the 270th day and no later
than the 90th day prior to the expiration of the Basic Term or such Renewal
Term, as the case may be, specify which of the options in Sections 19(a) or
19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and
acknowledge that Lessee may not specify which of the options in Sections 19(a)
or 19(b) it intends to elect prior to the date that is 270 days earlier than the
expiration of the Basic Term or such Renewal Term, as the case may be.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF
SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this
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Lease, the Lease Supplements and any amendments to this Lease and to mortgage
its interest in the Aircraft in favor of the Indenture Trustee, subject to the
reservations and conditions therein set forth. To the extent, if any, that this
Lease, the Lease Supplements and any amendments to this Lease constitute 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, the Lease
Supplements and any amendments to this Lease may be created through the transfer
or possession of any counterpart other than the original counterpart, which
shall be identified as the counterpart containing the receipt therefor executed
by the Indenture Trustee on the signature page thereof. Lessee hereby accepts
and consents to the assignment of all Lessor's right, title and interest in and
to this Lease pursuant to the terms of the Trust Indenture. Subject to Section
3(f) hereof, Lessee agrees to pay directly to the Indenture Trustee (or, after
receipt by Lessee of notice from the Indenture Trustee of the discharge of the
Trust Indenture, to Lessor), all amounts of Rent due or to become due hereunder
and assigned to the Indenture Trustee and Lessee agrees that the Indenture
Trustee's right to such payments hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
the circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor as
security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of ninety (90) days or less from date of purchase
thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings as of
its last report of condition of at least $500,000,000 and having a rating of Aa
or better by Moody's or AA or better by S&P and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii) commercial
paper
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<PAGE> 64
of any holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America or
any state thereof having a rating assigned to such commercial paper of A1 by S&P
or P1 by Moody's and having a final maturity of ninety (90) days or less from
the date of purchase thereof; provided, however, that the aggregate amount at
any one time so invested in certificates of deposit issued by any one bank shall
not be in excess of 5% of such bank's capital and surplus. There shall be
promptly remitted to Lessee or its order (but no more frequently than monthly)
any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Default of the type referred to in
Section 14(a) or 14(e) or an Event of Default shall have occurred and be
continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an
Event of Default shall have occurred and be continuing, Lessor, or if the Trust
Indenture shall not have been discharged, the Indenture Trustee as assignee of
Lessor, shall hold any such gain as security for the obligations of Lessee under
this Lease and apply it against such obligations as and when due, and once all
such Defaults and Events of Default have been remedied, any gain not so applied
shall be remitted to Lessee. Lessee shall be responsible for any net loss
realized as a result of any such investment and shall reimburse Lessor (or the
Indenture Trustee, as the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by Lessor, Lessee and any assignee
of Lessor's rights hereunder. This Lease shall constitute an agreement of lease,
and nothing contained herein shall be construed as conveying to Lessee any
right, title or interest in the Aircraft except as a lessee only. Neither Lessee
nor any affiliate of Lessee will file any tax returns in a manner inconsistent
with the
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<PAGE> 65
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case
of the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event
of Default shall have occurred and be continuing and notwithstanding any default
by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations pursuant to the Overall Transaction during the Term of this Lease,
and this Lease shall not be terminated except as expressly provided herein.
SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail
to return the Aircraft in accordance with Section 5 hereof at the scheduled
expiration of the Term, then, unless such failure shall occur as a result of (x)
the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the
Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or
(y) above, Lessee shall have made all payments required to be made pursuant to
such Sections, Lessee shall pay to Lessor, for each such day beyond the
scheduled expiration of the Term during which the Aircraft is not returned to
Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A)
the daily fair market rental value of the Aircraft during such period, computed
in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent
payable by Lessee during the Term.
- -65-
<PAGE> 66
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Lessor
BY:________________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:________________________________________
Title: Senior Vice President-Finance and
Treasurer
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of __________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:________________________________________
Title:
- Signature Page -
<PAGE> 67
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 C]
LEASE SUPPLEMENT NO.
[NW 1996 C]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee under the Trust Agreement [NW 1996 C], dated as of April
26, 1996, between [ ], as Owner Participant, and such Owner Trustee
(such Owner Trustee, in its capacity as such Owner Trustee, being herein called
"LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1996 C], dated as of April 26, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being filed
for recordation on the date hereof with the Federal Aviation Administration as
one document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the
date hereof consists of the following components:
- ---------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 68
(i)Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
(ii)Engines: two (2) Pratt & Whitney Model PW2037 engines
bearing, respectively, manufacturer's serial nos. P______ and
P______ (each of which engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor Basic
Rent for the Aircraft throughout the Term therefor in accordance with Section 3
of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted
the Aircraft for all purposes hereof and of the Lease as being airworthy, in
good working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE> 69
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By_________________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By_________________________________________
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By_________________________________________
Title:
- ---------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 70
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 C]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
----------------------- ---------------------
Interim Rent
Commencement (Percentage of
Date Lessor's Cost)
----------------------- ---------------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
<PAGE> 71
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------------- ---------------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
EXHIBIT B - Page 5 of 5
<PAGE> 72
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - Page 5 of 5
<PAGE> 73
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 C]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
----------------------- ---------------------
<PAGE> 74
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1996 C]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------------------- ---------------------
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 C]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 C], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1996 C], dated as of April 26, 1996
(in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1996 C], dated as of April 26, 1996
(the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1996 C] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated April 29, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N539US; manufacturer's serial No. 26486; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727168 and P727169;
WHEREAS, Section 17 of the Participation Agreement [NW 1996
C], dated as of April 26, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants named therein,
as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street
Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured
Certificates issued by the Owner Trustee under the Trust Indenture and Security
Agreement [NW 1996 C], dated as of April 26, 1996, between Lessor (not in its
individual capacity except as expressly provided therein but as trustee) and the
Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1996 C], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price in order to reflect, among other things, the interest
rate of the refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price, Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996,
and the Trust Agreement and Indenture Supplement [NW 1996 C], dated April 29,
1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3,
1996, and assigned Conveyance No. E21279;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Excess Amount",
"Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss
Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in
Section 1 of the Lease are hereby amended applicable on and after the Closing
Date, to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York;
Boston, Massachusetts; or Minneapolis, Minnesota.
"EXCESS AMOUNT" for the Closing Date or the Commencement
Date means an amount equal to the amount determined by
multiplying Lessor's Cost by the percentage set forth in
Exhibit B hereto under the heading "Excess Amount" opposite
the Closing Date or the Commencement Date.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i)
through (iv), inclusive, (x) each Affiliate of the Persons
described in clauses (vi), (vii) and (viii), (xi) the
respective directors, officers, employees, agents and
servants of each of the Persons described in clauses (i)
through (viii), inclusive, (xii) the successors and permitted
assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of
the Persons described in clauses (v), (vi), (vii) and (viii).
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
-2-
<PAGE> 3
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of
the Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v) hereof,
the amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount
is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any date after January 2, 2019 shall be the amount determined
as provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than
Interim Rent or Basic Rent) which Lessee assumes or agrees to
pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to
clause (b) of the third paragraph of Section 2.02 of the
Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreement, and
(d) Lessor's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except
with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein,
"Lessor's pro rata share" means as of any time a fraction,
the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of
all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee
under the Trust Agreement, the Trust Estate and the Indenture
Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as of
any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with
-3-
<PAGE> 4
respect to which the amount is determined (as such Exhibit D
may be adjusted from time to time as provided in Section 3(d)
hereof and in Section 7 of the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable
on and after the Closing Date:
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing shall
occur.
"INDEMNITY ADJUSTED PAYMENT" means any indemnity payment
made pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and
the Liquidity Provider, and any replacement thereof, in each
case as the same may be amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider under the Liquidity Facilities, or any
successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and
Security Agreement [NW 1996 C], dated as of April 26, 1996,
between the Owner Trustee and State Street Bank and Trust
Company, as amended, modified and supplemented prior to the
Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass
through trust agreement and supplement pursuant to which the
Class D pass through trust certificates are issued.
-4-
<PAGE> 5
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the three separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as
trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as
successor trustee under any such Pass Through Trust
Agreement.
"PURCHASERS" means the Pass Through Trustees under each
Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
"REFINANCING DATE" means the proposed date on which the
outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers
pursuant to the Trust Indenture Amendment and the Refunding
Agreement on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption
of the Secured Certificates issued on the Refinancing Date
and the concurrent issuance and sale of the Refinancing
Secured Certificates to the Pass Through Trustees (or their
designee) and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
-5-
<PAGE> 6
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1996 C], dated as of June 3, 1996, among
Lessor, Lessee, the Owner Participant, the Purchasers, the
Indenture Trustee, the Subordination Agent, and the
Guarantor, as the same may from time to time be supplemented
or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms
thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust
Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 C],
dated as of the Closing Date, 1996, between Lessor and State
Street Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended by deleting
on and after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended by deleting
on and after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs other
than on June 12, 1996, (B) Transaction Expenses paid by
Lessor pursuant to Section 16 of the Participation Agreement
are determined to be other than 1.0% of Lessor's Cost, or (C)
Refinancing Expenses paid by Lessor or the Owner Participant
pursuant to Section 11(a) of the Refunding Agreement are
determined to be other than 1.3281% of Lessor's Cost, then in
each case, the Basic Rent percentages set forth in Exhibit B
and the Stipulated Loss Value percentages set forth in
Exhibit C, the Termination Value percentages set forth in
Exhibit D and the Special Purchase Price shall be
recalculated by the Owner Participant, on or prior to
November 15, 1996 using the same methods and
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<PAGE> 7
assumptions used to calculate original Basic Rent, Stipulated
Loss Value and Termination Value percentages and the Special
Purchase Price, in order to: (1) maintain the Owner
Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof. In such recalculation
there will be no change in the amortization of the Secured
Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by (i)
deleting on and after the Closing Date "(A)" at the beginning thereof, (ii)
deleting on and after the Closing Date the word "and" at the end of clause (A)
thereof and substituting a period therefor, and (iii) deleting on and after the
Closing Date clause (B) thereof in its entirety.
(e) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is
hereby amended to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay, on behalf of Lessor, as Supplemental
Rent the Make-Whole Amount, if any, due pursuant to Section
2.10(b) or Section 2.11 of the Trust Indenture in connection
with a prepayment of the Secured Certificates upon redemption
of such Secured Certificates in accordance with such Section
2.10(b) or Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by deleting
on and after the Closing Date the numbers and punctuation "124-000-12" in the
first sentence thereof and substituting therefor the numbers and punctuation
"124-0000-12".
(h) Section 3(g) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(g) Prepayment of Certain Rent Payments. To the extent,
if any, that there shall not have been received by the
Indenture Trustee to its account and in funds of the type
specified in Section 3(f) hereof by 10:30 A.M., New York
time, on the Commencement Date from Lessor an amount equal to
the Excess Amount for such date, Lessee shall, on the
Commencement Date, prepay on the Commencement Date a portion
of Basic Rent equal to the Excess Amount not so paid (the
amount of such Basic Rent to be prepaid by Lessee being
herein called "PREPAID RENT"); provided, that Lessee will
also pay to the Indenture Trustee, on demand, as Supplemental
Rent, to the extent permitted by applicable law, interest at
the Past Due Rate in effect from time to time on any part of
any Prepaid Rent not paid when due for any period for which
the same shall be overdue. Lessor agrees to reimburse Lessee
in the manner provided in the following sentence for (x) the
Prepaid Rent so paid by Lessee, plus (y) any Supplemental
Rent paid with respect to Prepaid Rent by Lessee pursuant to
this Section 3(g), plus (z) accrued interest on the
unreimbursed portion thereof at a
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<PAGE> 8
rate per annum equal to the Base Rate as in effect from time
to time plus 5% per annum from the date such amount is paid
by Lessee to but not including the date of each such
reimbursement (such amounts to be reimbursed being herein
called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to
Lessee, in funds of the type specified in Section 3(f)
hereof, within five days after Lessor, the Owner Participant
and the Indenture Trustee shall have received written notice
from Lessee demanding payment, the Reimbursement Amount. In
addition, if, for any reason, Lessor shall fail to pay to
Lessee the Reimbursement Amount as above provided, Lessee
shall be entitled to offsets (without duplication) against
each succeeding payment (other than as limited by the proviso
to this sentence) due from Lessee to Persons other than the
Loan Participants, the Indenture Trustee and the Owner
Trustee in its individual capacity (including, without
limitation, Basic Rent, payments due under Section 9, 10, 15
and 19 hereof, payments due under the Tax Indemnity Agreement
and payments due to Persons other than the Loan Participants,
the Indenture Trustee and Lessor in its individual capacity
under Section 7 of the Participation Agreement), until Lessee
has been fully reimbursed for the Reimbursement Amount;
provided, however, that in the case of any payment due from
Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right to offset shall be limited to
amounts distributable to Lessor thereunder. No such offset or
aggregate combined effect of separate offsets shall reduce
the amount of any installment of Interim Rent or Basic Rent
to an amount insufficient, together with the Excess Amount
and all other amounts payable simultaneously by Lessee, to
pay in full the payments then required to be made on account
of the principal of and interest on (and Make-Whole Amount,
if any, due with respect to) the Secured Certificates then
outstanding.
(i) The following new Section 3(h) shall be added to the end
of Section 3 of the Lease to be applicable on and after the Closing Date:
(h) In the event that Lessee exercises its option to
satisfy any indemnity obligation under the Tax Indemnity
Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement, Lessee shall pay, in addition to any other
payments due hereunder, (i) on each Lease Period Date, the
portion of the Indemnity Adjusted Payments then due and
payable on such date as set forth in an appropriate schedule
to the Tax Indemnity Agreement and (ii) on the date that
Stipulated Loss Value, Termination Value or the Special
Purchase Price becomes due and payable, as the case may be,
the Indemnity Adjusted Payment then due and payable by
reference to the date as of which such Stipulated Loss Value,
Termination Value or Special Purchase Price is payable as set
forth in an appropriate schedule to the Tax Indemnity
Agreement.
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<PAGE> 9
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the words "the Owner Participant and the
Indenture Trustee" and substituting therefor the word "Lessor", and (ii)
deleting on and after the Closing Date the word "their" and substituting
therefor the word "its".
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
Section 9(c) of the Lease is hereby amended by deleting on
and after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by (i) deleting
on and after the Closing Date the words "the third Business Day following the
receipt of insurance proceeds in respect of such occurrence (but not earlier
that thirty (30) days after such occurrence)" in clause (i)(y) thereof and
substituting therefor the words "an earlier Business Day irrevocably specified
fifteen days in advance by notice from Lessee to Lessor and the Indenture
Trustee" and (ii) inserting on and after the Closing Date the words and
punctuation ", which appraisal shall be from a firm of independent aircraft
appraisers satisfactory to the Owner Participant," after the words "the
certificate or the appraisal" in the third parenthetical phrase of clause (A) of
the third paragraph thereof.
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on
and after the Closing Date the words and punctuation ", the Refunding Agreement"
after the words "Participation Agreement" and (ii) adding on and after the
Closing Date the words "and except for representations or warranties contained
in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in
the Refunding Agreement) or any document or instrument furnished pursuant to
either thereof" after the word "Agreement" at the end of the first parenthetical
phrase therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17
of the Lease is hereby amended to read in its entirety on and after the Closing
Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective
when received, addressed:
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<PAGE> 10
(i) if to Lessee, for U.S. Mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010),
Eagan, Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer, (Telecopy No. (612)
726-0665), or to such other address, telex number or
telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address
or telecopy number as Lessor shall from time to time
designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at such
address or telecopy number as such Loan Participant,
the Indenture Trustee or the Owner Participant shall
have furnished by notice to Lessor and to Lessee, and,
until an address is so furnished, addressed to such
Loan Participant, the Indenture Trustee or the Owner
Participant at its address or telecopy number set forth
on the signature pages of the Refunding Agreement."
SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The second sentence of Section 19(d) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
In addition, if on such date there shall be any Secured
Certificates outstanding, Lessee shall have the option to
assume, pursuant to Section 8(x) of the Participation
Agreement and Section 2.13 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture.
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26
of the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
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<PAGE> 11
(b) The parties hereto agree that Exhibits B, C and D
attached hereto reflect the recalculation of Basic Rent, Excess Amounts,
Stipulated Loss Value and Termination Value percentages and the Special Purchase
Price to take into account the interest rates borne by the Secured Certificates
as of the Closing Date.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to
the Lease set forth in Sections 1 through 10 hereof shall be effective as of the
date hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 12
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
By:
---------------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By:
---------------------------------------
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of ____________________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By:
---------------------------------------
Title:
- ----------------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 C]
This GUARANTEE [NW 1996 C], dated as of April 26, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1996 C], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1996 C], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1996 C], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully
aware of the terms and conditions of the Lease, the Participation Agreement and
the other Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby, and
does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent), the
Participation Agreement, the Tax Indemnity Agreement and the other Operative
Documents to which the Lessee is a party (such obligations of the Lessee
guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL
OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance
with the terms of the Operative Documents, and the timely performance of all
other obligations of the Lessee thereunder (individually, a "NONFINANCIAL
OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively
with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby
agree that in the event that the Lessee fails to pay any Financial Obligation
when due for any reason (including, without limitation, the liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceedings affecting the status, existence, assets or obligations of,
the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such proceeding)
within five days after the date on which such Financial Obligation became due
and payable and the applicable grace period has expired, the Guarantor shall pay
or cause to be paid forthwith, upon the receipt of notice from any Party (such
notice to be sent to the Lessee (to the extent such Party is not stayed or
prevented from doing so by operation of law) and the Guarantor) stating that
such Financial Obligation was not paid when due and for five days after the
applicable grace period has expired, the amount of such Financial Obligation.
The Guarantor hereby agrees that in the event the Lessee fails to perform any
Nonfinancial Obligation for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party in
any such proceeding) within 10 Business Days after the date on which such
Nonfinancial Obligation is required to be performed (for avoidance of doubt, to
include any applicable grace period), the Guarantor shall cause such
Nonfinancial Obligation to be performed within 10 Business Days following the
receipt of notice from any Party (such notice to be sent to the Lessee (to the
extent such Party is not stayed or prevented from doing so by operation of law)
and the Guarantor) stating that such Nonfinancial Obligation was not performed
when so required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not be,
to the fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
in writing shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is
- 2 -
<PAGE> 3
undertaken in accordance with the terms of the Operative Documents) without the
consent of the Guarantor, or by any priority or preference to which any other
obligations of the Lessee may be entitled over the Lessee's obligations under
the Lease and the other Operative Documents to which the Lessee is a party, or
by any other circumstance that might otherwise constitute a legal or equitable
defense to or discharge of the obligations of a surety or guarantor including,
without limitation, any defense arising out of any laws of the United States of
America or any State thereof which would excuse, discharge, exempt, modify or
delay the due or punctual payment and performance of the obligations of the
Guarantor hereunder. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not, to the
fullest extent permitted by law, affect the liability of the Guarantor
hereunder: (a) the extension of the time for or waiver of, at any time or from
time to time, without notice to the Guarantor, the Lessee's performance of or
compliance with any of its obligations under the Operative Documents (except
that such extension or waiver in writing shall be given effect in determining
the obligations of the Guarantor hereunder)), (b) any assignment, transfer,
sublease or other arrangement by which the Lessee transfers possession or loses
control of the use of the Aircraft, (c) any defect in the title, condition,
design, operation or fitness for use of, or damage to or loss or destruction of,
the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or
consolidation of the Lessee or the Guarantor into or with any other Person, or
any sale, transfer, lease or disposal of any of its assets or (e) any change in
the ownership of any shares of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any unpaid
amounts due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim for
personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate (as such
term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain
or assert a claim for personal judgment against any other Person liable for the
Obligations, or make any effort at collection of the Obligations from any such
other Person, or exercise or assert any other right or remedy to which any Party
is or may be entitled in connection with the Obligations or any security or
other guaranty therefor, or (v) assert or file any claim against the assets of
the Lessee or any other guarantor or other Person liable for the Obligations, or
any part thereof, before or as a condition of enforcing the liability of the
Guarantor under this Guarantee or requiring payment of said Obligations by the
Guarantor hereunder, or at any time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted by
law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be prevented
by applicable law from exercising its remedies (or any of
- 3 -
<PAGE> 4
them) under Section 15 of the Lease, the Lessor (or any assignee thereof,
including, without limitation, the Indenture Trustee) shall be, nevertheless,
entitled to receive hereunder from the Guarantor, upon demand therefor the sums
that would otherwise have been due from the Lessee under the Lease had such
remedies been able to be exercised. The Guarantor hereby unconditionally waives,
to the fullest extent permitted by law, any requirement that, as a condition
precedent to the enforcement of the obligations of the Guarantor hereunder, the
Lessee or all or any one or more of any other guarantors of any of the
Obligations be joined as parties to any proceedings for the enforcement of any
provision of this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall
not be deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent
permitted by law, all other demands or notices whatsoever, other than the
request for payment hereunder and notice provided for in Section 1 hereof. The
obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect of
any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim by
the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or
in the event of any proceedings for voluntary liquidation, dissolution
or other winding-up of the Lessee, whether or not involving insolvency
or bankruptcy proceedings, in which case the Obligations shall be paid
and performed in full before any payment in respect of a claim by the
Guarantor shall be made by or on behalf of the Lessee.
- 4 -
<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to this
Guarantee, or waiver or modification of, or consent under, the terms hereof,
shall be effective unless evidenced by an instrument in writing signed by the
Guarantor and each Party against whom such amendment, supplement, waiver,
modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in
the Trust Indenture, the Lessor will assign, and create a security interest in,
certain of its rights hereunder to and for the benefit of the Indenture Trustee.
From and after the execution and delivery of the Trust Indenture, and until
receipt by the Guarantor of a written notice from the Indenture Trustee to the
effect that the Trust Indenture has been fully satisfied and discharged, no
remedy or election hereunder may be exercised by the Lessor or consent given by
the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing in
good standing pursuant to the laws of the State of Delaware. It has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to
enter into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval of,
or exemption by, or the giving of notice to, or the registration with
or the taking of any other action in respect of, any Federal, state,
municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to authorize
the execution, delivery and performance (other than as contemplated by
the Operative Documents in the case of the
- 5 -
<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee,
or for the legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee, the
performance of its obligations hereunder, nor its consummation of the
transactions contemplated hereby, will conflict with or result in any
breach of, or constitute a default under, or result in any creation or
imposition of any Lien upon any of its property or assets under, any
applicable laws or any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it may be
bound or to which any of its property or assets may be subject, or its
Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor in
New York City as from time to time may be designated by the Guarantor in writing
to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to the
fullest extent permitted by applicable laws. The headings in this Guarantee are
for purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
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<PAGE> 7
10. NOTICES. All requests, notices or other communications
hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder or under the Lease, the Participation Agreement or the
other Operative Documents, and any other agreement or instrument relating
thereto will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise
of such right or remedy or the exercise of any other right or remedy or under
the Lease, the Participation Agreement or the other Operative Documents, and any
other agreement or instrument relating thereto.
12. SURVIVAL. All representations and warranties contained
herein or made in writing by the Guarantor in connection herewith shall survive
the execution and delivery of this Guarantee regardless of any investigation
made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or any provision in any other Operative Document,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
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<PAGE> 8
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL
(AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any
Party any and all reasonable costs and expenses (including reasonable legal fees
and expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:__________________________________________
Name: Joseph E. Francht, Jr.
Title: Senior Vice President-Finance
and Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:_______________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:________________________________
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 C]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 C]
THIS PARTICIPATION AGREEMENT [NW 1996 C] dated as of April 26,
1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the
laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution
listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT"
which executes and delivers a counterpart of this Agreement and of the Trust
Agreement (as hereinafter defined) on or prior to the Delivery Date referred to
below, (iii) the institutions listed on Schedule I and identified therein as
"LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee under the Trust Agreement
(herein, in such latter capacity, together with any successor owner trustee,
called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust Company, a
Massachusetts trust company, in its individual capacity and as Indenture Trustee
under the Trust Indenture (as hereinafter defined) (herein, in such latter
capacity together with any successor indenture trustee, called the "INDENTURE
TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain Boeing 757-251 aircraft, including the Aircraft which has been delivered
by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1996 C], dated as of the date hereof (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to
the Owner Trustee certain rights and interests of Lessee under the
Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and Agreement
[NW 1996 C] (herein called the "CONSENT AND AGREEMENT"), substantially
in the form attached to the Purchase Agreement Assignment (herein
called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 C],
dated as of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST AGREEMENT", such
term to include, unless the context otherwise requires, any Trust Supplement
referred to below), with the Owner Trustee, pursuant to which Trust Agreement
the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering into
the Trust Indenture and Security Agreement [NW 1996 C], dated as of the date
hereof (said Trust Indenture and Security Agreement, as the same may be amended
or supplemented from time to time, being herein called the "TRUST INDENTURE",
such term to include, unless the context otherwise requires, the Trust
Supplement referred to below) pursuant to which the Owner Trustee issues to each
of the Loan Participants one or more secured certificates (herein called
collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement and
the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1996 C], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred to
below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale, and
accepted by the Owner Trustee for all purposes of the Lease, such acceptance to
be evidenced by the execution of the Trust Supplement covering the Aircraft, and
such lease to be evidenced by the execution and delivery of a Lease Supplement
covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a)
Participation by Loan Participants. Subject to the terms and conditions of this
Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's
payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner
Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite
the name of such Loan Participant. Each Loan Participant shall make such Loan to
the Owner Trustee on a date to be designated pursuant to Section 2 hereof, by
transferring to the account of the Owner Trustee at Bankers Trust Company, New
York, New York, Acct. No. 01014789, ABA No. 02-100- 1033, not
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<PAGE> 3
later than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite such Loan
Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the Trust
Indenture to evidence the obligation of the Owner Trustee to repay the Loans
together with interest thereon. The Owner Trustee agrees to pay the Secured
Certificates in installments in the amounts and on the dates provided in the
Trust Indenture together with interest thereon and all other amounts payable
with respect thereto, all as more fully provided in the Trust Indenture.
(b) Participation by Owner Participant. Subject to the terms
and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an equity
investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite the Owner Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation of
each of the Loan Participants and the Owner Participant to be made as provided
above in the payment of Lessor's Cost for the Aircraft is hereinafter called
such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants
or the Owner Participant shall default in its obligation under the provisions of
this Section 1, no other such party shall have any obligation to make any
portion of such defaulted amount available or to increase the amount of its
Commitment and the obligation of such nondefaulting party shall remain subject
to the terms and conditions set forth in this Agreement. Upon receipt by the
Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant
to this Section 1 and the satisfaction of the conditions set forth in Section 4
hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner
Trustee, and the Owner Trustee shall purchase and take title to and accept
delivery of the Aircraft. In consideration of the transfer of title to and
delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee
in accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each
Participant, the Owner Trustee and the Indenture Trustee at least two Business
Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in the
manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 4(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill
of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture; and
(vi) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations
in the Aircraft. It is agreed that the obligations of each of the Loan
Participants and the Owner Participant to participate in the payment of Lessor's
Cost and to make available the amount of its respective Commitment are subject
to the satisfaction prior to or on the Delivery Date of the following conditions
precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to
representations and warranties only contained in the Tax Indemnity Agreement),
(xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii)
shall not be a condition precedent to the obligations of the Loan Participants,
and paragraphs (iv), (x) (insofar as it relates to the Owner Participant),
(xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations
of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing or
as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the Documentation
Agent and the Owner Participant and shall be in full force and effect
and executed counterparts shall have been delivered to the Loan
Participants and the Owner Participant, or their respective counsel,
provided that only each Loan Participant shall receive an executed
original of its respective Secured Certificate and provided, further,
that an excerpted copy of the Purchase Agreement shall only be
delivered to and retained by the Owner Trustee and the Owner
Participant (but the Indenture Trustee shall also retain an excerpted
copy of the Purchase Agreement which may be inspected by the
Documentation Agent and its counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant and their respective counsel if
and only if there shall occur and be continuing an Event of Default),
the chattel paper counterpart of the Lease and the Lease Supplement
covering the Aircraft dated the Delivery Date shall be delivered to the
Indenture Trustee, and the Tax Indemnity Agreement shall only be
delivered to Lessee and the Owner Participant and their respective
counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent, the
Owner Participant and Lessee (herein called the "ACCEPTANCE
CERTIFICATE") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the Owner Participant Guaranty.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act shall have
been executed and delivered by the Owner Trustee, and such financing
statement or statements shall have been duly filed in all places
necessary or advisable, and any additional Uniform Commercial Code
financing statements deemed advisable by the Owner Participant or the
Documentation Agent shall have been executed and delivered by Lessee or
the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
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<PAGE> 7
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified by a Vice
President, the Secretary or an Assistant Secretary of Lessee,
duly authorizing the sale of the Aircraft and the lease by
Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the Bill
of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement
covering the Aircraft, the Purchase Agreement Assignment, the
Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on or before the Delivery
Date in accordance with the provisions hereof and thereof, and
a certified copy of the Certificate of Incorporation and
By-Laws of the Guarantor and a copy of resolutions of the
Board of Directors of the Guarantor, certified by a Vice
President, the Secretary or an Assistant Secretary of the
Guarantor, duly authorizing the execution, delivery and
performance by the Guarantor of the Guarantee;
(2) such other documents and evidence with respect
to Lessee, the Guarantor, the Manufacturer, the Owner Trustee,
the Owner Participant, the Owner Participant Guarantor, the
Indenture Trustee, and the Loan Participants as the Loan
Participants or the Owner Participant, or the respective
counsel for the Loan Participants or the Owner Participant,
may reasonably request in order to establish the authority of
such parties to consummate the transactions contemplated by
this Agreement and the taking of all corporate proceedings in
connection therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall
be true, and the Documentation Agent and the Owner Participant shall
have received evidence satisfactory to it to the effect that:
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<PAGE> 8
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft on such Delivery
Date, free and clear of Liens other than the rights of Lessee
under the Lease and Lease Supplement covering the Aircraft,
the mortgage and security interests created by the Trust
Indenture, the rights of the Owner Participant under the Trust
Agreement and the Trust Supplement, and Liens permitted by
clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft in
the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and as
of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee, and
reasonably satisfactory as to scope and substance to the Documentation
Agent and the Owner Participant, from Cadwalader, Wickersham & Taft,
special counsel for Lessee and the Guarantor, as to New York and
certain federal law matters, and Lessee's and the Guarantor's in-house
or other counsel, as to Minnesota and certain federal law matters and
the Delaware General Corporation Law, to the collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and
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<PAGE> 9
perform its obligations under the Lessee Documents. Lessee is
a Certificated Air Carrier. The Guarantor is a corporation
duly organized and validly existing pursuant to the laws of
the State of Delaware and has the corporate power and
authority to enter into and perform its obligations under the
Guarantee;
(2) the execution, delivery and performance of the
Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel after due inquiry, any approval or consent of any
trustee or holders of any indebtedness or obligations of
Lessee or the Guarantor, as the case may be (or that any such
approval or consent as is required has been obtained), and
neither the execution and delivery of any thereof by Lessee or
the Guarantor, as the case may be, nor the performance by
Lessee or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on
Lessee or the Guarantor, as the case may be, or (B) to the
knowledge of such counsel after due inquiry, contravenes or
results in any breach of, or constitutes any default under, or
results in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee or the Guarantor, as the
case may be, under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, or any other agreement or instrument, corporate
charter, by-law or permit issued by any Minnesota or United
States governmental authority to which Lessee or the
Guarantor, as the case may be, is a party or by which Lessee
or the Guarantor, as the case may be, or its properties may be
bound or affected;
(3) neither the execution and delivery by Lessee of
the Lessee Documents or by the Guarantor of the Guarantee nor
the performance by Lessee or the Guarantor of their respective
obligations thereunder requires the consent or approval of, or
the giving of notice to, or the registration with, or the
taking of any other action in respect of, any Federal or state
governmental authority in the United States, except for (A)
the registration of the Aircraft (including the placement on
board of the owner's copy of the application for registration
of the Aircraft and, if necessary, a flying time wire),
recordations and other actions referred to in paragraph 5
below and (B) such consents, approvals, notices, registrations
and other actions required by the terms of the Lessee
Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such
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<PAGE> 10
other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft with
the Federal Aviation Administration in the name of the Owner
Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof, with
respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document
(including any financing statement with respect to the Lease
under Article 9 of the Uniform Commercial Code of Minnesota or
Utah), is necessary in any applicable jurisdiction within the
United States in order (x) to establish the Owner Trustee's
title to such portion of the Aircraft as against Lessee or any
third parties or (y) to create and perfect the Indenture
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee or any third parties. With respect
to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in
the Federal Aviation Act, except for the filing of financing
statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified
in such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and
when required, (x) under the federal laws of the United States
and
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<PAGE> 11
the laws of the State of New York no filing or recording of
any document (including any financing statement) is necessary
under Article 9 of the Uniform Commercial Code in order to
establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and the laws of
the State of New York no filing or recording of any document
(including any financing statement) is necessary or advisable
under Article 9 of the Uniform Commercial Code in order to
create or perfect the Indenture Trustee's security interest in
such portion of the Aircraft as against the Owner Trustee and
any third parties in any applicable jurisdiction within the
United States; and
(6) there are no legal or governmental proceedings
pending or, to the best knowledge of such in-house counsel,
threatened to which Lessee or Guarantor or any of their
respective subsidiaries is a party or to which any of the
properties of Lessee or Guarantor or any of their respective
subsidiaries is subject other than those proceedings
summarized in the Guarantor's publicly filed annual, quarterly
and other reports filed with the Securities and Exchange
Commission, and proceedings which such in-house counsel
believes would not reasonably be expected to have a material
adverse effect on Lessee and its subsidiaries, taken as a
whole, or on the power or ability of Lessee to perform its
obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of Ray,
Quinney & Nebeker with respect to the opinion in paragraph (5) above
insofar as it relates to the laws of the State of Utah and (C) upon the
representations and warranties set forth herein, including, without
limitation, in Section 8 hereof, with respect to matters of fact, and
may state that no opinion is expressed as to laws other than laws of
the State of New York (in the case of such special counsel's opinion),
the State of Minnesota and the Delaware General Corporation Law (in the
case of Lessee's in-house or other counsel's opinion) and the Federal
laws of the United States. Such counsel may assume that, except for the
filings and recordations contemplated herein, there are no filings or
recordations with respect to the Aircraft, the Lease, the Lease
Supplement covering the Aircraft, the Trust Agreement, the Trust
Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be identified
in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the
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<PAGE> 12
Manufacturer Documents and such other matters as such parties may
reasonably request.
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National Association
is a national banking association duly organized, validly
existing and in good standing under the laws of the United
States, is a Citizen of the United States and has under the
laws of the State of Utah and federal banking law the power,
authority and legal right to execute, deliver and carry out in
its capacity as Owner Trustee or in its individual capacity,
as the case may be, the terms of the Owner Trustee Documents,
including the Secured Certificates;
(2) each of the Owner Trustee Documents has been duly
authorized, executed and delivered by First Security Bank of
Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by the
Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to
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<PAGE> 13
such counsel after due inquiry to which First Security Bank of
Utah, National Association in its individual capacity or as
the Owner Trustee is a party or by which it is bound, or of
any Federal or Utah law, governmental rule or regulation
applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the Owner
Trustee and, where appropriate, by First Security Bank of
Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal law governing
the banking and trust powers of First Security Bank of Utah,
National Association or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the Trust
Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated to a substantial degree in the State of New York
and that the closing of a substantial portion of the
transactions contemplated by the Operative Documents occurred
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<PAGE> 14
in the State of New York, the choice of New York law to govern
the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which
the Owner Trustee or First Security Bank of Utah, National
Association in its individual capacity, or both, is a party
is, under the laws of the State of Utah, a valid choice of law
and should, in a properly presented case, be honored by the
courts of the State of Utah;
(8) the Owner Trustee has received from Lessee such
title to the Aircraft as Lessee had immediately prior to the
conveyance to the Owner Trustee, subject to the rights of the
Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) there are no pending or, to the knowledge of
such counsel after due inquiry, threatened proceedings against
or affecting the Owner Trustee before any court or
administrative agency, individually or in the aggregate,
which, if determined adversely to it, would materially
adversely affect the power or ability of the Owner Trustee to
perform its obligations under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such other
matters incident to the matters covered thereby as the Documentation
Agent, the Owner Participant, the Indenture Trustee or Lessee may
reasonably request. Such opinion may state that (A) no opinion is
expressed as to laws other than the laws of the State of Utah, the
Federal laws of the United States governing the banking and trust
powers of First Security Bank of Utah, National Association, and the
Federal Aviation Act as it relates to paragraph (1) and (B) no opinion
is expressed as to the priority of security interests or as to title to
any part of the Trust Estate. Such opinion may assume (M) the due
authentication of the Secured Certificates by the Indenture Trustee,
(N) that the Operative Documents (other than the Trust Agreement) are
legal, valid and binding under the laws of the State of New York and
(O) the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant and of the other Operative
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<PAGE> 15
Documents by each of the parties thereto other than First Security Bank
of Utah, National Association in its individual capacity and as the
Owner Trustee.
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from Dewey Ballantine, special counsel for the
Owner Participant and the Owner Participant Guarantor, and the Owner
Participant's in-house counsel, to the collective effect that:
(1) the Owner Participant is a duly incorporated and
validly existing corporation in good standing under the laws
of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents; the Owner Participant Guarantor
is a duly incorporated and validly existing corporation in
good standing under the laws of the State of Delaware and has
the corporate power and authority to execute, deliver and
carry out the terms of the Owner Participant Guaranty;
(2) the Owner Participant Documents have been duly
authorized, executed and delivered by the Owner Participant
and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitute legal, valid
and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations; the Owner Participant Guaranty has been
duly authorized, executed and delivered by the Owner
Participant Guarantor and constitutes the legal, valid and
binding obligation of the Owner Participant Guarantor,
enforceable against the Owner Participant Guarantor in
accordance with its terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(3) neither the execution and delivery by the Owner
Participant of the Owner Participant Documents or by the Owner
Participant Guarantor of the Owner Participant Guaranty nor
the consummation of any of the transactions by the Owner
Participant or the Owner Participant Guarantor contemplated
thereby requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any
other action with respect to, any governmental authority or
agency of the United States, the State of Delaware or the
State in
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<PAGE> 16
which the principal office of the Owner Participant or the
Owner Participant Guarantor is located (or any governmental
subdivision of any thereof) (except as shall have been duly
obtained or given, specifying the same);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and except that certain of the
remedial provisions in the Lease and the Trust Indenture may
be limited or rendered unenforceable by applicable laws, which
laws, however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the Indenture
Trustee as aforesaid, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) the execution, delivery and performance of the
Owner Participant Documents by the Owner Participant does not
require any approval of stockholders of the Owner Participant,
or, to the knowledge of such counsel after due inquiry, any
approval or consent of any trustee or holders of any
indebtedness or obligations of the Owner Participant (or that
any such approval or consent as is required has been
obtained), and neither the execution and delivery of the Owner
Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or
regulation or, to the knowledge of such counsel after due
inquiry, judgment or order applicable to or binding on the
Owner Participant or (B) to the knowledge of such counsel
after due inquiry, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter or by-law
or permit issued by any New York, Delaware or United States
governmental authority to which the Owner Participant is a
party or by which it or its properties may be bound or
affected; the execution,
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<PAGE> 17
delivery and performance of the Owner Participant Guaranty by
the Owner Participant Guarantor does not require any approval
of stockholders of the Owner Participant Guarantor, or, to the
knowledge of such counsel after due inquiry, any approval or
consent of any trustee or holders of any indebtedness or
obligations of the Owner Participant Guarantor (or that any
such approval or consent as is required has been obtained),
and neither the execution and delivery of the Owner
Participant Guaranty by the Owner Participant Guarantor, nor
the performance by the Owner Participant Guarantor of its
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on the
Owner Participant Guarantor or (B) to the knowledge of such
counsel after due inquiry, contravenes or results in any
breach of, or constitutes any default under, or results in the
creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner
Participant Guarantor under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other agreement or instrument,
corporate charter or by-law or permit issued by any New York,
Delaware or United States governmental authority to which the
Owner Participant Guarantor is a party or by which it or its
properties may be bound or affected; and
(7) there are no pending or, to the best knowledge of
such counsel, threatened actions or proceedings against or
affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material adverse effect on the Owner Participant or the
ability of the Owner Participant to perform its obligations
under the Owner Participant Documents; there are no pending
or, to the best knowledge of such counsel, threatened actions
or proceedings against or affecting the Owner Participant
Guarantor before any court or administrative agency
individually or in the aggregate which, if determined
adversely to the Owner Participant Guarantor, would have a
material adverse effect on the Owner Participant Guarantor or
the ability of the Owner Participant Guarantor to perform its
obligations under the Owner Participant Guaranty;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's or the Owner Participant
Guarantor's obligations in connection with this Agreement as the
Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee
may reasonably request. Such opinion may rely upon the representations
and warranties set forth herein, including, without limitation, in
Section 8 hereof, as to matters of fact. Such opinion may state that
(M) no opinion is expressed as to laws other than the General
Corporation Law of the State of Delaware, the laws of the State of New
York and the Federal laws of the United States, and (N) no opinion is
expressed as to the priority of security interests or as to title to
any part of the Trust Estate.
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<PAGE> 18
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the
Trust Supplement attached thereto and the Trust Indenture with
the Trust Supplement attached thereto are in due form for
recording by and have been duly filed for recordation with the
Federal Aviation Administration in accordance with the
provisions of Section 44107 of Title 49 of the United States
Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal title
to the Aircraft, and the Aircraft is free and clear of all
Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in the
name of the Owner Trustee and will be duly registered in due
course in the name of the Owner Trustee pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(5) the Trust Indenture as supplemented by the Trust
Supplement creates a duly and validly perfected first priority
security interest in the Aircraft and a duly perfected
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease as supplemented by the
Lease Supplement (insofar as such security interest affects an
interest covered by the recording system established by the
Federal Aviation Administration pursuant to Section 44107 of
Title 49 of the United States Code), subject only to the Lease
and to Liens permitted by the Lease and the Trust Indenture,
it being understood that no opinion need be expressed as to
the validity or enforceability of such security interest under
local law or as against third parties in respect of the
Aircraft when the same is outside the United States;
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<PAGE> 19
(6) none of the Trust Indenture, the Trust Agreement,
the Trust Supplement, the Lease or the Lease Supplement is
required to be filed or recorded in any other place within the
United States in order to perfect the security interest in the
Aircraft and the Lease as supplemented by the Lease Supplement
(insofar as such security interest affects an interest covered
by the recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code), under the applicable laws of any
jurisdiction within the United States;
(7) no authorization, approval, consent, license or
order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected; and
(8) no other registration of the Aircraft and no
filings or recordings (other than the filings and recordings
with the FAA referred to above) are necessary to provide
constructive notice to third parties in any jurisdiction
within the United States of the Owner Trustee's title to the
Aircraft or the beneficial interest of the Owner Participant
in the Aircraft.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States. Said opinion may also
contain a statement to the effect that such opinion is limited to the
records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the filing
of notice thereof with the Federal Aviation Administration, such as
Federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Code and possessory artisans' liens, and is subject
to the accuracy of FAA personnel in the filing, indexing and recording
of instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Said opinion may also rely
on the opinion obtained by such counsel from counsel for the
Aeronautical Center of the FAA, satisfactory in form and scope to such
counsel, and on past practice of the FAA which is consistent with such
Aeronautical Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, to the effect
that:
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power,
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<PAGE> 20
authority and legal right to enter into and perform its
obligations under the Indenture Trustee Documents and, in its
capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(2) the execution, delivery and performance by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the Indenture
Trustee Documents and the consummation by State Street Bank
and Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, of the transactions contemplated
thereby and compliance by State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, as the
case may be, with the terms thereof including, without
limitation, the authentication of the Secured Certificates to
be delivered on the Delivery Date, have been duly authorized
by all necessary corporate action on the part of State Street
Bank and Trust Company, and neither the execution and delivery
thereof nor the consummation by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee,
as the case may be, of the transactions contemplated thereby
nor compliance by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, with any of the terms and provisions thereof (i) does or
will contravene any law or governmental rule or regulation of
the United States governing the banking or trust powers of
State Street Bank and Trust Company or the Commonwealth of
Massachusetts or any order or judgment known to such counsel
and applicable to or binding on State Street Bank and Trust
Company, or (ii) does or will contravene or result in any
breach of, or constitute any default under, the charter
documents or By-Laws of State Street Bank and Trust Company or
the provisions of any indenture, mortgage, contract or other
agreement, in each case known to such counsel, to which State
Street Bank and Trust Company is a party or by which it or any
of its properties is or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby requires or required
the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document
with, or the taking of any other action in respect of, any
Federal or Massachusetts governmental authority or agency
governing the banking or trust powers of State Street Bank and
Trust Company or under any Massachusetts law;
(4) each of the Indenture Trustee Documents has been
duly executed and delivered by State Street Bank and Trust
Company, in its individual capacity or as Indenture Trustee,
as the case may be, and, assuming that each
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<PAGE> 21
such agreement is the legal, valid and binding obligation of
each other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
(5) the Secured Certificates to be issued and dated
the Delivery Date have been duly authenticated and delivered
by the Indenture Trustee pursuant to the terms of the
Indenture Trustee Documents;
(6) to the best knowledge of such counsel, there are
no pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration board or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other governmental
charges ("TAXES") payable under the laws of the Commonwealth
of Massachusetts with respect to the execution of and delivery
by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the Indenture Trustee Documents (except for taxes on any
fees payable to State Street Bank and Trust Company in its
individual capacity) which would not have been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts. Neither State Street Bank and Trust Company, in
its individual capacity or as Indenture Trustee, as the case
may be, the Owner Participant, the Owner Trustee, nor the
trust created by the Trust Agreement will, as a result of the
transactions contemplated thereby, be subject to any taxes
under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for taxes on any fees
payable to State Street Bank and Trust Company in its
individual capacity) which would have not been imposed if
State Street Bank and Trust Company did not have its principal
place of business in Massachusetts or did not perform its
administrative duties under the Indenture Trustee Documents in
Massachusetts, and there are no taxes under the laws of the
Commonwealth of Massachusetts or any political subdivision
thereof (except for taxes on any fees payable to State Street
Bank and Trust Company in its individual capacity) upon or
with respect to the Aircraft or any Engine or any part of any
interest therein, or the purchase, ownership, delivery, lease,
sublease, possession, presence, use, operation, condition,
storage, maintenance,
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<PAGE> 22
modification, alteration, repair, sale, return, transfer or
other disposition of the Aircraft or any Engine which would
not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts
or did not perform its administrative duties under the
Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request. Such
opinion may state that no opinion is expressed as to laws other than
the internal substantive laws of the Commonwealth of Massachusetts and
the Federal laws of the United States. Such opinion may further state
that with respect to paragraph (4) in connection with the opinion
relating to legality, validity and binding effect of the documents
there referred to, such counsel has assumed that the laws of the
jurisdictions whose laws govern such documents are not materially
different from the internal substantive laws of the Commonwealth of
Massachusetts.
(xvii) The Loan Participants shall have received from Vedder,
Price, Kaufman & Kammholz, special counsel for the Loan Participants, a
favorable opinion satisfactory in substance and form to the
Documentation Agent, as to such matters incident to the transactions
contemplated hereby as the Documentation Agent may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive Vice
President, any Senior Vice President or any Vice President of Lessee,
dated the Delivery Date, addressed to the Loan Participants and the
Owner Participant and certifying as to the matters stated in paragraphs
(viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this
Section 4(a). Copies of the orders, permits, waivers, authorizations,
exemptions and approvals referred to in Section 4(a)(viii) shall have
been furnished to the Loan Participants and the Owner Participant.
(xix) The Owner Participant and the Loan Participants shall,
by making their Commitments available as provided in Section 1(b) of
this Agreement, be deemed to have reaffirmed the representations and
warranties made by them in Section 8 of this Agreement.
(xx) The Owner Participant shall have received an opinion,
in form and substance satisfactory to the Owner Participant, from
Aeroeconomics, Inc., independent aircraft appraisers, or such other
recognized aircraft appraiser, to the effect, among other relevant
matters, that (A) the Aircraft will have, at the end of the third Fixed
Renewal Term, (i) at least 20% of its original economic life remaining
and (ii) a fair market value of at least 20% of Lessor's Cost (without
taking into account any increase or decrease for inflation or deflation
during the Interim Term, the Basic Term and the Fixed Renewal Terms or
the terms of any purchase option provided in
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<PAGE> 23
the Lease) and taking into account any costs to the Owner Trustee or
the Owner Participant of removal and delivery of the Aircraft to the
Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair
market value of the Aircraft on the Delivery Date is equal to Lessor's
Cost; and (C) it will be commercially feasible for a third party to
utilize the Aircraft at the end of the third Fixed Renewal Term.
(xxi) The Loan Participants and Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to the Documentation Agent and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event
of Loss (or event which with the passage of time would become an Event
of Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from Dewey
Ballantine, special counsel to the Owner Participant, a favorable
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions of
the Internal Revenue Code of 1986, as amended through the date hereof,
and the regulations promulgated under the Code (including temporary
regulations), Internal Revenue Service Revenue Procedures or Revenue
Rulings, or other administrative interpretations, applicable judicial
precedents or Executive Orders of the President of the United States,
all as in effect on the date
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<PAGE> 24
hereof, the effect of which might preclude the Owner Participant from
obtaining any of the income tax benefits and consequences assumed to be
available to the Owner Participant as set forth in Section 2 of the Tax
Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants
and the Owner Participant, and reasonably satisfactory as to scope and
substance to the Documentation Agent and the Owner Participant, from
Cadwalader, Wickersham & Taft, special counsel for Lessee, which
opinion shall state (with customary assumptions and qualifications)
that the Owner Trustee, as lessor under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease
pursuant to the Trust Indenture, would be entitled to the benefits of
11 U.S.C. Section1110 with respect to the Aircraft.
(xxix) The Loan Participants shall have received an opinion,
in form and substance reasonably satisfactory to the Documentation
Agent, from BK Associates, Inc., independent aircraft appraisers, to
the effect that the fair market value of the Aircraft on the Delivery
Date is equal to Lessor's Cost.
(xxx) Lessee shall have executed and delivered to the Owner
Participant a letter from the Owner Participant to Lessee relating to
Lessee's weighted average cost of capital.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner Trustee,
the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease
Supplement, such Trust Supplement, the Lease and the Trust Agreement and the
lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It
is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner
Trustee and (B) to accept delivery of the Aircraft under the Lease, are all
subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on
or prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers,
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<PAGE> 25
exemptions, authorizations and approvals shall be in full force and
effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii)
and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have
been duly authorized, executed and delivered by the respective party or
parties thereto (other than Lessee and the Guarantor) in the manner
specified in Section 4(a)(v), shall each be satisfactory in form and
substance to Lessee, shall be in full force and effect on the Delivery
Date, and an executed counterpart of each thereof (other than the
Secured Certificates) shall have been delivered to Lessee or its
special counsel.
(iv) Lessee shall have received a copy of the resolutions or
other instruments satisfactory to Lessee of the Board of Directors of
the Owner Participant, or other evidence of authority satisfactory to
Lessee, certified as of the Delivery Date by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing or
evidencing authority for the execution, delivery and performance by the
Owner Participant of all of the Owner Participant Documents, a copy of
the resolutions or other instruments satisfactory to Lessee of the
Board of Directors of the Owner Participant Guarantor, certified as of
the Delivery Date by the Secretary or Assistant Secretary of the Owner
Participant Guarantor, duly authorizing the execution, delivery and
performance by the Owner Participant Guarantor of the Owner Participant
Guaranty, and a copy of the general authorizing resolutions of the
boards of directors of the Indenture Trustee and the Owner Trustee,
certified as of the Delivery Date by the Secretary or an Assistant
Secretary of the Indenture Trustee and the Owner Trustee, respectively,
which authorize the execution, delivery and performance by the
Indenture Trustee of the Indenture Trustee Documents and the Secured
Certificates and by the Owner Trustee of the Owner Trustee Documents,
together with such other documents and evidence with respect to the
Indenture Trustee, the Owner Participant, the Owner Participant
Guarantor and the Owner Trustee as Lessee or its special counsel may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and accurate
as of the Delivery Date as though made on and as of such date except to
the extent that such representations and warranties relate solely to an
earlier date (in which event such representations and warranties shall
have been true and accurate on and as of such earlier date) and Lessee
shall have received a certificate signed by the Chairman of the Board,
the President, any Vice President or any Assistant Vice President or
other authorized representative of the Indenture Trustee, the Owner
Participant and the Owner Trustee, respectively, addressed to Lessee
and
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<PAGE> 26
certifying as to the foregoing matters with respect to the Indenture
Trustee, the Owner Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in
effect which, in the opinion of Lessee or its special counsel, would
make it a violation of law or regulations or guidelines for Lessee to
enter into any transaction contemplated by the Operative Documents.
(ix) In the opinion of Lessee and its special counsel, there
shall have been, since the date hereof, no amendment, modification,
addition or change in or to the Internal Revenue Code of 1986, as
amended through the date hereof, the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service
Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. PUBLICITY. Each party hereto agrees that it will use its
best efforts not to disclose, or permit any of its employees or agents to
disclose, the identity of the Owner Participant or the terms of the Operative
Documents in connection with the issuance or release for external publication of
any article or advertising or publicity matter relating to the terms and
conditions of any of the Operative Documents or the transactions contemplated
thereby without the prior written consent of the Owner Participant and Lessee,
provided that nothing in this Section 5 shall prevent the Loan Participants from
publishing a tombstone which may include the initial principal amount of the
Secured Certificates, provided, further, that no such tombstone shall disclose
the identity of the Owner Participant without the prior written consent of the
Owner Participant.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums
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<PAGE> 27
payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan Participants
and, by its acceptance of a Secured Certificate, each Certificate Holder agrees
that it will look solely to the income and proceeds from the Trust Indenture
Estate to the extent available for distribution to such Certificate Holder as
provided in Article III of the Trust Indenture and that neither the Owner
Participant nor the Owner Trustee shall be personally liable to the Loan
Participants or any Certificate Holder for any amounts payable under the Secured
Certificates, the Trust Indenture or hereunder, except as expressly provided in
the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a)
In General. Lessee represents, warrants and covenants to each of the Loan
Participants, the Owner Trustee, the Indenture Trustee, and the Owner
Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse effect
on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises which,
if not obtained, would not have a material adverse effect on the
consolidated business assets, properties or condition (financial or
otherwise) of Lessee and its subsidiaries taken as a whole or on the
ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of
the Lessee Documents will, on the Delivery Date, have been duly
authorized by all necessary corporate action on the part of Lessee, do
not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of Lessee except
such as have been duly obtained or by the Delivery Date will have been
duly obtained, and none of such agreements contravenes any law,
judgment, government rule, regulation or order binding on Lessee or the
certificate of incorporation or By-Laws of Lessee or contravenes the
provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
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<PAGE> 28
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice to,
or the registration with, or the taking of any other action in respect
of, any Federal, State or foreign government authority or agency,
except for (A) the orders, permits, waivers, exemptions, authorizations
and approvals of the regulatory authorities having jurisdiction over
the operation of the Aircraft by Lessee required to be obtained on or
prior to the Delivery Date, which orders, permits, waivers, exemptions,
authorizations and approvals have been duly obtained and are, or will
on the Delivery Date be, in full force and effect (other than a flying
time wire, all steps to obtain the issuance of which will have been, on
the Delivery Date, taken or caused to be taken by Lessee), (B) the
registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C)
such consents, approvals, notices, registrations and other actions
required by the terms of the Lessee Documents to the extent required to
be given or obtained only after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court or
administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Lease with the Lease Supplement covering
the Aircraft, the Trust Indenture and the Trust Supplement attached
thereto and made a part thereof, the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof and the FAA Bill of
Sale, (C) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security and
other interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified in
the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the
taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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 Owner
Trustee's title to and the Indenture Trustee's security interest in the
Aircraft as against Lessee and any third parties in any applicable
jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving of
notice or the passage of time or
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<PAGE> 29
both would constitute an Event of Default under the Lease) which is
presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent
by the sale of the Aircraft; after the sale of the Aircraft the capital
of Lessee will not be unreasonably small for the conduct of the
business in which Lessee is engaged or is about to engage; Lessee has
no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated subsidiaries
for the year then ended, which have been audited by independent
certified public accountants, copies of which have been furnished to
the Owner Participant and each Loan Participant, fairly present the
consolidated financial condition of the Guarantor and its consolidated
subsidiaries as at such date and the results of operations and cash
flow of the Guarantor and its consolidated subsidiaries for the period
ended on such date, all in accordance with generally accepted
accounting principles consistently applied and since December 31, 1995
there has been no material adverse change in the consolidated financial
condition, cash flow or results of operations of the Guarantor and its
consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive
good title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of Lessee
under the Lease and the Lease Supplement covering the Aircraft, the
Lien of the Trust Indenture and the beneficial interest of the Owner
Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation G or U of the Board of Governors of the
Federal Reserve System;
(xii) Lessee is not in default in the performance of any
term or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due
and for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft or any interest therein;
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<PAGE> 30
(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease;
and
(xv) neither Lessee nor any subsidiary of Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(b) General Tax Indemnity. [RESERVED]
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<PAGE> 31
(c) General Indemnity. [Reserved]
- 31 -
<PAGE> 32
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than taxes in the nature of sales, use, license, property or
value added Taxes (except value added taxes in the nature of any income,
franchise, capital, doing business, excess profits or net worth tax) (including,
without limitation, capital gains taxes, minimum taxes, income taxes collected
by withholding and taxes on tax preference items), and Taxes which are capital,
doing business, excess profits or net worth taxes and interest, additions to
tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner
Participant represents that it is acquiring its interest in the Trust Estate for
investment and not with a present intent as to any resale or distribution
thereof (subject nonetheless to any requirement of law that the disposition of
its properties shall at all times be and remain within its control) and that
neither it nor anyone acting on its behalf has directly or indirectly offered
any interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire any of the same from,
anyone in a manner which would result in a violation of the Securities Act of
1933, as amended, or the securities laws, rules and regulations of any state.
(b) Lessee represents and warrants that neither Lessee nor
anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended, or the
securities laws, rules and regulations of any state.
(c) Each of the Owner Participant and First Security Bank of
Utah, National Association, in its individual capacity, represents and warrants
to the other parties to this Agreement that it is, and on the Delivery Date will
be, a Citizen of the United States without making use of any voting trust,
voting powers agreement or similar arrangement. The Owner Participant agrees,
solely for the benefit of Lessee and the Loan Participants, that if (i) it shall
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<PAGE> 33
cease to be, or believes itself likely to cease to be, a Citizen of the United
States and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner Participant shall (at its
own expense and without any reimbursement or indemnification from Lessee)
promptly effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee and
the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole expense
of the Owner Participant, to cooperate with the Owner Participant in complying
with its obligations under the provisions of the second sentence of this Section
8(c). First Security Bank of Utah, National Association, in its individual
capacity, agrees that if at any time an officer or responsible employee of the
Corporate Trust Department of First Security Bank of Utah, National Association,
shall obtain actual knowledge that First Security Bank of Utah, National
Association, has ceased to be a Citizen of the United States without making use
of a voting trust, voting powers agreement or similar arrangement, it will
promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Loan Participants, Lessee or the Owner
Participant), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or
First Security Bank of Utah, National Association, in its individual capacity,
does not comply with the requirements of this Section 8(c), the Owner Trustee,
the Indenture Trustee and the Participants hereby agree that an Event of Default
(or an event which would constitute an Event of Default but for lapse of time or
the giving of notice or both) shall not have occurred and be continuing under
the Lease due to non-compliance by Lessee with the registration requirements in
the Lease.
(d) First Security Bank of Utah, National Association, in its
individual capacity, represents and warrants that both the principal place of
business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of Utah,
National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and
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delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank of Utah, National Association, in its
individual capacity, represents that it has not offered any interest in the
Trust Estate or any Secured Certificates or any similar securities for sale to,
or solicited any offer to acquire the same from, anyone, and that no officer or
responsible employee of the Corporate Trust Department of First Security Bank of
Utah, National Association, has knowledge of any such offer or solicitation by
anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither
it nor anyone acting in its behalf has offered any Secured Certificates or any
similar securities related to the Aircraft for sale to, or solicited any offer
to buy any Secured Certificate from, any person or entity other than in a manner
in compliance with, and which does not require registration under, the
Securities Act of 1933, as amended, or the rules and regulations thereunder or
the securities laws, rules and regulations of any state.
(f) The Owner Participant and each of the Loan Participants
agree that, at any time after the Depreciation Period, as long as no Event of
Default or a Default of the type referred to in Section 14(a) or 14(e) of the
Lease shall have occurred and be continuing, Lessee may elect to effect a change
in registration of the Aircraft, at Lessee's cost and expense, so long as (a)
the country of registry of the Aircraft is a country listed on Exhibit A hereto
(or such other country as the Owner Participant approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of the
Aircraft, and if the country of registry is Taiwan, the United States maintains
diplomatic relations at least as good as those in effect on the Delivery Date;
and (ii) the Owner Trustee and the Indenture Trustee shall have received
favorable opinions (subject to customary exceptions) addressed to each such
party, from counsel qualified in the laws of the relevant jurisdiction and
reasonably satisfactory to the Owner Participant, to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft
shall be recognized under the laws of such jurisdiction, (B) the
obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under
the laws of such jurisdiction (or the laws of the jurisdiction to which
the laws of such jurisdiction would refer as the applicable governing
law), (C) after giving effect to such change in registration, the Lien
of the Trust Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft and the Lease shall continue as a valid and duly
perfected first priority security interest and all filing, recording or
other action necessary to protect the same shall have been accomplished
(or, if such opinion cannot be given at the time of such proposed
change in registration because such change in registration is not yet
effective, (1) the opinion shall detail what filing, recording or other
action is necessary and (2) the Owner Trustee and the Indenture Trustee
shall have received a certificate from Lessee that all possible
preparations to accomplish such filing,
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<PAGE> 35
recording and other action shall have been done, and such filing,
recording and other action shall be accomplished and a supplemental
opinion to that effect shall be delivered to the Owner Trustee and the
Indenture Trustee on or prior to the effective date of such change in
registration), (D) none of the Owner Trustee, the Owner Participant or
the Indenture Trustee will be required to register to do business in
the country in which the Aircraft is to be registered as a result of
such reregistration, after (1) taking into account any other contacts
of the Owner Trustee and the Owner Participant with such jurisdiction
(provided, that upon request by Lessee (such request having been
acknowledged by the Owner Participant's general counsel), the Owner
Trustee and the Owner Participant must respond within fourteen (14)
Business Days after receipt of such request describing its contacts in
the jurisdiction of reregistration, or else such party shall be deemed
for purposes of this clause (D) to have no such contacts) and (2)
assuming that the Indenture Trustee has no other contacts with such
jurisdiction, (E) there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such latter opinion cannot be given
in a form satisfactory to the Owner Participant, such opinion shall be
waived if insurance reasonably satisfactory to the Owner Participant is
provided to cover such risk), and (F) (unless Lessee shall have agreed
to provide insurance covering the risk of requisition of use of such
Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for
the loss of use of such Aircraft in the event of the requisition by
such government of such use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom and (b) the Owner Participant shall have received assurances
satisfactory to it that (i) the original indemnities in favor of it under this
Agreement afford it substantially the same protection as provided prior to such
change in registry, and (ii) such change will not result in the risk of, or the
imposition of, or increase the amount of, any Tax for which Lessee is not
required to indemnify under the Operative Documents, or is not then willing to
enter into a binding agreement to indemnify in a manner satisfactory in form and
substance, which may include consideration of the creditworthiness of Lessee, to
the Owner Participant; provided, however, that if (A) Lessee (or, so long as the
Guarantee remains in full force and effect, the Guarantor) has outstanding
publicly issued or privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB" or better from S&P and
"Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with
cash collateral or a letter of credit reasonably satisfactory in form and
substance to Lessor, the amount of which is sufficient (as determined by the
Owner Participant in its reasonable judgment) to cover any anticipated adverse
tax consequences for which the Owner Participant has been indemnified by Lessee
under the Operative Documents in addition to any additional
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<PAGE> 36
adverse tax consequences resulting from such reregistration or (C) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to Lessee,
the Indenture Trustee, the Loan Participants and the Owner Trustee, in its
capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties
and to enter into and perform its obligations under the Owner
Participant Documents;
(ii) the Owner Participant Documents have been duly authorized
by all necessary corporate action on the part of the Owner Participant,
do not require any approval not already obtained of stockholders of the
Owner Participant or any approval or consent not already obtained of
any trustee or holders of any indebtedness or obligations of the Owner
Participant, and have been duly executed and delivered by the Owner
Participant, and, subject to and in reliance upon the representations
made by the Loan Participants and Lessee in Section 8(q) hereof,
neither the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by the Owner
Participant with any of the terms and provisions thereof will
contravene any United States Federal or state law, judgment,
governmental rule, regulation or order applicable to or binding on the
Owner Participant (it being understood that no representation or
warranty is made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner Trustee,
other than such laws, rules or regulations relating to financing or the
citizenship requirements of the Owner Participant under applicable
aviation law) or contravene or result in any breach of or constitute
any default under, or result in the creation of any Lien (other than
Liens provided for in the Operative Documents) upon any property of the
Owner Participant under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, corporate charter, by-law or other agreement or instrument
to which the Owner Participant is a party or by which it or its
properties may be bound or affected provided, that no representation or
warranty as to ERISA (as hereinafter defined) is made by the Owner
Participant except as set forth in Section 8(q)(A);
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant
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<PAGE> 37
in accordance with the terms thereof (subject to the qualifications set
forth in clause (2) of the opinion of counsel to the Owner Participant
in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the ability of the Owner Participant to perform its obligations under
the Owner Participant Documents;
(v) upon the execution and delivery of the Trust Indenture,
the Trust Indenture Estate will be free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to the
Owner Participant;
(vi) neither the execution and delivery of the Owner
Participant Documents nor the performance by the Owner Participant of
its obligations thereunder require the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action in respect of any Federal, state or foreign government
authority or agency except for those exceptions referred to in Section
7(a)(iii) which may be applicable to the Owner Participant and the
Owner Participant Documents (it being understood that no representation
or warranty is made with respect to the laws, rules or regulations
relating to aviation or to the nature of the equipment owned by the
Owner Trustee, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law); and
(vii) the Owner Participant is not an "investment company" or
a company "controlled by an investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants and
agrees that it shall not cause or permit to exist a Lessor Lien attributable to
it with respect to the Aircraft or any other portion of the Trust Estate. Each
of First Security Bank of Utah, National Association, in its individual
capacity, and the Owner Participant agrees that it will promptly, at its own
expense, take such action as may be necessary duly to discharge such Lessor Lien
attributable to it. Each of First Security Bank of Utah, National Association,
in its individual capacity, and the Owner Participant agrees to make restitution
to the Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens) attributable
to it. The Owner Participant agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Estate resulting from any Taxes
or Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
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<PAGE> 38
(i) State Street Bank and Trust Company, in its individual
capacity, covenants and agrees that it shall not cause or permit to exist any
Lien, arising as a result of (A) claims against the Indenture Trustee not
related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or willful misconduct, (C)
claims against the Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 pursuant to said Section
7, or (D) claims against the Indenture Trustee arising out of the transfer by
the Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a
transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture Trustee has
received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants and
agrees as to itself: (i) that this Agreement has been duly authorized, executed
and delivered by such Loan Participant and this Agreement constitutes a legal,
valid and binding obligation of such Loan Participant enforceable against such
Loan Participant in accordance with its terms except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (ii) that such Loan Participant is duly
organized and validly existing under the laws of its jurisdiction of
organization; and (iii) that such Loan Participant has full power, authority and
legal right to execute, deliver and carry out the terms of this Agreement.
(k) Each Loan Participant represents and warrants that the
Secured Certificate to be issued to it pursuant to the Trust Indenture is being
acquired by it for investment and not with a view to resale or distribution (it
being understood that such Loan Participant may pledge or assign as security its
interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its control,
except that the Loan Participants may sell, transfer or otherwise dispose of any
Secured Certificate or any portion thereof, or grant participations therein, in
a manner which in itself does not require registration under the Securities Act
of 1933, as amended, and which is consistent with the applicable provisions of
the Credit Agreement and subject to the provisions hereof.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to the
Trust Agreement shall be strictly limited to the Trust Estate (excluding the
Excluded Payments) and (ii) make (and hereby agree to make), with respect to the
Trust Indenture Estate, the election provided for in Section 1111(b)(2) of Title
11 of the United
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<PAGE> 39
States Code. It is hereby agreed by the Indenture Trustee, and by the acceptance
of the Secured Certificates the Certificate Holders hereby agree, that if (i)
all or any part of the Trust Estate becomes the property of, or the Owner
Participant becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Reform Act of 1978 or any successor provision or any comparable
proceeding, (ii) pursuant to such reorganization provisions the Owner Trustee
(in its individual capacity) or the Owner Participant is required, by reason of
the Owner Trustee (in its individual capacity) or the Owner Participant being
held to have recourse liability to the holder(s) of the Secured Certificates or
to the Indenture Trustee, directly or indirectly (other than the recourse
liability of the Owner Participant under this Participation Agreement), to make
payment on account of any amount payable as principal or interest on the Secured
Certificates and (iii) any holder(s) of the Secured Certificates or the
Indenture Trustee actually receives any Excess Payment (as hereinafter defined)
which reflects any payment by the Owner Trustee (in its individual capacity) or
the Owner Participant on account of (ii) above, then such holder(s) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(l), "EXCESS PAYMENT" means the
amount by which such payment exceeds the amount which would have been received
by the holder(s) of the Secured Certificates or the Indenture Trustee if the
Owner Trustee (in its individual capacity) or the Owner Participant had not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 8(l) shall prevent the holder of a Secured Certificate
or the Indenture Trustee from enforcing any personal recourse obligation (and
retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) under this Agreement or the Trust Indenture (and any exhibits or
annexes thereto) or the Owner Participant under this Agreement.
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making use of
any voting trust, voting powers trust agreement or other similar
arrangement, will notify promptly all parties to this Agreement if in
its reasonable opinion its status as a Citizen of the United States
without making use of any voting trust, voting powers trust agreement
or other similar arrangement, is likely to change and that it will
resign as Indenture Trustee as provided in Section 8.02 of the Trust
Indenture if it should cease to be a Citizen of the United States
without making use of any voting trust, voting powers trust agreement
or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized and
validly existing in good standing under the laws of the Commonwealth of
Massachusetts and has the requisite corporate power and authority to
enter into and perform its obligations under the Trust Indenture and
this Agreement and to authenticate the Secured Certificates to be
delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the authentication
of the Secured Certificates to be delivered on the Delivery Date have
been duly authorized by all
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<PAGE> 40
necessary corporate action on its part, and neither the execution and
delivery thereof nor its performance of any of the terms and provisions
thereof will violate any Federal or state law or governmental rule or
regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its charter or
By-Laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may
be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, enforceable
against State Street Bank and Trust Company, in its individual capacity
or as Indenture Trustee, as the case may be, in accordance with its
terms except as limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights.
(n) So long as the Aircraft shall be subject to the Lease and
at all times prior to the release of the Lien of the Trust Indenture, the Owner
Participant will not, directly or indirectly, sell, assign, convey or otherwise
transfer any of its right, title or interest in and to the Aircraft, this
Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement
or any proceeds therefrom to any person or entity, unless the proposed
transferee is a "Transferee" (as defined below), and such sale, assignment,
conveyance or transfer is with respect to all, but not less than all, of such
Transferee's right, title and interest to a single entity (except that the Owner
Participant may transfer to one or more Transferees all or any portion of its
interest, if any, in the residual value of the Aircraft (which interest shall
not include any of the Owner Participant's right, title or interest in any of
the Operative Documents); provided that such transfer of residual value shall
result in no increase, decrease or change in any of Lessee's, any Loan
Participant's, or the Indenture Trustee's obligations, rights or
responsibilities under the Operative Documents and that such Transferee or
Transferees of residual value shall have no right to consent or object to any
matter or decision under, or relating to, the Aircraft or any of the Operative
Documents and provided, further, that no Lien shall result from such transfer).
A "TRANSFEREE" shall mean either (A) a bank or other financial institution or
insurance company with a combined capital, surplus and undivided profits of at
least $50,000,000 or a corporation whose tangible net worth is at least
$50,000,000, exclusive of goodwill, in either case as of the proposed date of
such transfer, as determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution,
insurance company, or corporation, provided that such bank, financial
institution, insurance company, or corporation furnishes to the Owner Trustee,
the Loan Participants, the Indenture Trustee and Lessee a guaranty with respect
to the Owner Participant's obligations, in the case of the Owner Trustee, under
the Trust Agreement and, in the case of the Loan Participants, the Indenture
Trustee and Lessee, the Owner Participant's obligations hereunder, including but
not limited to, under Section 8(c) and Section 8(h) hereof, in the form attached
as Exhibit D hereto; provided, however, that any Transferee shall not be
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<PAGE> 41
(i) an airline, a commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or (ii) other similar person
or a corporation or other entity controlling, controlled by or under common
control with such an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or other
similar person (unless such entity is General Electric Company, International
Lease Finance Corporation, any similar entity or any of their respective
Affiliates, provided, that (I) such entity is not included within the
immediately preceding clause (i) of this subsection (n) and (II) no such entity
has, through ownership of common or preferred stock, effective voting control of
an entity described in such immediately preceding clause (I)). Each such
transfer to a Transferee shall be subject to the conditions that (M) upon giving
effect to such transfer, the Transferee is a Citizen of the United States (or
has effected a voting trust agreement, voting powers agreement or other similar
arrangement so as not to affect the then continued (if applicable) United States
registration of the Aircraft), and has full power and authority to enter into
the transactions contemplated hereby, (N) the Transferee has the requisite power
and authority to enter into and carry out the transactions contemplated hereby
and such Transferee shall have delivered to Lessee, the Owner Trustee, the
Indenture Trustee and the Loan Participants an opinion of counsel in the form
attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in
the form attached as Exhibit B hereto or (ii) such other form approved by Lessee
and the Indenture Trustee whereby the Transferee confirms that it shall be
deemed a party to this Agreement and a party to the Trust Agreement and each
other Operative Document to which the Owner Participant is a party and agrees to
be bound by all the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in, the Owner Participant Documents and
makes the representations and warranties comparable to those made by the Owner
Participant thereunder provided that with respect to ERISA, the Transferee makes
the representations and warranties contained in Section 7(h) of the agreement in
the form attached as Exhibit B hereto, (P) such transfer does not affect
registration of the Aircraft under the Federal Aviation Act, or any rules or
regulations promulgated thereunder or create a relationship which would be in
violation thereof or violate any provision of the Securities Act of 1933, as
amended, or any other applicable Federal or state law (provided that the term
"applicable Federal law" shall not include ERISA), (Q) the transferor Owner
Participant assumes the risk of any loss of Interest Deductions, Amortization
Deductions and MACRS Deductions and the risk of any Inclusion Event (each as
defined in the Tax Indemnity Agreement) resulting from such transfer, (R) the
transferor Owner Participant pays all of the costs and expenses (including,
without limitation, fees and expenses of counsel) incurred in connection with
such transfer, including the costs and expenses of the Owner Trustee, the
Indenture Trustee, Lessee and the Loan Participants in connection therewith
unless such transfer is effected in connection with the exercise of remedies as
a result of and during the continuance of an Event of Default in which case any
expenses incurred by Lessee in connection with such transfer shall not be
reimbursed, and (S) the terms of the Operative Documents and the Overall
Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations
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<PAGE> 42
of the transferor Owner Participant under the Owner Participant Documents
arising after the date of such transfer except to the extent fully attributable
to or arising out of acts or events occurring prior thereto and not assumed by
the Transferee (in each case, to the extent of the participation so
transferred). If the Owner Participant intends to transfer any of its interests
hereunder, it shall give 20 days' prior written notice thereof to the Loan
Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying
the name and address of the proposed Transferee.
Upon any such transfer, Lessee shall, at the Transferee's expense,
use its reasonable efforts promptly to cause to be obtained new insurance
certificates (consistent with the provisions of Section 11 of the Lease) that
reflect the interest of the Transferee in the Aircraft.
(o) Notwithstanding the provisions of Section 8(x) hereof,
unless waived by the Loan Participants, Lessee shall not be entitled to assume
the Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of Default shall have
occurred and be continuing or any condition or event shall exist which, with the
passage of time or giving of notice or both, would become such an Event of
Default.
(p) First Security Bank of Utah, National Association, and
State Street Bank and Trust Company, each in its individual capacity, agrees for
the benefit of Lessee to comply with the terms of the Trust Indenture which it
is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is not
acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code or of any entity the assets of which constitute "plan" assets under
ERISA. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section 2.14
of the Trust Indenture) unless such entity makes (or is deemed to have made) a
representation and warranty as of the date of transfer as set forth in the
preceding sentence and a covenant as set forth in this sentence.
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement and the other Operative Documents, (ii)
the initial purchase by the Loan Participants of the Secured Certificates, and
(iii) the initial acquisition by the Owner Participant of its beneficial
interest in the Trust Estate will involve any non-exempt prohibited transaction
within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through
(D) of the Code (such representation being made in reliance upon and subject to
the accuracy of the representations contained in subparagraph (A) of this
Section 8(q)).
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<PAGE> 43
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in connection
with the financing of the Aircraft and the other transactions contemplated by
the Operative Documents (including any transfer of Secured Certificates
(including by way of participation or assignment of an interest, provided such
participant or assignee agrees to hold such terms confidential to the same
extent as herein provided) or the Owner Participant's beneficial interest in the
Trust Estate and any exercise of remedies under the Lease and the Trust
Indenture), (C) with the prior written consent of the Manufacturer and Lessee,
(D) to the Owner Trustee's, the Indenture Trustee's and each Participant's
counsel or special counsel, independent insurance brokers or other agents who
agree to hold such information confidential, or (E) in the case of the Owner
Participant and/or the Owner Trustee, it may disclose so much of the Purchase
Agreement as has been assigned to the Owner Trustee under the Purchase Agreement
Assignment and not specifically reserved to Lessee under Section 1 thereof, to
bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the Loan
Participants pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall
not cause or permit to exist a Loan Participant Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each Loan
Participant agrees that it will promptly, at its own expense, take such other
action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificates of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the date
of payment of such principal amount plus all other amounts owed to such affected
Certificate Holder under the Operative Documents (including any Funding Loss
Amount payable as a result of the applicable purchase occurring on a day other
than the last day of an Interest Period). For purposes of this Section 8(t),
"AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted
claims
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<PAGE> 44
against the Owner Trustee or Lessee under or sought rights or remedies provided
by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture.
(u) State Street Bank and Trust Company, in its individual
capacity, covenants and agrees that it shall not cause or permit to exist any
Indenture Trustee's Liens with respect to the Trust Indenture Estate or the
Trust Estate. State Street Bank and Trust Company, in its individual capacity,
agrees that it will promptly, at its own expense, take such action as may be
necessary duly to discharge such Indenture Trustee's Liens. State Street Bank
and Trust Company, in its individual capacity, agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Indenture
Estate or the Trust Estate resulting from such Indenture Trustee's Liens.
(v) First Security Bank of Utah, National Association, in its
individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner Participant,
each of the other Owner Trustee Documents has been duly executed and
delivered by one of its officers who is duly authorized to execute and
deliver such instruments on behalf of First Security Bank of Utah,
National Association or the Owner Trustee, as the case may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First Security
Bank of Utah, National Association, in its individual capacity, arising
out of any event or condition not related to the ownership, leasing,
use or operation of the Aircraft or to any other transaction
contemplated by this Agreement or any of the Operative Documents,
including any such Lien resulting from the nonpayment by First Security
Bank of Utah, National Association, in its individual capacity, of any
Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes (or
to the best of its knowledge would, with the passage of time or the
giving of notice or both, constitute) an Event of Default as defined in
the Trust Indenture which has been caused by or relates to First
Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof
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<PAGE> 45
nor its performance of any of the terms and provisions thereof will
violate any Federal law governing the banking and trust powers of First
Security Bank of Utah, National Association, or Utah law or regulation
or contravene or result in any breach of the provisions of its articles
of association or By-Laws or any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may
be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with its respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association for services rendered in connection with the
transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if (i)
Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the
Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease
and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to
Lessee written notice of Lessor's election to retain title to the Aircraft and
(iii) the Owner Trustee has failed to make, on or before the Termination Date,
any payment required to be made by the Owner Trustee pursuant to Section 9(c) in
connection with its retention of title to the Aircraft, the Owner Participant
will indemnify Lessee for any losses, damages, costs or expenses of any kind
(including any additional rents paid by Lessee and any fees and expenses of
lawyers, appraisers, brokers or accountants) incurred as a consequence of such
failure by the Owner Trustee. The Owner Participant further covenants and agrees
to pay those costs and expenses specified to be paid by the Owner Participant
pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to
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<PAGE> 46
purchase the Aircraft pursuant to Section 19(b) of the Lease or (b) to terminate
the Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, then
each of the parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee (including,
without limitation, such bills of sale and other instruments and documents as
Lessee shall reasonably request to evidence (on the public record or otherwise)
such transfer and the vesting of all right, title and interest in and to the
Aircraft in Lessee), and if Lessee, in connection with such purchase, elects to
assume the obligations of the Owner Trustee pursuant to the Trust Indenture and
the Secured Certificates each of the parties will execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, maintaining the security interest in the
Aircraft created by the Trust Indenture, releasing the Owner Participant and the
Owner Trustee from all future obligations in respect of the Secured
Certificates, the Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such assumption by Lessee.
(y) (A) Lessee will not consolidate with or merge into any
other corporation or convey, transfer or lease substantially all of its assets
as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer
or lease substantially all of the assets of Lessee as an entirety shall
be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
reasonably satisfactory to such Participant containing an assumption by
such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement mentioned in clause (ii)
above comply with this subparagraph (A) of Section 8(y) and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and
(v) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer
or lease substantially all of the assets of Lessee, shall make such
filings and recordings with the FAA pursuant
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<PAGE> 47
to the Federal Aviation Act, as shall be necessary or desirable to
evidence such consolidation, merger, conveyance, transfer or lease with
or to such entity.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety in
accordance with this subparagraph (A) of Section 8(y), the successor corporation
or Person formed by such consolidation or into which Lessee is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, Lessee under this
Agreement with the same effect as if such successor corporation or Person had
been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to which
it is a party.
(B) Lessee shall at all times maintain its corporate
existence except as permitted by subparagraph (A) of this Section 8 (y).
(z) Lessee, at its expense, will take, or cause to be taken,
such action with respect to the recording, filing, re-recording and refiling of
the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the
Trust Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in effect,
the perfection of the security interests created by the Trust Indenture and any
security interest that may be claimed to have been created by the Lease and the
interest of the Owner Trustee in the Aircraft or will furnish to the Owner
Trustee and the Indenture Trustee timely notice of the necessity of such action,
together with such instruments, in execution form, and such other information as
may be required to enable them to take such action. Lessee will notify the Owner
Trustee, the Owner Participant and the Indenture Trustee of any change in the
location of its chief executive office (as such term is used in Article 9 of the
Uniform Commercial Code) promptly after making such change or in any event
within the period of time necessary under applicable law to prevent the lapse of
perfection (absent refiling) of financing statements filed under the Operative
Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner
Participant hereby agrees to make such recalculations as and when contemplated
by the Lease and subject to all the terms and conditions of the Lease and
promptly to take such further actions as may be necessary or desirable to give
effect to and to cause the Owner Trustee to give effect to the provisions of
Section 3 of the Lease.
(bb) To the extent that any Excess Amount is due on the
Commencement Date, the Owner Participant shall have the right to prepay to the
Indenture Trustee all or a portion of such Excess Amount on the last Business
Day occurring in 1996, and the Indenture Trustee agrees that it shall invest
such amount in accordance with the terms set forth in the
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<PAGE> 48
Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with
Lessee, and not for the benefit of any other party to this Participation
Agreement, that it will pay in full to Lessee upon termination of the Lease the
Reimbursement Amount for which Lessee has not previously received an offset
pursuant to Section 3(g) of the Lease.
(cc) The Owner Participant hereby agrees to notify Lessee or
cause Lessee to be notified by telecopier not later than 10:00 a.m. New York
time on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) [________________] agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the Indenture
Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual
interest expected to accrue on the Secured Certificates during each Interest
Period promptly after the commencement of such Interest Period and after the
occurrence of any event that would cause such actual interest expected to accrue
during such Interest Period to change from the amount previously notified. The
Administrative Agent further agrees to perform all of the functions that are
required to be performed by the Administrative Agent pursuant to the terms of
the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that it
will pay, or cause to be paid, all costs and expenses that are for the account
of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner
Participant further agrees with Lessee that it will provide the information
contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of
the Lease within the time period contemplated therein.
(ff) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate unless
and until the transferee agrees in writing (copies of which shall be provided by
the Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant) to
make the representations contemplated to be made by a Loan Participant in this
Agreement and to be bound by the terms of this Agreement and the Trust Indenture
(including, without limitation, the representations and covenants set forth in
Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff)
and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(gg) [____________] agrees to act as Documentation Agent
hereunder and to perform all of the functions that are required to be performed
by the Documentation Agent hereunder.
(hh) [____________], [____________] and [_______________]
each agrees to furnish to the Administrative Agent timely information for
the purpose of determining each Eurodollar Rate (as defined in the Trust
Indenture).
(ii) Lessee agrees and covenants that it shall not purchase or
guarantee or acquire any interest in any Secured Certificate or any other
certificate for which a Secured Certificate is security except as provided in
Section 8(x).
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<PAGE> 49
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS
AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment
to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant
shall, pursuant to this Section 9 and in accordance with the requirements of
Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize
the debt payment structures. Within forty-five Business Days after the need for
an adjustment to Rent has been established pursuant to Section 3 of the Lease,
the Owner Participant shall deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE")
setting forth the proposed revised schedules of debt amortization and Basic
Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and
Termination Value percentages. Within forty-five days of its receipt of the
Reoptimization Certificate, Lessee may demand a verification, pursuant to
Exhibit E of the Lease, of the information set forth in the Reoptimization
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Reoptimization Certificate or the determination pursuant to
such verification procedures of such information, the Owner Participant will
cause the Owner Trustee (M) to execute a Lease Supplement setting forth the
reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss
Value and Termination Value percentages, and (N) to exchange new Secured
Certificates containing reoptimized amortization schedules for the Secured
Certificates outstanding immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of Basic Rent,
Stipulated Loss Value and Termination Value percentages pursuant to this Section
9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes
in the amortization schedule of the Secured Certificates, and (N) each Loan
Participant will exchange the Secured Certificates held by it immediately prior
to such reoptimization for new Secured Certificates containing reoptimized
amortization schedules; provided that such changes do not (X) change the final
maturity of any Secured Certificates to beyond twenty years from the Delivery
Date or (Y) increase the weighted average lives of the Secured Certificates as
of the Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the
Owner Trustee hereby (A) agrees with Lessee, the Loan Participants and the
Indenture Trustee not to amend, supplement or otherwise modify any provision of
the Trust Agreement in a manner adversely affecting such party without the prior
written consent of such party; and (B) agrees with Lessee and the Loan
Participants not to revoke the Trust Agreement without the prior written consent
of Lessee and the Loan Participants so long as the Lease or the Lien of the
Trust Indenture remain in effect. Notwithstanding the foregoing, so long as the
Lease has not been terminated, the Indenture Trustee and the Owner Trustee
hereby agree for the benefit of Lessee that without the consent of Lessee they
will not (i) amend or modify Article III or IX of the Trust Indenture, (ii) make
any amendment which will affect the stated principal amount or interest on the
Secured Certificates or (iii) amend or modify the provisions of Sections 2.05 or
10.05 of the Trust Indenture. The Indenture Trustee and the Owner Trustee agree
to promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Documents to which Lessee is not a party.
Notwithstanding anything to the contrary contained herein, in the Trust
Agreement or in any
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<PAGE> 50
other Operative Document, the Owner Participant will not consent to or direct a
change in the situs of the Trust Estate without the prior written consent of
Lessee. Each Loan Participant agrees that it will not take any action in respect
of the Trust Indenture Estate except through the Indenture Trustee pursuant to
the Trust Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and agrees
with each of the Loan Participants, the Owner Participant, the Indenture Trustee
and the Owner Trustee, in its capacity as such and in its individual capacity as
follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act, or shall furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to make
application for such registration, and shall promptly furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to
timely file any reports required to be filed by it as the lessor under the Lease
or as the owner of the Aircraft with any governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments to
the Trust Indenture and this Agreement 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. Upon the execution and delivery of the
FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the
Trust Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; first, the
FAA Bill of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the
Trust Indenture, with the Trust Supplement attached.
(c) Lessee agrees that it will consummate, with Owner Participant, on
terms substantially identical to those set forth in the Operative Documents,
leveraged lease transactions in respect of the first four Boeing 757-251
aircraft delivered by the Manufacturer to Lessee subsequent to the date of this
Agreement.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among
Lessee, the Owner Participant and the Owner Trustee that for Federal income tax
purposes the Owner Participant will be the owner of the Aircraft to be delivered
under the Lease and Lessee
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<PAGE> 51
will be the lessee thereof, and each party hereto agrees to characterize the
Lease as a lease for Federal income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a)
Except as otherwise defined in this Agreement, terms used herein in capitalized
form shall have the meanings attributed thereto in the Lease. The term "TRUST
OFFICE" shall have the meaning set forth in the Trust Agreement and the term
"TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust
Indenture. Unless the context otherwise requires, any reference herein to any of
the Operative Documents refers to such document as it may be amended from time
to time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier (only if such
communication is also given or made by an additional method herein permitted),
or by prepaid courier service, and shall be deemed to be given for purposes of
this Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 13(b).
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), 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 telecopier
numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants,
the Administrative Agent, the Documentation Agent, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures of
such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto, or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture, or (D) if to the
Guarantor, addressed to the Guarantor at such address as the Guarantor shall
have furnished by notice to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Agreement, the Lease, the
Tax Indemnity Agreement or any other Operative Document, the subject matter of
any thereof or any of the transactions contemplated hereby or thereby brought by
any party or parties thereto, or their successors or assigns, and (B) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, to the extent permitted by applicable
law, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or that this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or by such courts. Lessee
hereby generally consents to service of process at Cadwalader, Wickersham &
Taft, 100 Maiden Lane, New York, New
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<PAGE> 52
York 10038, Attention: Managing Attorney, or such office of Lessee in New York
City as from time to time may be designated by Lessee in writing to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the situs
of the trust may be moved with the written consent of the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Loan Participants may
reasonably request in form and substance satisfactory to such parties, (B) the
rights and obligations under the Operative Documents of the Owner Participant
and the Loan Participants shall not be altered as a result of the taking of such
action, (C) the lien of the Trust Indenture on the Trust Indenture Estate shall
not be adversely affected by such action, and (D) the Owner Participant and the
Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to indemnify the Owner Participant, the
Loan Participants, the Owner Trustee or the Trust Estate pursuant to Section
7(b) hereof (taking into account any additional indemnification provided by
Lessee pursuant to clause (A) of this sentence), (IV) such removal will not
result in any loss of Interest Deductions or MACRS Deductions or an Inclusion
Event (as defined in the Tax Indemnity Agreement) with respect to which Lessee
is not required to indemnify the Owner Participant pursuant to Section 4 of the
Tax Indemnity Agreement (taking into account any additional indemnification
provided by Lessee pursuant to clause (A) of this sentence) and (V) if such
removal involves the replacement of the Owner Trustee, an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
the Loan Participants and to the Owner Participant covering the matters
described in Section 4(a)(xiii) hereof and such other matters as the Loan
Participants and the Owner Participant may reasonably request, and (E) Lessee
shall indemnify and hold harmless the Owner Participant, the Indenture Trustee
and the Loan Participants on an After-Tax Basis against any and all reasonable
and actual costs and expenses including reasonable counsel fees and
disbursements, registration fees, recording or filing fees and taxes incurred by
the Owner Trustee, the Owner Participant, the Indenture Trustee and the Loan
Participants in connection with such change of situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the
Owner Participant covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as Lessor, or the
Indenture Trustee under the
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<PAGE> 53
terms of the Lease which by its terms is not to be unreasonably withheld by the
Owner Trustee, as Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the
Documentation Agent's and the Owner Participant's obligations under any and all
thereof, shall survive the making available of the respective Commitments by the
Loan Participants and the Owner Participant, the delivery or return of the
Aircraft, the transfer of any interest of the Owner Participant in the Trust
Estate or the Aircraft or any Engine or the transfer of any interest by any Loan
Participant in any Secured Certificate or the Trust Indenture Estate and the
expiration or other termination of this Agreement or any other Operative
Document.
(c) 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 party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Agreement shall be binding upon, and
inure to the benefit of, and shall be enforceable by, Lessee and its successors
and assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, the Administrative Agent
and the Documentation Agent. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement or
such other agreements against the Owner Trustee in its individual capacity or
against any institution or person which becomes a successor trustee or
co-trustee or
- 53 -
<PAGE> 54
any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this Agreement
and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any
reorganization of Lessee under such Section.
SECTION 16. EXPENSES. Each of the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly
submit to the Owner Trustee and Lessee for their review copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (but in no event later than July 15,
1996). The Owner Participant agrees to transfer to the Owner Trustee promptly
but in any event no later than August 15, 1996 such amount as shall be necessary
in order to enable the Owner Trustee to pay Transaction Expenses. To the extent
of funds received by it, the Owner Trustee agrees to pay all invoices of
Transaction Expenses that have been approved by it and Lessee promptly upon
receipt thereof. Notwithstanding the foregoing, to the extent that Transaction
Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the
right to pay directly its special counsel fees and the fee and reasonable
disbursements of Babcock and Brown Financial Corporation.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default or a Default of the type referred
to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing,
Lessee shall have the right to refinance all (but not less than all) of the
Secured Certificates with Dollar denominated debt no more than three times by
giving written notice to the Owner Participant and the Owner Trustee that there
be effected a voluntary redemption of the Secured Certificates by the Owner
Trustee, whereupon the Owner Participant agrees to negotiate promptly in good
faith to conclude an agreement with Lessee as to the terms of such refinancing
(including the terms of any debt to be issued in connection with such
refinancing); provided that no such refinancing shall subject the Owner
Participant to any adverse, or the risk of any adverse, tax consequence unless
Lessee agrees to indemnify the Owner Participant for such unindemnified adverse
tax consequence (any such indemnity to be satisfactory in form and substance,
which may include consideration of the creditworthiness of Lessee, to the Owner
Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee
remains in full force and effect, the Guarantor) has outstanding publicly issued
or privately placed unsecured indebtedness (excluding any short-term commercial
paper) with a rating of "BBB" or better from S&P and "Baa2" or better from
Moody's, or (2) Lessee provides the Owner
- 54 -
<PAGE> 55
Participant with cash collateral or a letter of credit reasonably satisfactory
in form and substance to Lessor, the amount of which is sufficient (as
determined by the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner Participant has been
indemnified by Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such refinancing or (3) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee); provided further that (x) the Owner Participant
agrees that it will not be entitled to any indemnity from Lessee for any failure
of the debt in such refinancing to constitute "qualified nonrecourse
indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b)
with respect to the first refinancing described in the next paragraph, provided
it is satisfactory to, or has no adverse tax consequences for, the Owner
Participant and (y) no offering material related to any public refinancing shall
disclose the identity of the Owner Participant.
The Owner Participant has been informed by Lessee that the
debt to be issued in connection with such refinancing may be issued in several
classes, each of which may have a different interest rate, final maturity date
and priority of payment. The Owner Participant acknowledges that it has been
informed that one or more of such classes may be entitled to the benefit of a
liquidity facility which shall not be provided by Lessee or a Person who is an
Affiliate of Lessee, and which will entitle the Indenture Trustee (or a
collateral agent therefor) to make drawings thereunder to pay interest on a
current basis on the enhanced classes of debt for up to three semi-annual
interest payments following a payment default with respect to such enhanced
classes. The Owner Participant acknowledges being informed that under such a
structure drawings of the entire amount available under the liquidity facility
for any class (and the deposit of the proceeds thereof into a cash collateral
account) will be required in the event of a ratings decline with respect to the
related liquidity provider or in the event that the liquidity facility is not
extended or replaced prior to its scheduled expiration and that amounts owed to
the liquidity facility provider for both drawings and interest thereon will
generally be senior to all Loan Participant claims. The Owner Participant agrees
that in any refinancing operation it will consider in good faith these and any
other conditions which do not impair the customary rights of an owner
participant in a leveraged lease transaction.
In the event that any such agreement is concluded:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth the following information calculated pursuant to the
provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on the
proposed date on which the outstanding Secured Certificates will be redeemed
(such date, the "REFINANCING DATE"), (C) the amount, if any, by which the Owner
Participant's aggregate investment in the beneficial interest in the Aircraft is
to be increased or decreased and (D) the proposed revised
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<PAGE> 56
schedules of Basic Rent percentages, debt amortization, Stipulated Loss Value
percentages and Termination Value percentages. The Refinancing Certificate shall
not provide for a debt/equity ratio of more than 4:1. Within fourteen days of
its receipt of the Refinancing Certificate, Lessee may demand a verification
pursuant to Exhibit E to the Lease of the information set forth in the
Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of the
information set forth in the Refinancing Certificate (or the determination
pursuant to such verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised Basic Rent percentages, debt amortization, Stipulated Loss
Value percentages and Termination Value percentages (such information, whether
as set forth or as so determined, the "REFINANCING INFORMATION") the appropriate
parties will take the actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale with the institution or institutions to be named therein providing for
(i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information (such debt securities,
the "NEW DEBT") except that the principal amount of New Debt may exceed by no
more than 105% the principal amount of all outstanding Secured Certificates in
connection with the first refinancing under this Section 17, (ii) the
application of the proceeds of the sale of the New Debt to the redemption of all
such Secured Certificates on the Refinancing Date and (iii) the payment of the
excess, if any, of such proceeds over the amounts necessary to effect such
redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide
for the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses of the
first refinancing (including, but not limited to, the fees, expenses and
disbursements of counsel and any placement or underwriting fees) and such
expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the
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<PAGE> 57
assumptions and constraints referred to in the definition of "Net Economic
Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions
and constraints are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A). All adjustments to Basic Rent
shall also be in compliance with the tests of Sections 4.02(5), 4.07 and
4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section
4.08(1) shall be applied on a prospective basis from the date of such
adjustment) and Section 467 of the Code as then in effect as long as the
Schedule of Basic Rent was in compliance with Section 467 of the Code as in
effect on the Closing Date, it being understood that, to the extent that any
grandfather, effective date, or similar provisions in any regulations under
Section 467 or other administrative pronouncement interpreting Section 467
promulgated or issued after the Closing Date causes such regulations or
pronouncement not to be applicable to the Schedule of Basic Rent in effect on
the Closing Date, such Schedule shall be deemed to be in compliance with Section
467 as in effect on the Closing Date.
(b) The final maturity and weighted average life of the New Debt on
an aggregate basis shall not exceed by more than six months those of the Secured
Certificates.
(c) The Secured Certificates shall not be subject to voluntary
redemption by the Owner Trustee without the consent of Lessee except as set
forth in Section 2.14 of the Trust Indenture.
(d) The Owner Participant, at the time of the closing of the second
or third refinancing pursuant to this Section 17, if any, shall be paid a fee of
$25,000 in respect of each such refinancing provided, that in the event that a
similar refinancing is concurrently being effected on identical terms under any
of the other transactions entered into in 1996 by the Owner Participant and
Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is
payable pursuant to the corresponding provisions of the applicable participation
agreement, Lessee shall not be required to pay a separate fee of $25,000 for
each such refinancing, it being the intent of the parties that a total fee of
$50,000 shall be paid by Lessee for all such concurrent refinancings on
identical terms for which a fee is otherwise payable pursuant to the
corresponding provisions of the applicable participation agreement.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes each of the
Administrative Agent and the Documentation Agent (each, an "AGENT") to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Operative Documents as are delegated to such Agent
by the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. Each Agent shall have no duties or
responsibilities except those expressly set forth in the Operative Documents. As
to any matters not expressly provided for hereby or by the Trust Indenture, each
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining
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<PAGE> 58
from acting) upon the instructions of the Majority in Interest of Certificate
Holders (as defined in the Trust Indenture), and such instructions shall be
binding upon all Loan Participants and all Certificate Holders; provided,
however, that such Agent shall not be required to take any action that exposes
such Agent to personal liability or that is contrary to the Operative Documents
or applicable law. Each Agent agrees to give to each Loan Participant prompt
notice of each notice given to it by the Owner Trustee pursuant to the terms of
the Operative Documents with respect to which such Loan Participant has not
otherwise received such notice.
(b) No Agent nor such Agent's directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or the Trust Indenture, except
for its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, each Agent: (i) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to any Loan Participant and shall not be
responsible to any Loan Participant for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
the Operative Documents on the part of any party thereto or to inspect the
property (including the books and records) of any such party; (iv) shall not be
responsible to any Loan Participant for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, the Operative Documents or any other instrument or
document furnished pursuant thereto; and (v) shall incur no liability under or
in respect of the Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier, telegram
or telex) believed by it to be genuine and signed or sent by the proper party or
parties.
(c) With respect to their Loans and any Secured Certificates issued
to them, [ ] and [ ] shall
have the same rights and powers under the Operative Documents as any other Loan
Participant and may exercise the same as though they were not Agents and the
term "Loan Participant" or "Certificate Holder" shall, unless otherwise
expressly indicated, include [ ] and [ ] in their individual capacity. [ ]
and its Affiliates and [ ] and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the Owner
Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any
Person who may do business with or own securities of any of such Persons, all as
if [ ] and [ ] were not Agents and without any duty to account therefor to
the Loan Participants.
(d) Each Loan Participant acknowledges that it has, independently and
without reliance upon the Agents or any other Loan Participant and based on the
financial statements referred to in Section 7(a)(ix) of this Agreement and such
other documents and
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<PAGE> 59
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Loan Participant also acknowledges
that it will, independently and without reliance upon the Agents or any other
Loan Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a successor agent as
provided below, any Agent may resign at any time by giving written notice
thereof to the Loan Participants, the Owner Trustee and Lessee and may be
removed at any time with or without cause by the Majority in Interest of
Certificate Holders (as defined in the Trust Indenture). Upon any such
resignation or removal, the Majority in Interest of Certificate Holders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority in Interest of Certificate Holders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation or removal of the retiring Agent by the Majority in
Interest of Certificate Holders, then the retiring Agent may, on behalf of the
Loan Participants, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the Trust Indenture. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 18 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the Trust Indenture. Notwithstanding anything contrary
herein, the Administrative Agent and the Documentation Agent hereunder and under
the Trust Indenture shall be the same institution, respectively, as the
Administrative Agent and the Documentation Agent under (and as defined in) the
Credit Agreement.
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<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
--------------------------------------------
Title: Sr. Vice President-Finance and Treasurer
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[ ]
Owner Participant
By:
--------------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 61
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
--------------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
--------------------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 62
[INSERT BRIDGE LENDERS]
By:
--------------------------------------------
Title:
- Signature Page -
<PAGE> 63
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and
Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant:
Payments made to the Owner Participant as
provided in Section 3.06 of the Trust Indenture
shall be made to:
<PAGE> 64
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust
Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 C
Owner Trustee: First Security Bank of Utah, National
Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
First Security Bank of Utah, National
Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 C
SCHEDULE I - PAGE 2
<PAGE> 65
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ------------------ -------------
<S> <C>
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
Owner Participant:
<S> <C>
-----------
Total Commitments: 100%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 67
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1996 C]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina Japan
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Brazil Netherlands
Canada New Zealand
Chile Norway
Denmark People's Republic of China
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Hungary South Korea
Iceland Spain
India Sweden
Indonesia Switzerland
Ireland Thailand
Italy United Kingdom
<PAGE> 68
EXHIBIT B
TO PARTICIPATION
AGREEMENT
[NW 1996 C]
ASSIGNMENT AND ASSUMPTION AGREEMENT
[NW 1996 C]
ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 C], dated as of
, , between , a
corporation (the "ASSIGNOR"), and , a
corporation (the "ASSIGNEE").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect (a) the transfer by
the Assignor to the Assignee of all of the right, title and interest of the
Assignor (except as reserved below) in, under and with respect to, among other
things, (i) the Participation Agreement [NW 1996 C], dated as of April 26, 1996,
among Northwest Airlines, Inc., the Assignor, each Loan Participant named
therein, First Security Bank of Utah, National Association, and State Street
Bank and Trust Company (as amended, modified or supplemented from time to time,
the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity
payments payable to the Assignee directly or indirectly thereunder, (ii) the
Trust Agreement identified in the Participation Agreement (the "TRUST
AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv)
the Tax Indemnity Agreement identified in the Participation Agreement, and (v)
the proceeds therefrom and (b) the assumption by the Assignee of the obligations
of the Assignor accruing from and after the Effective Time; and
WHEREAS, such documents permit such transfer upon satisfaction of
certain conditions heretofore or concurrently herewith being complied with;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto do hereby
agree as follows (capitalized terms used herein without definition having the
meaning ascribed thereto in the Participation Agreement):
1. ASSIGNMENT. The Assignor has sold, assigned, conveyed,
transferred and set over, and does hereby sell, assign, convey, transfer and set
over, unto the Assignee as of the date hereof all of its present and future
right, title and interest in, under and with respect to the Trust Estate, the
Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity
Agreement and all other Operative Documents to which the Assignor is a party or
any other contract, agreement, document or instrument relating to the Trust
Estate by which the Assignor is bound, and any proceeds therefrom, together with
all other documents and
<PAGE> 69
instruments evidencing any of such right, title and interest, except such rights
of the Assignor as have accrued to the Assignor prior to the Effective Time (as
subsequently defined) (including specifically, but without limitation, the right
to receive any amounts due or accrued to the Assignor under the Trust Agreement
prior to the Effective Time and the right to receive any indemnity payment
pursuant to the Participation Agreement or the Tax Indemnity Agreement with
respect to events occurring prior to the Effective Time).
2. ASSUMPTION. The Assignee hereby undertakes all of the duties
and obligations of the "Owner Participant" accruing on or subsequent for the
Effective Time (for the avoidance of doubt, excluding any duties, obligations
and liabilities of the Assignor required to be performed by it on or prior to
the date hereof under the Participation Agreement, the Trust Agreement, any of
the other Operative Documents to which the Assignor is a party or by which it is
bound or any other contract, agreement, document or other instrument relating to
the Trust Estate to which the Assignor is a party or by which the Assignor is
bound), pursuant to the Participation Agreement, the Trust Agreement, and each
other Operative Document to which the Assignor is a party, each contract,
agreement, document or instrument hereby assigned and each other contract,
agreement, document or instrument relating to the Trust Estate by which the
Assignor is bound, and hereby confirms that it shall be deemed a party to the
Participation Agreement, the Trust Agreement and each other Operative Document
to which the Assignor is a party or by which it is bound and each such other
contract, agreement, document and instrument, and shall be bound by all the
terms thereof (including the agreements and obligations of the Assignor set
forth therein) as if therein named as the Owner Participant. The assignment and
assumption contemplated hereby shall not release the Assignor from its
obligations under the Participation Agreement or the Trust Agreement except to
the extent expressly assumed by the Assignee pursuant to this Section 2,
provided, that Assignor's rights under Section 7 of the Participation Agreement
and under the Tax Indemnity Agreement to the extent relating to acts, conditions
or events occurring or existing prior to the date hereof shall be retained in
full by Assignor.
3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within
assignment, the Assignor hereby constitutes and appoints the Assignee, and its
successors and assigns, the true and lawful attorneys of the Assignor, with full
power of substitution, in the name of the Assignee or in the name of the
Assignor but on behalf of and for the benefit of and at the expense of the
Assignee, to collect for the account of the Assignee all items sold, transferred
or assigned to the Assignee pursuant hereto; to institute and prosecute, in the
name of the Assignor or otherwise, but at the expense of the Assignee, all
proceedings that the Assignee may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the items sold,
transferred or assigned; to defend and compromise at the expense of the Assignee
any and all actions, suits or proceedings as to title to or interest in any of
the property acquired by the Assignee; and to do all such acts and things in
relation thereto at the expense of the Assignee as the Assignee shall reasonably
deem advisable. The Assignor hereby acknowledges that this appointment is
coupled with an interest and is irrevocable by the Assignor in any manner or for
any reason or by virtue of any dissolution of the Assignor.
EXHIBIT B - PAGE 2
<PAGE> 70
4. PAYMENTS. The Assignor hereby covenants and agrees to pay
over to the Assignee, if and when received following the date hereof, any
amounts (including any sums payable as interest in respect thereof) paid to or
for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee, and the Assignee hereby covenants and agrees to pay over to the
Assignor, if and when received following the date hereof, any amounts (including
any sums payable as interest in respect thereof) paid to or for the benefit of
the Assignee that, under Section 1 hereof, belong to the Assignor.
5. FURTHER ASSURANCES. Each party hereto shall, at any time and
from time to time, upon the request of any other party hereto, promptly and duly
execute and deliver any and all such further instruments and documents and take
such further action as the other party may reasonably request to obtain the full
benefits of this Assignment and of the right and powers herein granted.
6. INVESTMENT PURPOSE. The Assignee hereby represents that it is
acquiring the trust and other interests hereby assigned to it for its own
account for the purpose of investment and not with a view to the distribution or
resale of either thereof.
7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and
warrants that:
(a) it is duly organized and validly existing in good
standing under the laws of its jurisdiction of organization, and
has the power and authority to carry on its business as now
conducted, to own or hold under lease its properties and to enter
into and perform its obligations and the obligations of the Owner
Participant under the Operative Documents to which it is or will
be a party;
(b) this Assignment and Assumption Agreement has been duly
authorized by all necessary action on its part, does not require
any approval not already obtained of its stockholders or any
approval or consent not already obtained of any trustee or
holders of any of its indebtedness or obligations, and has been
duly executed and delivered by the Assignee, and neither the
execution and delivery thereof, nor the consummation of the
transactions contemplated hereby, nor compliance by the Assignee
with any of the terms and provisions hereof or of any of the
Operative Documents to which it will become a party or by which
it will be bound, will contravene any United States Federal or
state law, judgment, governmental rule, regulation or order
applicable to or binding on the Assignee (it being understood
that no representation or warranty is made with respect to laws,
rules or regulations relating to ERISA (except as set forth in
subsection 7(h) below) or aviation or to the nature of the
equipment to be owned by the Owner Trustee, other than such laws,
rules, or regulations relating to lease transactions generally or
to the citizenship requirements of the Assignee under the Federal
Aviation Act) or contravene or result in any breach of or
constitute any default under, or result in the creation of any
Lien (other
EXHIBIT B - PAGE 3
<PAGE> 71
than Liens provided for in the Operative Documents) upon any
property of the Assignee or, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement, corporate charter, by-law or other agreement or
instrument to which the Assignee is a party or by which it or its
properties may be bound or affected;
(c) each of the Operative Documents to which it will become
a party, assuming such document is the legal, valid and binding
obligation of each other party thereto, will constitute the
legal, valid and binding obligation of the Assignee, enforceable
in accordance with its terms;
(d) there are no pending or, to the knowledge of the
Assignee, threatened actions or proceedings against the Assignee
before any court or administrative agency which, if determined
adversely to the Assignee, would materially adversely affect the
ability of the Assignee to perform its obligations under any
Operative Document to which it will become a party;
(e) upon the execution and delivery of this Assignment and
Assumption Agreement, the Trust Estate and the Trust Indenture
Estate will be free and clear of Lessor Liens (including for the
this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) attributable to the Assignee;
(f) neither the execution and delivery by the Assignee of
this Assignment and Assumption Agreement, nor the consummation by
it of any of the transactions contemplated hereby, requires the
consent or approval of, the giving of notice to, the registration
with, the recording or filing of any document with, or the taking
of any other action in respect of, any Federal or other
governmental authority or agency (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee, other than such laws, rules
or regulations relating to lease transactions generally or to the
citizenship requirements of the Assignee under applicable
aviation law);
(g) the Assignee is not an "investment company" or a
company controlled by an "investment company" required to
register as such under the Investment Company Act of 1940, as
amended;
(h) either (x) no part of the funds to be used by it to
acquire any right, title or interest in the Trust Estate, or in
this Agreement, the Trust Agreement, the Tax Indemnity Agreement
or any other of the Operative Documents to which the Assignee is
a party or by which the Owner Participant is bound, directly or
indirectly constitutes, or may be deemed under the Code, ERISA or
any applicable state law or any rulings or regulations thereunder
to be, the assets of any "employee benefit plan" as defined in
Section 3(3) of
EXHIBIT B - PAGE 4
<PAGE> 72
ERISA or of any "plan" within the meaning of Section 4975(e)(1)
of the Code or of any entity the assets of which constitute
"plan" assets under ERISA, or
(y) the transfer to and ownership of such right, title and
interest by the Assignee is and will continue to be covered by
Prohibited Transaction Class Exemption 91-38 or 95-60.
(i) on the date hereof [it is a Citizen of the United States
(without use of a voting trust agreement or voting powers
agreement)] [it has entered into a voting powers or voting trust
agreement which has been approved by the FAA (to the extent
required by the Federal Aviation Act or the FAA)];
(j) the transfer to it of all of the Assignor's right, title
and interest as Owner Participant will not adversely affect the
continued registration of the Aircraft in the name of the Owner
Trustee or violate any provision of the Federal Aviation Act or
any rules or regulations promulgated thereunder, or violate any
provisions of the Securities Act of 1933, as amended, or any
other applicable Federal or state law (it being understood that
no representation or warranty is made with respect to laws, rules
or regulations relating to ERISA (except as set forth in
subsection 7(h) above)); and
(k) [it is a "Transferee" satisfying the conditions set forth
in Section 8(n) of the Participation Agreement] [alternatively,
guaranty meeting the requirements of Section 8(n) of the
Participation Agreement to be provided]; and
(1) such Transferee is not (i) an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the
business of parcel transport by air or (ii) other similar person
or a corporation or other entity controlling, controlled by or
under common control with such an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the
business of parcel transport by air or other similar person
(unless such entity is General Electric Company, International
Lease Finance Corporation, any similar entity or any of their
respective Affiliates, provided, that (I) such entity is not
included within the immediately preceding clause (i) of this
subsection (l) and (II) no such entity has, through ownership of
common or preferred stock, effective voting control of an entity
described in such immediately preceding clause (i).
8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor
represents and warrants that:
(a) it is a corporation duly organized and validly existing
in good standing under the laws of the State of and
has the requisite power, authority and legal right to enter into
and carry out the transactions contemplated hereby;
EXHIBIT B - PAGE 5
<PAGE> 73
(b) this Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding
obligation of Assignor, enforceable against it in accordance with
its terms;
(c) no action or proceeding is pending, has been instituted
or, to the knowledge of Assignor, is threatened, before any court
or governmental agency, nor has any order, judgment or decree
been issued or, to the knowledge of Assignor, is threatened, by
any court or governmental agency which would materially adversely
affect the ability of Assignor to complete and consummate its
obligations contemplated hereby;
(d) the Trust Estate is free of Lessor Liens (including for
this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) attributable to it;
(e) it has fully performed all of its obligations under the
Participation Agreement and under each other Operative Document
to which it is a party or by which it is bound, which obligations
by their terms are required to be satisfied or performed prior to
the Effective Time or prior to the consummation of the
transactions contemplated hereby;
(f) neither the execution, delivery and performance by it of
this Agreement, nor compliance by it with any of the provisions
thereof requires or will require any approval of its
stockholders, or approval or consent of any trustees or holders
of any indebtedness obligations of it or contravenes or will
contravene any law or any order of any court or governmental
authority of agency applicable to or binding on it (it being
understood that no representation or warranty is made with
respect to laws, rules or regulations relating to ERISA) or
contravenes or will contravene the provisions of, or constitute a
default under, its [Certificate of Incorporation] or [By-Laws] or
any indenture, mortgage, contract or any agreement or instrument
to which it is a party or by which it or any of its property may
be bound or affected;
(g) the transfer to Assignee of all of the Assignor's right,
title and interest as Owner Participant will not violate, or
affect registration of the Aircraft under, any provision of the
Federal Aviation Act (or any rules or regulations promulgated
thereunder), violate the Securities Act of 1933, as amended (and
no registration pursuant to such Act or the rules and regulations
thereunder shall be required in connection with such transfer),
or violate any other applicable Federal or state law (it being
understood that no representation or warranty is made with
respect to laws, rules or regulations relating to ERISA); and
(h) Assignor has assumed the risk of any loss of Interest
Deductions, Amortization Deductions and MACRS Deductions and the
risk of any Inclusion
EXHIBIT B - PAGE 6
<PAGE> 74
Event (each as defined in the Tax Indemnity Agreement) resulting
from the transfer to Assignee pursuant to the Assignment.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER STATE.
10. COUNTERPARTS. This Assignment may be executed in any number
of counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by both parties so long as
each party shall sign at least one counterpart.
11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for
the benefit of the Owner Trustee, each Loan Participant, each Certificate
Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"),
that the representations, warranties and covenants of such party contained
herein are also intended to be for the benefit of each Beneficiary, and each
Beneficiary shall be deemed to be an express third party beneficiary with
respect thereto, entitled to enforce directly and in its own name any rights or
claims it may have against such party as such beneficiary.
12. EFFECTIVENESS. This Agreement shall be effective upon its
execution and delivery by each of Assignor and Assignee, the exact time of
occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed
by Assignor and Assignee addressed to Lessee, the Owner Trustee and the
Indenture Trustee.
EXHIBIT B - PAGE 7
<PAGE> 75
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment as of the
day and year first above written.
[ASSIGNOR]
By
------------------------------------------
Title
[ASSIGNEE]
By
------------------------------------------
Title
EXHIBIT B - PAGE 8
<PAGE> 76
EXHIBIT C
TO
PARTICIPATION
AGREEMENT
[NW 1996 C]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
** Argentina * Japan
* Australia * Luxembourg
* Austria ** Malaysia
* Belgium ** Mexico
** Brazil * Netherlands
* Canada * New Zealand
** Chile * Norway
* Denmark ** People's Republic of China
* Finland Portugal
* France ** Republic of China (Taiwan)***
* Germany Singapore
** Greece ** South Africa
** Hungary South Korea
* Iceland Spain
** India * Sweden
** Indonesia * Switzerland
* Ireland ** Thailand
* Italy * United Kingdom
- -----------------------------------------
* Designates "Specified Country".
** Designates "Restricted Country".
*** So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those in
effect on the Delivery Date.
EXHIBIT C - PAGE 1
<PAGE> 77
EXHIBIT D TO
PARTICIPATION
AGREEMENT
FORM OF GUARANTY
[LETTERHEAD OF GUARANTOR]
PARENT GUARANTY
Dated as of ,
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
One Boeing Model 757-251 Aircraft
Manufacturer's Serial Number [ ]
Ladies and Gentlemen:
Reference is hereby made to the Participation Agreement [NW 1996
C] (as from time to time amended or supplemented, the "Participation
Agreement"), dated as of April 26, 1996, among Northwest Airlines, Inc.
[ ] (the "Owner Participant"), First Security Bank of
Utah, National Association, not in its individual capacity, except as expressly
provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under
the Trust Agreement, dated as of April 26_, 1996, between the Trustee and the
Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company
(the "Indenture Trustee") and the Loan Participants listed on Schedule I
thereto. Capitalized terms used herein without definition have the respective
meanings ascribed thereto in the Participation Agreement.
Pursuant to Section 8 of the Participation Agreement and in
connection with the transfer of the Interest (as defined in the Assignment and
Assumption Agreement dated as of the date hereof between [Transferor], a
corporation ("Transferor") and [Transferee], a
corporation ("Transferee") (the "Assumption Agreement")) to be consummated as of
the date hereof from Transferor to Transferee, the wholly-owned subsidiary of
("Guarantor"), and the execution by Guarantor of the
guaranty of Transferee's obligations as contemplated by the Assumption Agreement
(this "Guaranty"), Guarantor represents and warrants to, and covenants with,
Lessee, First Security Bank of Utah, National Association, in its individual
capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows:
EXHIBIT D - PAGE 1
<PAGE> 78
1. Ownership of Transferee. Guarantor directly or indirectly
owns and holds all of the issued and outstanding shares of capital stock of
Transferee.
2. Additional Representations and Warranties.
(i) Guarantor is a corporation duly organized and validly
existing pursuant to the laws of , and has the corporate
power and authority to enter into and perform this Guaranty.
(ii) The execution, delivery and performance by Guarantor of
this Guaranty has been duly authorized by all necessary corporate action on the
part of Guarantor, does not require any stockholder approval, or approval or
consent of any trustee or holders of any indebtedness or obligations of
Guarantor except such as have been duly obtained, and this Guaranty will not
contravene any applicable law or corporate charter or by-law, or contravene the
provisions of, or constitute a default under, or result in the creation of any
Lien upon the property of Guarantor under, any indenture, mortgage, contract or
other agreement to which Guarantor is a party or by which it may be bound or
affected.
(iii) Neither the execution and delivery by Guarantor of this
Guaranty, nor the consummation of the transactions by Guarantor contemplated
hereby, nor the performance of the obligations hereunder or under any other
documents contemplated hereby or thereby by Guarantor requires the consent or
approval of, the giving of notice to, or the registration with, or the taking of
any other action in respect of, United States Federal, state, or foreign
governmental authority or agency.
(iv) This Guaranty has been duly executed and validly delivered
by Guarantor and constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms except as
the enforcement of this Guaranty may be affected by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally.
(v) There are no pending or, to Guarantor's knowledge,
threatened actions or proceedings before any court or administrative agency
which might materially adversely affect the consolidated financial condition,
business or operations of Guarantor, or the ability of Guarantor to perform its
obligations under this Guaranty.
(vi) No broker's or finder's fees or commissions or advisory
fees are or may become payable in connection with this Guaranty or the
Assumption Agreement or, if any such fee is payable, such fee will be the
responsibility of Guarantor.
(vii) On the date hereof the Trust Estate will be free of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to Guarantor.
(viii) Guarantor is (A) a Citizen of the United States (or has
effected a voting trust agreement, voting powers agreement or other similar
arrangement) and (B) a bank,
EXHIBIT D - PAGE 2
<PAGE> 79
insurance company, financial institution or domestic corporation the net worth
of which is at least $50,000,000.
3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably
guarantees, not merely as surety but as obligor:
(i) the due and punctual payment of any and all sums which
are payable by Transferee pursuant to any provision of the
Assumption Agreement (and in particular, Section 4 thereof) and
the Participation Agreement, the Tax Indemnity Agreement and any
other Operative Document assumed by Transferee pursuant to the
Assumption Agreement (collectively, the "Guaranteed Agreements"),
and
(ii) the due and punctual performance of and compliance with
and observance of all other obligations, covenants, warranties
and undertakings of or conditions contained in or arising under
the Guaranteed Agreements binding upon or made by Transferor and
assumed by Transferee under the Assumption Agreement,
in each case, whether or not Guarantor shall have contributed funds to Lessor or
Transferee, as the case may be, for such payment or performance by Lessor or
Transferee (such payments and other obligations guaranteed hereunder hereinafter
referred to as the "Obligations").
(b) Guarantor agrees that this Guaranty is an unconditional and
absolute guaranty of payment and performance (not merely enforceability) and
that its undertakings hereunder are not contingent upon your bringing any action
against Transferee or resorting to any security and hereby expressly waives any
claim that its undertakings hereunder are so contingent.
(c) Guarantor hereby waives promptness, diligence, demand and
all notices whatsoever as to the obligations and covenants guaranteed hereby and
acceptance of this Guaranty, and waives any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the undersigned,
and agrees that it shall not be required to consent to, or receive any notice
of, any amendment or modification of, or waiver, consent or extension with
respect to, the Guaranteed Agreements that may be made or given as provided
therein.
(d) Guarantor agrees to pay any costs and expenses (including
reasonable fees and disbursements of counsel) that may be paid or incurred by
the beneficiaries hereof in enforcing any rights with respect to, or collecting,
any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, Guarantor under this Guaranty.
(e) Guarantor understands and agrees that its obligations
hereunder shall be construed as continuing, absolute and unconditional without
regard to (i) the validity, regularity or enforceability of any Operative
Document, any of the Obligations or any collateral security therefor or guaranty
or right of offset with respect thereto at any time or
EXHIBIT D - PAGE 3
<PAGE> 80
from time to time held by any beneficiary hereof, (ii) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by Transferee against any beneficiary hereof
or (iii) any other circumstances whatsoever (with or without notice to or
knowledge of Transferee or Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of Transferee for the Obligations,
or of Guarantor under this Guaranty, in bankruptcy or in any other instance.
4. Quiet Enjoyment. So long as no Event of Default shall have
occurred and be continuing, Guarantor will not permit Transferee or Lessor to
take or cause to be taken any action contrary to Lessee's rights under the
Lease, including, without limitation, Lessee's rights to possession and use of
the Aircraft.
5. No Discharge. The obligations of Guarantor hereunder are
absolute, unconditional and irrevocable and will not be discharged by, and this
Guaranty shall remain in full force and effect notwithstanding: (a) the
assignment, conveyance or other transfer by Guarantor of any or all of its
interest in or capital stock of Transferee, unless such assignment, conveyance
or transfer of all of its interest is to a transferee meeting the requirements
set forth in Section 8(n) of the Participation Agreement and otherwise complies
with the requirements for a transfer as set forth in Section 8(n) of the
Participation Agreement, in which event Guarantor shall be discharged from any
and all liabilities arising hereunder (to the extent such liabilities arise
after such transfer); (b) the assignment, conveyance or other transfer by
Transferee of any or all of its interest in the Trust Estate (as defined in the
Trust Agreement), unless such assignment, conveyance or transfer of all of its
interest is to a transferee meeting the requirements set forth in Section 8(n)
of the Participation Agreement and otherwise complies with the requirements for
a transfer as set forth in Section 8(n) of the Participation Agreement, in which
event Guarantor shall be discharged from any and all liabilities arising
hereunder (to the extent such liabilities arise after such transfer) unless
Guarantor guarantees the obligations of the transferee under Section 8(n) of the
Participation Agreement; (c) the assignment, conveyance or other transfer by
Lessor of any or all of its interest in the Aircraft; (d) any extension or
renewal with respect to any obligation of Transferee or Lessor under the
Guaranteed Agreements; (e) any modification of, or amendment or supplement to,
any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional
security or any release of any security; (g) any waiver, consent or other action
or inaction or any exercise or non-exercise of any right, remedy or power with
respect to Transferee or Lessor, or any change in the structure of Transferee or
Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement,
composition, liquidation, dissolution, or similar proceedings with respect to
the Trustee or Transferee; or any other occurrence whatsoever, except payment in
full of all amounts payable by Transferee under the Guaranteed Agreements and
performance in full of all Obligations of Transferee in accordance with the
terms and conditions of the Guaranteed Agreements.
6. Reinstatement. Guarantor agrees that this Guaranty shall be
automatically reinstated with respect to any payment made prior to any
termination of the Guaranty by or on behalf of Transferee pursuant to the
Participation Agreement or the other
EXHIBIT D - PAGE 4
<PAGE> 81
Operative Documents to which Transferee is a party if and to the extent that
such payment is rescinded or must be otherwise restored, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.
7. No Subrogation. Notwithstanding any payment or payments made
by Guarantor hereunder or any set-off or application of funds of Guarantor by
any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any
of the rights of any beneficiary hereof against Transferee or any collateral,
security or guarantee or right of set-off held by any beneficiary hereof for the
payment of the Obligations, nor shall Guarantor seek or be entitled to seek any
reimbursement from Transferee in respect of payment made by Guarantor hereunder,
until all amounts and performance owing to the beneficiaries hereof by
Transferee on account of the Obligations are paid and performed in full.
8. Severability. Any provision of this Guaranty Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Miscellaneous. This Guaranty shall: (a) be binding upon
Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants,
and their respective successors and assigns and each other holder from time to
time of any interest in the Aircraft or the Operative Documents, but shall not,
and is not intended to, create rights in any other third parties; (c) not be
waived, amended or modified without the written consent of Lessee, Trust
Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject
to Section 6 hereof, remain in full force and effect until, and shall be
terminated upon (1) the payment in full of all sums payable by Transferee, as
the case may be, under the Guaranteed Agreements, and by Guarantor hereunder,
and performance in full of Transferee, in accordance with the terms and
provisions of the Guaranteed Agreements and Guarantor in accordance with the
terms of this Guaranty or (2) the date on which Transferee shall meet the
requirements set forth in Section 8 of the Participation Agreement without
benefit of this Guaranty; provided that Guarantor hereby covenants and agrees
that if Transferee shall at any time thereafter (while Transferee shall be Owner
Participant under the Participation Agreement) fail to meet such requirements,
Guarantor shall immediately reinstate this Guaranty or execute and deliver to
the addressees of this Guaranty a guaranty substantially identical hereto. All
notices to, or requests of, demands on and other communications with Guarantor
shall be made as set forth in the Participation Agreement.
[rest of page intentionally left blank]
EXHIBIT D - PAGE 5
<PAGE> 82
Very truly yours,
[GUARANTOR]
By:
-----------------------------------
Name:
Title:
[SIGNATURE PAGE]
EXHIBIT D - PAGE 6
<PAGE> 83
EXHIBIT E TO
PARTICIPATION
AGREEMENT
FORM OF OPINION OF TRANSFEREE COUNSEL
To Each of the Persons Named on
Schedule A Attached Hereto
Re: Transfer of Interest in one Boeing Model 757-251
Aircraft, and Operative Documents related to
Acquisition Thereof on ,
Ladies and Gentlemen:
We have acted as [special][internal] counsel to [Transferee], a
corporation (the "Transferee"), in connection with the transfer by
[Transferor], a corporation (the "Transferor") to Transferee,
of all of its right, title and interest in and to the Aircraft and the Operative
Documents to which the Transferor is a party or by which it is bound
(collectively, the "Transferee Documents") and the assumption by the Transferee
of the Transferor's obligations thereunder. The transfer is being accomplished
by an Assignment and Assumption Agreement, dated as of ,
made by the Transferee and agreed to and acknowledged by the Transferor (the
"Assumption Agreement"). Capitalized terms used but not otherwise defined herein
are defined as set forth in or by reference in the Participation Agreement
referred to in the Assumption Agreement.
In connection with the opinions expressed herein, we have
examined executed counterparts of the Transferee Documents. We have also
examined and relied upon the accuracy of the originals or certified, conformed,
photocopied or telecopied copies of such corporate records, certificates,
instruments and other documents as we have deemed necessary or appropriate to
enable us to render the opinions expressed herein. In all such examinations, we
have assumed the genuineness of signatures (other than those of the Transferee)
on original documents and the conformity to such original documents of all
copies submitted to us as certified, conformed, photocopied or telecopied
copies, and as to certificates and telegraphic and telephonic confirmations
given by public officials, we have assumed the same to have been properly given
and to be accurate. As to all matters of fact material to our opinions, we have,
when relevant facts were not independently established, relied upon
representations and warranties contained in the Operative Documents and upon the
statements and certificates furnished to us.
Based upon and subject to the foregoing and the matters
hereinafter set forth, we are of the opinion that:
EXHIBIT E - PAGE 1
<PAGE> 84
1. The Transferee is a corporation duly organized, validly
existing and in good standing under the laws of the State of .
2. The Transferee has full corporate power, authority and legal
right to carry on its business as now conducted and is duly authorized and
empowered to [execute and deliver] the Transferee Documents and to perform its
obligations thereunder in accordance with the conditions and provisions thereof.
3. The execution, delivery and performance by the Transferee of
the Transferee Documents have been duly authorized by the Transferee[, and each
of the Transferee Documents has been duly executed and delivered by it].
4. No filing with, notice to or authorization or approval from
any governmental or public body or authority of the United States of America or
the State of is required in connection with the execution, delivery
and performance by the Transferee of the Transferee Documents.
5. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Transferee) pending or, to our knowledge,
threatened against or affecting the Transferee or any property rights of the
Transferee at law or in equity or before any court, commission or other
administrative agency or instrumentality, which, either individually or in the
aggregate, if determined adversely would materially affect the condition,
financial or otherwise, of the Transferee or its ability to perform its
obligations under the Transferee Documents; and, to our knowledge, the
Transferee is not in default with respect to any order or decree of any court or
governmental commission, agency or instrumentality which would materially affect
the condition, financial or otherwise, of the Transferee or its ability to
perform its obligations under the Transferee Documents.
6. Neither the execution and delivery by the Transferee of the
Transferee Documents nor the consummation of the transactions therein
contemplated or the fulfillment of or compliance with, the terms and provisions
thereof will conflict with or result in a breach of, any of the terms,
conditions or provisions of (i) any law or regulation of the United States of
America or the State of , or (ii) to the best of our knowledge, any
order, injunction or decree of any court or governmental instrumentality binding
upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of
the Transferee or (iv) to the best of our knowledge, any bond, debenture, note,
mortgage, indenture, agreement or other instrument to which the Transferee is
now a party or by which it or its property may be bound, or would constitute
(with the giving of notice or the passage of time or both) a default thereunder
or result in the creation or imposition of any lien, charge, security interest
or other encumbrance (except as expressly contemplated by the Operative
Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of
any such agreement or instrument.
7. Each of the Transferee Documents constitutes a legal, valid
and binding obligation of the Transferee, enforceable against the Transferee in
accordance with the terms thereof, except as the enforceability thereof may be
limited by (a) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law),
EXHIBIT E - PAGE 2
<PAGE> 85
(b) applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
8. Neither the execution and delivery by the Transferee of the
Transferee Documents, nor the consummation by the Transferee of any of the
transactions contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration or filing with, or the taking of any
other action with respect to, any governmental authority or agency of the United
States of the State of .
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of and the federal laws of the United
States of America. We note that the Trust Agreement is governed by the laws of
the State of Utah. Insofar as the foregoing opinions relate to the legality,
validity, binding effect and enforceability of the Trust Agreement, we have
assumed for purposes of such opinions (notwithstanding the express provisions of
such agreements to the contrary) that such agreement is governed by the laws of
the State of and we express no opinion as to the enforceability
of the choice of law provisions in such agreement. In addition, we express no
opinion herein as to (i) any federal or state securities laws, (ii) any tax
laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations
applicable to the particular nature of the equipment acquired by the Owner
Trustee pursuant to the Participation Agreement or the Purchase Agreement
Assignment and (v) ERISA or any other pension and employee benefit laws, rules
or regulations. In addition, we express no opinion as to title in or to the
Trust Estate on the part of any Person.
Insofar as our opinions expressed herein relate to the Tax
Indemnity Agreement, such opinions are addressed and are being rendered solely
to Lessee.
In rendering the opinions expressed herein, we have assumed that
(a) each of the Transferee Documents has been duly authorized, executed and
delivered by the respective parties thereto (other than the Transferee) and
constitutes a legal, valid and binding obligation of each of such parties (other
than the Transferee) enforceable against each of such parties in accordance with
the terms thereof, (b) each of such parties (other than the Transferee) has the
requisite power, authority and legal right to enter into and perform its
respective obligations under the Transferee Documents and (c) the transactions
provided for in the Transferee Documents are not within the prohibitions of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended.
This opinion is furnished by us at the request of the Transferee,
with their consent for the sole benefit of the addressees hereof, each of whom
we understand and agree may rely upon the opinions set forth herein. No other
person or entity is entitled to rely on this opinion without our express written
consent. This opinion is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
EXHIBIT E - PAGE 3
<PAGE> 86
SCHEDULE A
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
SCHEDULE A - PAGE 1
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1996 C]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 C],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the
"OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as
defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate
Pass Through Trust Agreements (as defined below), (v) STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and
(vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as
Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the
Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[ ], as the loan participants
(collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee
entered into the Participation Agreement [NW 1996 C], dated as of April 26,
1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease
of one Boeing 757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 C], dated as of
April 26, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 C], dated April 29, 1996
<PAGE> 2
(collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee
issued to the Original Loan Participants secured certificates substantially in
the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES")
as evidence of the loan then being made by the Original Loan Participants in
participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease
from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26,
1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1996 C] dated as of April 26, 1996 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant Guarantor entered into
the Owner Participant Guaranty [NW 1996 C] dated as of April 26, 1996 (the
"OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor
guaranteed certain obligations of the Owner Participant under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and the Owner Trustee pursuant to such Section 17 of
its desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1996 C], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 C], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 C], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1996 C] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Participant and the Owner Trustee have entered into the
First Amendment to Trust Agreement [NW 1996 C] dated as of the date hereof (the
"TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by
the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), three separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the
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<PAGE> 4
Subordination Agent entered into the Intercreditor Agreement, dated as of the
date hereof (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement
is hereby amended by (i) adding the words "or the Pass Through Certificates" (1)
before and after the clause "or transfer of the Secured Certificates" in clause
(E) thereof and (2) after the clause "the Secured Certificates" in clause (F)
thereof and (ii) adding the words and punctuation "(including any Make-Whole
Amount)" after the word "premium" in clause (F) thereof.
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4)
thereof in their entirety and substituting therefor "Intentionally Omitted",
(iii) deleting the words "a Loan Participant" from clause (9) thereof and
substituting therefor the words "the Indenture Trustee or the Trust Indenture
Estate", (iv) deleting the words "any Loan Participant or any Certificate
Holder" from clause (9) thereof and substituting therefor the words "the
Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in
clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in
clause (10) thereof and substituting therefor "(B)", and (vii) deleting the
parenthetical clause and the proviso from clause (12) thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes"
where such words first appear in the second sentence of the first paragraph
thereof and substituting therefor "any Income Tax imposed by the Unites States
Federal government required to be withheld from payments on the Secured
Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and
(ii) deleting the second sentence in the last paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement
is hereby amended by (i) deleting the third and fourth sentences thereof and
(ii) deleting the words "other than a Loan Participant" in the first sentence
thereof.
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<PAGE> 5
SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is
hereby amended by (i) deleting the word "and" between the words "expenses" and
"Transaction Expenses" in the second parenthetical phrase of the first paragraph
thereof and substituting a comma therefor, (ii) inserting after the phrase "to
Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) adding the words and punctuation "and, only in the case of an Indemnitee
who is the Owner Participant and its Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents, the Intercreditor
Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and,
only in the case of an Indemnitee who is the Subordination Agent, the
Intercreditor Agreement and the Liquidity Facilities" after the words "respect
thereof" in the first clause (A) thereof, and (iv) adding the words and
punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass
Through Trust Agreements" after the words "Operative Documents" in the second
clause (A) thereof and in the second clause (B) thereof.
SECTION 7. [Reserved]
SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended by deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof.
SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", any Loan
Participant's," from the first sentence thereof, (ii) deleting the words and
punctuation "the Loan Participants," each time they appear in the second
sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and
"the Indenture Trustee" in clause (N) of the third sentence thereof and
substituting therefor "and", (iv) deleting the words "and the Loan Participants"
from clause (N) of the third sentence thereof, and (v) deleting the words and
punctuation "the Loan Participants," from the fifth sentence thereof.
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<PAGE> 6
SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the word "Each" in the first sentence thereof
and substituting therefor the words "The Owner" and (ii) adding a new sentence
to the end thereof to read as follows: "The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of
the initial supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust
Agreement without the prior written consent of the Owner Participant.".
SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is
hereby amended by deleting the fourth and fifth sentences thereof.
SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", each Loan
Participant" therefrom and (ii) adding a new second paragraph thereto at the end
thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section 1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section 1110.
SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the words "each" the first time it appears in
Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii)
deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Indenture Trustee and the Owner", (iii)
inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the
Indenture Trustee and the Owner Participant".
SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
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<PAGE> 7
SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
(ii) Lessee agrees and covenants that it shall not purchase,
guarantee or acquire any interest in (i) any Secured Certificate (except as
provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the
Liquidity Provider.
SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (A) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (B) thereof and substituting
therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05"
from clause (iii) of the second sentence thereof.
SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Loan Participants" each time they
appear in clauses (A), (B), and (D) thereof and substituting therefor the words
"Indenture Trustee", (ii) deleting the "," both times it appears between the
words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and
substituting therefor "and", and (iii) deleting the words "and the Loan
Participants" both times they appear in clause (E) thereof.
SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent to any consent
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<PAGE> 8
requested of the Owner Trustee, as Lessor, under the terms of
the Lease which by its terms is not to be unreasonably
withheld by the Owner Trustee, as Lessor.
SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is
hereby amended by adding the following new subclause (7) to clause (a) thereof:
(7) in connection with any proposed refinancing, if,
on the date which is two Business Days prior to the last date
on which notice of revocation of redemption may be given
pursuant to Section 2.12(b) of the Trust Indenture, the Owner
Participant is not satisfied in its sole discretion that such
refinancing will occur on the date specified for such
refinancing in the notice provided pursuant to Section 2.11 of
the Trust Indenture, then Lessee shall not effect such
proposed refinancing and shall provide notice to such effect
to the Indenture Trustee pursuant to Section 2.12(b) of the
Trust Indenture.
SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 25. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
SECTION 26. MISCELLANEOUS. (a) Without in any way affecting
the provisions of the letter agreement dated April 29, 1996 between the Owner
Participant and Lessee (which letter agreement shall remain in full force and
effect) relating to future financings, each of the parties hereto agrees that
the transactions contemplated hereby shall constitute one of the three
refinancing operations permitted in Section 17 of the Participation Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement, and (iii) the Purchaser has no liability or obligation
under any covenant in any of such agreements for any period prior to the
Closing.
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<PAGE> 9
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: ___________________________________
Name: Thomas S. Schreier, Jr.
Title: Vice President-Finance
and Assistant Treasurer
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
By: ___________________________________
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By: ___________________________________
Name: Donald E. Smith
Title: Vice President
[ ],
as Owner Participant
By: ___________________________________
Name:
Title:
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<PAGE> 11
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By: ___________________________________
Name: Donald E. Smith
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By: ___________________________________
Name: Donald E. Smith
Title: Vice President
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<PAGE> 12
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
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REFUNDING AGREEMENT
[NW 1996 C]
This REFUNDING AGREEMENT [NW 1996 C], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[______________], a [__________] corporation (the "OWNER PARTICIPANT"),
(iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE
STREET BANK AND TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as trustee (in such capacity,
the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust
Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
[Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
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Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, as
supplemented by Trust Agreement and Indenture Supplement [NW 1996 C], dated
April 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the
Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996, as
supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL
TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996 (the
"ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 C]
dated as of April 26, 1996 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
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WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1996 C], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into the First Amendment to Trust Agreement [NW 1996 C], dated as of
the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust
Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST
AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1996 C], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1996 C] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, three separate
grantor trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a
"PASS THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
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WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Owner Participant
shall pay to the Owner Trustee an amount equal to the unpaid interest
on the Original Secured Certificates accrued up to but not including
the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders by the Owner Trustee under the Original Indenture and the
Original Participation Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture;
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the
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maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust; and
(viii) the Owner Trustee shall disburse to the Owner Participant
the excess of the amounts received by it pursuant to clauses (i) and
(ii) above over the amount paid by it pursuant to clause (iii) above.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
or the Indenture Trustee any amount in respect of the prepayment of the Original
Secured Certificates, the Original Secured Certificates shall remain outstanding
and in full force and effect, and the actions contemplated by Sections 1(a), 5,
6 and 7 hereof shall not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated the
date hereof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such
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Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates
in the aggregate shall be in the principal amounts set forth on Schedule II
hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of
the other Operative Documents, all such Refinancing Secured Certificates shall
be dated and authenticated as of the Refinancing Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through
Trustee to make the payments described in Section l(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. L;
(5) the Trust Agreement Amendment No. 1;
(6) each of the Pass Through Trust Agreements;
(7) the Intercreditor Agreement; and
(8) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts.
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(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1 and any other documents to be
executed on behalf of the Lessee or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Original Trust
Agreement
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has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d)) relate solely to an earlier date (in
which case such representations and warranties were correct on and
as of such earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
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(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any
other documents to be executed on behalf of the Owner Trustee in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an
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opinion addressed to it from the Lessee's legal department, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Dewey Ballantine, special counsel for
the Owner Participant, and an opinion addressed to it from corporate counsel to
the Owner Participant, in each case in form and substance satisfactory to each
of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in house German counsel
for the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
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(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to
the receipt by the Lessee and the Guarantor of (i) each opinion referred to in
subsections (j) through (n) of Section 3, addressed to the Lessee and the
Guarantor or accompanied by a letter from counsel rendering such opinion
authorizing the Lessee and the Guarantor to rely on such opinion as if it were
addressed to the Lessee and the Guarantor, (ii) each certificate referred to in
subsections (e) through (g) of Section 3, (iii) executed counterparts or
conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment
No. 1 and (iv) such other documents and evidence with respect to each other
party hereto as the Lessee, the Guarantor or their counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement, the taking of all necessary corporate action in
connection therewith and compliance with the conditions herein set forth.
(b) The respective obligation of each of the Lessee, the Guarantor, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate in
the transactions contemplated hereby is subject to the receipt by each of them
of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Refinancing Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are correct as though
made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The
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Lessee and the Guarantor, by execution and delivery hereof, consent to such
execution and delivery of the Indenture. The Indenture shall be effective as of
the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1,
and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to
execute and deliver, the Lease Amendment No. 1. The Lease Amendment No. 1 shall
be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the
Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree
to execute and deliver the PA Amendment No. 1. Upon the execution and delivery
of the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
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(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all necessary corporate action on the part of the
Lessee or the Guarantor, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material
indebtedness or material obligations of the Lessee or the Guarantor,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation or
order binding on the Lessee or the Guarantor (as the case may be) or
the certificate of incorporation or by-laws of the Lessee or the
Guarantor (as the case may be), or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of the Lessee or the
Guarantor (as the case may be) under, any indenture, mortgage, contract
or other agreement to which the Lessee or the Guarantor (as the case
may be) is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate, would
be reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the Guarantor and
its subsidiaries considered as one enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign
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<PAGE> 14
governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of
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the Original Lease and the Lease Amendment No. 1 (to the extent the
Lease constitutes chattel paper) and the filing of continuation
statements at periodic intervals with respect to the Uniform Commercial
Code financing statements in effect on the Refinancing Date covering
the security interests created by the Original Indenture or describing
the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
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<PAGE> 16
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Original Trust Agreement, has the
corporate
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power and authority to carry out the terms of the Trust Agreement, and
has, or had on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust Agreement by the
Owner Participant), as Owner Trustee, and to the extent expressly
provided herein or therein, in its individual capacity, the corporate
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1
and each other Operative Document (other than the Trust Agreement) to
which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, the Lease, when the
Lease Amendment No. 1 shall have been entered into, and the Trust
Agreement, when the Trust Agreement Amendment No. 1 shall have been
entered into, will constitute, a legal, valid and binding obligation of
the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, enforceable against it in its individual capacity or
as Owner Trustee, as the case may be, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Original Trust Agreement, the Trust Agreement Amendment No.
1, the Original Indenture, the Indenture, the Original Lease, the Lease
Amendment No. 1, the Refinancing Secured Certificates or any other
Operative Document to which it is a party, nor the consummation by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or thereby,
nor the compliance by the Owner Trustee, in its individual capacity or
as Owner Trustee, as the case may be, 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 it, or (B) violates or
will violate its articles of association or by-laws, or contravenes or
will contravene any provision of, or
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constitutes or will constitute a default under, or results or will
result in any breach of, or results or will result in the creation of
any Lien (other than as permitted under the Operative Documents) upon
its property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement,
license or other agreement or instrument to which it is a party or by
which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the
State of Utah governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of, or the carrying out by, the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or by the
Trust Agreement, the Participation Agreement, the Indenture, the Lease,
the Refinancing Secured Certificates, or any other Operative Document
to which it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere
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in any way with the use or operation of the Aircraft by the Lessee (or
any Sublessee), (C) the existence of which does not affect the priority
or perfection of, or otherwise jeopardize, the Lien of the Indenture,
(D) which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest
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for sale to, or to solicit any offer to acquire any of the same from,
any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) The Owner Participant is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
[_________] and has the corporate power and authority to carry on its
present business and operations and to own or lease its properties,
has, or had on the respective dates of execution thereof, as the case
may be, the corporate power and authority to enter into and to perform
its obligations under this Agreement, the Original Participation
Agreement, the Original Trust Agreement, the Tax Indemnity Agreement,
the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1
and the Trust Agreement Amendment No. 1; this Agreement has been duly
authorized, executed and delivered by the Owner Participant; and this
Agreement constitutes, and the Participation Agreement when the PA
Amendment No. 1 shall have been entered into, the Tax Indemnity
Agreement when the TIA Amendment No. 1 shall have been entered into,
and the Trust Agreement when the Trust Agreement Amendment No. 1 shall
have been entered into, will constitute, the legal, valid and binding
obligations of the Owner Participant enforceable against it in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at law
or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1, the Trust Agreement Amendment No. 1 or any other
Operative Document to which it is a party nor (B) compliance by the
Owner Participant with all of the provisions hereof or thereof, (x)
will contravene any law or order of any court or governmental authority
or agency applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect to
laws, rules or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws, rules or
regulations relating to the citizenship requirements of the Owner
Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
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(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by the Owner Participant of this
Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the
Trust Agreement Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person; the Owner Participant's interest in the
Trust Estate and the Trust Agreement was acquired for its own account
and was purchased for investment and not with a view to any resale or
distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings and (E)
the existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for the benefit
of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts,
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and has the full corporate power, authority and legal right under the
laws of the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Pass Through Trust Agreements,
the Intercreditor Agreement and the Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
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<PAGE> 23
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under subpart E,
Part I of Subchapter J of the Code, such trusts will not be subject to
any Taxes imposed by the Commonwealth of Massachusetts or any political
subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
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<PAGE> 24
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement will constitute, the legal, valid and binding obligations of
the Subordination Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the
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<PAGE> 25
registration with, or the taking of any other action with respect to,
any Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States
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<PAGE> 26
mail, with proper postage for first-class registered or certified mail prepaid,
or when delivered personally or, if promptly confirmed by mail as provided
above, when dispatched by facsimile or other written telecommunication,
addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture
Trustee, at their respective addresses or facsimile numbers set forth below the
signatures of such parties at the foot of this Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for
the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special
counsel for the Original Loan Participants;
(2) the fees, expenses and disbursements of Dewey Ballantine,
special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider; and
(b) In the event that the transactions contemplated by this Section
11 and the agreements referred to herein are not consummated, the Lessee shall
bear and pay all costs, expenses and fees referred to in this Section 11 at no
after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant;
provided that if the transactions fail to be consummated
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<PAGE> 27
as a result of the failure of the Owner Participant to act in good faith in
consummating the transactions, or to otherwise comply with the terms hereof, the
Owner Participant shall bear and pay its own fees, costs and expenses
(including, without limitation, the fees and expenses of its special counsel)
and the Lessee shall pay all other reasonable fees, costs and expenses as
aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
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<PAGE> 28
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 30
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
-31-
<PAGE> 31
[ ]
Owner Participant
By: _______________________________________
Title:
Address:
Attn:
Telecopy No.:
-32-
<PAGE> 32
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Pass Through Trustee,
Pass Through Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 33
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By: __________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Indenture Trustee
Indenture Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 35
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Owner Trustee
By: __________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 36
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C dated as of the Closing Date.
<PAGE> 37
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- ------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1C [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 D]
This TRUST AGREEMENT [NW 1996 D] dated as of April 29, 1996
between [ ], a [ ] corporation (the "ORIGINAL OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSBU") and otherwise
not in its individual capacity but solely as trustee hereunder (herein in such
capacity with its permitted successors and assigns called the "OWNER TRUSTEE");
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust
Agreement the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in
the Trust Indenture.
"Indenture Event of Default" has the meaning which the term
"Event of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 D], to be
dated as of the date hereof, and to be entered into by the Owner Trustee and
Lessee concurrently with the execution and delivery of this Trust Agreement, as
said Lease Agreement may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Trust Agreement. The term "Lease" shall also include
each Lease Supplement from time to time entered into pursuant to the terms of
the Lease.
"Lease Event of Default" has the meaning which the term "Event
of Default" has in the Lease.
<PAGE> 2
"Lessee" means Northwest Airlines, Inc., a Minnesota
corporation, and its permitted successors and assigns.
"Owner Participant" means the Original Owner Participant and
each Subsequent Owner Participant to the extent that the same shall, at the
relevant time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner
Participant, the percentage of its undivided beneficial interest in the Trust
Estate created by this Trust Agreement.
"Participation Agreement" has the meaning ascribed to such
term in the Lease.
"Replacement Airframe" has the meaning ascribed to such term
in the Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in
the Trust Indenture.
"Subsequent Owner Participant" means any Person to which the
Original Owner Participant or any transferee from the Original Owner
Participant or any Subsequent Owner Participant shall have transferred at any
time after the Delivery Date its undivided right, title and interest originally
held by the Original Owner Participant in this Trust Agreement, the Trust
Estate and the Participation Agreement, to the extent permitted by Section 8.1
of this Trust Agreement and Section 8 of the Participation Agreement; provided
that in the event of any such transfer so long as the Lease shall be in effect
or any Secured Certificates remain unpaid, such transferee and its transferor
shall have complied with all of the terms of Section 8(n) of the Participation
Agreement.
"Trust Estate" means all estate, right, title and interest of
the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in
its individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payments.
2
<PAGE> 3
"Trust Indenture Estate" has the meaning ascribed to such term
in the Trust Indenture.
"Trust Office" shall mean the principal corporate trust office
of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture
and to this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner
Participant hereby authorizes and directs the Owner Trustee to execute and the
Owner Trustee agrees for the benefit of the Owner Participant that it will on
or before the Delivery Date, execute and deliver the Operative Documents and
any other agreements, instruments or documents to which the Owner Trustee is a
party in the respective forms thereof in which delivered from time to time by
the Owner Participant to the Owner Trustee for execution and delivery and,
subject to the terms hereof, to perform its duties and, upon instructions from
the Owner Participant, exercise its rights under said Operative Documents in
accordance with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participant, subject, however, to
the provisions of and the Lien created by the Trust Indenture and to the
provisions of the Lease and the Participation Agreement.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the
3
<PAGE> 4
benefit of the Owner Participant that it will, on the Delivery Date, subject to
due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale
and the FAA Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the
Lease, and in furtherance thereof execute and deliver
a Lease Supplement covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates
in the amounts and otherwise as provided in Section
1(a) of the Participation Agreement;
(f) execute and deliver the financing statements referred
to in Section 4(a)(vi) of the Participation
Agreement, together with all other agreements,
documents and instruments referred to in Section 4 of
the Participation Agreement to which the Owner
Trustee is a party;
(g) effect the registration of the Aircraft in the name
of the Owner Trustee by filing or causing to be filed
with the FAA: (i) the FAA Bill of Sale; (ii) an
application for registration of the Aircraft in the
name of the Owner Trustee (including without
limitation an affidavit from the Owner Trustee in
compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) this Trust
Agreement; and
(h) execute and deliver all such other instruments,
documents or certificates and take all such other
actions in accordance with the directions of the
Owner Participant, as the Owner Participant may deem
necessary or advisable in connection with the
transactions contemplated hereby.
SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation
of the Owner Trustee to take the action required by Section 3.01 hereof with
respect to the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the
full amount of its Commitment set forth in Schedule
II of the Participation
4
<PAGE> 5
Agreement available to the Owner Trustee, in
immediately available funds, in accordance with
Section 1 of the Participation Agreement; and
(b) the Owner Participant shall have notified the Owner
Trustee that the terms and conditions of Section 4 of
the Participation Agreement, insofar as they relate
to the Aircraft, shall have been complied with in a
manner satisfactory to the Original Owner
Participant.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF
THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee
agrees for the benefit of the Owner Participant that it will, take the actions
specified to be taken by the Owner Trustee in Section 8(x) of the Participation
Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of
the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured
Certificates in accordance with the provisions of such Section 8(x) provided
Lessee shall have paid all amounts required by such Section 19(d) and 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT
AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and
directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of
the Owner Participant that it will, in the event of a Replacement Airframe and
Replacement Engines, if any, being substituted pursuant to Section 10(a) of the
Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of
the Lease, subject to due compliance with the terms of Section 10(a) or 10(b)
of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or
representatives of the Owner Trustee (who shall be an
employee or employees of Lessee) to accept delivery
of the Replacement Airframe and Replacement Engines,
if any, or the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement
Airframe and Replacement Engines, if any, or the
Replacement Engine a bill of sale or bills of sale
(if tendered), and the invoice, if any, with respect
to the Replacement Airframe and Replacement Engines,
if any, or the Replacement Engine being furnished
pursuant to Section 10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make
application to the Federal Aviation Administration
for the registration in the name of the Owner Trustee
of the Aircraft of which such Replacement Airframe is
a part;
5
<PAGE> 6
(d) execute and deliver a Lease Supplement and a Trust
Supplement covering (i) the Aircraft of which such
Replacement Airframe is part or (ii) such Replacement
Engine, as the case may be;
(e) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including
for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens)
the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to
release the Airframe and Engines or engines (if any)
or the Engine or engine being replaced from the lien
created under the Trust Indenture and release the
Purchase Agreement and the Purchase Agreement
Assignment (solely with respect to such replaced
Airframe and Engines, if any, or Engine) from the
assignment and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take
such further action as may be contemplated by clauses
(A) and (B) of the third paragraph of Section 10(a)
of the Lease or clauses (ii) and (iii) of Section
10(b) of the Lease, as the case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND
EFFECT. In the event of the substitution of a Replacement Airframe for the
Airframe or the substitution of a Replacement Engine for any Engine or engine,
all provisions of this Trust Agreement relating to such replaced Airframe or
Engine or engine shall be applicable to such Replacement Airframe or
Replacement Engine with the same force and effect as if such Replacement
Airframe or Replacement Engine were the same airframe or engine as the Airframe
or Engine being replaced but for the Event of Loss with respect to such
Airframe or Engine.
SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN
ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee
to, and the Owner Trustee agrees for the benefit of the Owner Participant that
it will, in the event of an engine being transferred to the Owner Trustee
pursuant to Section 5(b) of the Lease, subject to due compliance with the terms
of such Section 5(b):
(a) accept from Lessee the bill of sale with respect to
such engine contemplated by such Section 5(b) (if
tendered);
(b) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including
for this purpose Liens that would
6
<PAGE> 7
be Lessor Liens but for the proviso in the definition
of Lessor Liens) and to an Engine to Lessee as
contemplated by such Section 5(b); and
(c) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to
release the Engine being transferred to Lessee
pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement
and the Purchase Agreement Assignment (solely with
respect to such Engine) from the assignment and
pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to
Indenture Trustee. Until the Trust Indenture shall have been discharged
pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance
proceeds and requisition or other payments of any kind included in the Trust
Estate (other than Excluded Payments) payable to the Owner Trustee shall be
payable directly to the Indenture Trustee (and if any of the same are received
by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee
without deduction, set-off or adjustment of any kind) for distribution in
accordance with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof, any
payment of the type referred to in Section 4.01(a) hereof (other than Excluded
Payments) received by the Owner Trustee, any payments received from the
Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the
balance, if any, shall be paid to the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts
from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the Trust
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Indenture shall, if paid to the Owner Trustee, be distributed by the Owner
Trustee to the Owner Participant in accordance with the provisions of Article
III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the
Owner Trustee shall be paid by the Owner Trustee to the Person to whom such
Excluded Payments are payable under the provisions of the Participation
Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents
on the day received (or on the next succeeding Business Day if the funds to be
so distributed shall not have been received by the Owner Trustee by 12:00 noon,
New York City time).
(e) Multiple Owner Participants. If as a result of a
transfer by an Owner Participant under Section 8.01 of this Trust Agreement,
there is more than one Owner Participant hereunder, each such Owner Participant
shall hold in proportion to its respective beneficial interest in the Trust
Estate, an undivided beneficial interest in the entire Trust Estate and is
entitled to receive ratably with any other Owner Participant payments
distributable by the Owner Trustee hereunder. No Owner Participant shall have
legal title to the Aircraft or any other portion of the Trust Estate.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall
make distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds on the day received (or the next succeeding Business Day if the
funds to be so distributed shall not have been received by the Owner Trustee by
12:00 noon, New York time, the amount to be distributed to such account or
accounts of the Owner Participant as the Owner Participant may designate from
time to time in writing to the Owner Trustee. Notwithstanding the foregoing,
the Owner Trustee will, if so requested by the Owner Participant in writing,
pay any or all amounts payable to the Owner Participant pursuant to this
Article IV either (i) by crediting such amount or amounts to an account or
accounts maintained by the Owner Participant with the Owner Trustee in its
individual capacity in immediately available funds, (ii) by payment at the
Trust Office of the Owner Trustee, in immediately available funds, or (iii) by
mailing an official bank check or checks in such amount or amounts payable to
the Owner Participant at such address as the Owner Participant shall have
designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner
Trustee shall have knowledge of a Lease Event of Default or Indenture Event of
Default (or an event which with the passage of time or the giving of notice or
both would constitute a Lease Event of Default or an Indenture Event of
Default) the Owner Trustee shall give to the
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Owner Participant prompt telephonic or telecopy notice thereof followed by
prompt confirmation thereof by certified mail, postage prepaid, provided that
(i) in the case of an event which with the passage of time would constitute an
Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the
Trust Indenture, such notice shall in no event be furnished later than ten (10)
days after the Owner Trustee shall first have knowledge of such event and (ii)
in the case of a misrepresentation by the Owner Trustee which with the passage
of time would constitute an Indenture Event of Default referred to in paragraph
(d) of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten (10) days after the Owner Trustee shall first have
knowledge of such event. The notice shall set forth in reasonable detail the
facts and circumstances known to it with respect to such Lease Event of Default
or Indenture Event of Default. Subject to the terms of Section 5.03 hereof,
the Owner Trustee shall take such action or shall refrain from taking such
action, not inconsistent with the provisions of the Trust Indenture, with
respect to such Lease Event of Default, Indenture Event of Default or other
event as the Owner Trustee shall be directed in writing by the Owner
Participant. If the Owner Trustee shall not have received instructions as
above provided within thirty (30) days after the mailing of such notice to the
Owner Participant, the Owner Trustee until instructed otherwise in accordance
with the preceding sentence may, but shall be under no duty to, take or refrain
from taking such action with respect to such Lease Event of Default, Indenture
Event of Default or other event, not inconsistent with the provisions of the
Trust Indenture, as it shall deem advisable in the best interests of the Owner
Participant. For all purposes of this Trust Agreement, the Lease and the other
Operative Documents, in the absence of actual knowledge by an officer of FSBU
in the Corporate Trust Department, the Owner Trustee shall not be deemed to
have knowledge of a Lease Event of Default, Indenture Event of Default or other
event referred to in this Section 5.01 unless notified in writing by the
Indenture Trustee, the Owner Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms
of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of the Owner Participant, the Owner Trustee will take such of
the following actions, not inconsistent with the provisions of the Trust
Indenture, as may be specified in such instructions:
(i) give such notice or direction or exercise such right,
remedy or power hereunder or under any of the
Operative Documents to which the Owner Trustee is a
party or in respect of all or any part of the Trust
Estate as shall be specified in such instructions;
(ii) take such action to preserve or protect the Trust
Estate (including the discharge of Liens) as may be
specified in such instructions;
(iii) approve as satisfactory to it all matters required by
the terms of the Lease or the other Operative
Documents to be satisfactory to the Owner Trustee, it
being understood that without written instructions
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of the Owner Participant, the Owner Trustee shall not
approve any such matter as satisfactory to it (it
being understood that the provisions of Sections
3.03, 3.04 and 3.06 hereof do not constitute
instructions by the Owner Participant for the Owner
Trustee to approve of or consent to the matters to be
approved of or consented to by the Owner Trustee in
the sections of the Lease referred to in Sections
3.03, 3.04 or 3.06 hereof); and
(iv) subject to the rights of Lessee under the Operative
Documents, after the expiration or earlier
termination of the Lease, deliver the Aircraft to the
Owner Participant in accordance with such
instructions, convey all of the Owner Trustee's
right, title and interest in and to the Aircraft for
such amount, on such terms and to such purchaser or
purchasers as shall be designated in such
instructions, or net lease the Aircraft on such terms
and to such lessee or lessees as shall be designated
in such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not
be required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participant, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
reasonable fees and disbursements of counsel or agents employed by the Owner
Trustee in connection therewith. The Owner Trustee shall not be required to
take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall
reasonably determine, or shall have been advised by counsel, that such action
is contrary to the terms of any of the Operative Documents to which the Owner
Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST
AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or
obligation to manage, control, use, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Estate, or to otherwise take or refrain
from taking any action under, or in connection with any of the Operative
Documents to which the Owner Trustee is a party, except as expressly required
by the terms of any of the Operative Documents to which the Owner Trustee is a
party, or (to the extent not inconsistent with the provisions of the Trust
Indenture) as expressly provided by the terms hereof or in written instructions
from the Owner Participant received pursuant to the terms of Section 5.01 or
5.02, and no implied
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duties or obligations shall be read into this Trust Agreement against the Owner
Trustee. FSBU agrees that it will, in its individual capacity and at its own
cost or expense (but without any right of indemnity in respect of any such cost
or expense under Section 7.01 hereof) promptly take such action as may be
necessary to duly discharge and satisfy in full all Lessor Liens attributable
to it in its individual capacity which it is required to discharge pursuant to
Section 8(h) of the Participation Agreement and otherwise comply with the terms
of said Section binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything
herein to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the
Participation Agreement.
SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority
to, and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts
the trusts hereby created and agrees to perform the same but only upon the
terms hereof applicable to it. The Owner Trustee also agrees to receive and
disburse all monies received by it constituting part of the Trust Estate upon
the terms hereof. FSBU shall not be answerable or accountable under any
circumstances, except (a) for its own willful misconduct or gross negligence,
(b) for performance of the terms of the last sentence of Section 5.04 hereof
and the first sentence of Section 5.01 hereof, (c) for its or the Owner
Trustee's failure to use ordinary care to disburse funds, (d) for liabilities
that may result from the inaccuracy of any representation or warranty of it (or
from the failure by it to perform any covenant) in Section 6.03 hereof, in
Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section
8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on
or measured by any fees, commissions or compensation received by it for acting
as trustee in connection with any of the transactions contemplated by the
Operative Documents.
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SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in
accordance with written instructions furnished pursuant to Section 5.02 hereof
and except as provided in, and without limiting the generality of, Sections
3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither
the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or
filing of any Operative Document or of any supplement to any thereof or to see
to the maintenance of any such recording or filing or any other filing of
reports with the Federal Aviation Administration or other governmental
agencies, except that FSBU, in its individual capacity, shall comply with the
reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor
provision and the Owner Trustee shall, to the extent that information for that
purpose is supplied by Lessee pursuant to any of the Operative Documents,
complete and timely submit (and furnish the Owner Participant with a copy of)
any and all reports relating to the Aircraft which may from time to time be
required by the Federal Aviation Administration or any government or
governmental authority having jurisdiction, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Lessee
shall be in default with respect thereto, other than to forward to the Owner
Participant copies of all reports and other written information which the Owner
Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to
see to the payment or discharge of any tax, assessment or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed
or levied against any part of the Trust Indenture Estate or the Trust Estate,
except as provided in Section 8 of the Participation Agreement, or (iv) to
inspect Lessee's books and records with respect to the Aircraft at any time
permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner
Trustee will furnish to the Indenture Trustee and the Owner Participant,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN
MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE
MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH
RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity
warrants that on the Delivery Date the Owner Trustee shall have received
whatever title was conveyed to it by Lessee and that the Aircraft shall during
the Term be free of Lessor Liens attributable to it, or (b) any representation
or warranty as to the validity, legality or enforceability of this Trust
Agreement or any Operative Document to which the Owner Trustee is a party, or
any other document or instrument, or as to the correctness of any statement
contained in any thereof except to the extent that any such statement is
expressly made herein or therein as a representation by FSBU in its individual
capacity or by the Owner Trustee and except that FSBU in its individual
capacity hereby represents and warrants that this Trust Agreement has been, and
(assuming due
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authorization, execution and delivery by the Original Owner Participant of this
Trust Agreement) the Operative Documents to which it or the Owner Trustee is a
party have been (or at the time of execution and delivery of any such
instrument by it or the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself or the
Owner Trustee, as the case may be and that this Trust Agreement constitutes the
legal, valid and binding obligation of FSBU or the Owner Trustee, as the case
may be, enforceable against FSBU or the Owner Trustee, as the case may be, in
accordance with its terms.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST.
Except as provided in Section 22 of the Lease, monies received by the Owner
Trustee hereunder need not be segregated in any manner except to the extent
required by law, and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS.
The Owner Trustee shall incur no liability to anyone in acting in reliance upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of the
Owner Participant or Lessee mentioned herein or in any of the Operative
Documents to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be the chairman of the
board, the president, any executive vice president, any senior vice president
or any vice president or a managing director and in the name of the Owner
Participant or Lessee, as the case may be. The Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the secretary or any assistant secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board or Committee and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is
not specifically described herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by a person purporting to be the chairman
of the board, the president, any executive vice president, any senior vice
president or any vice president or a managing director of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon. In the administration of trusts hereunder, the Owner
Trustee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and may, at the
expense of the Trust Estate, consult with counsel, accountants and other
skilled persons to be selected and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by
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it in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons and the Owner Trustee shall not be liable for the
negligence of any such agent, attorney, counsel, accountant or other skilled
person appointed by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons,
other than the Owner Participant, as provided herein, having any claim against
the Owner Trustee by reason of the transactions contemplated hereby shall look
only to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in
Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no
right against the Owner Participant or (subject to the provisions of the Trust
Indenture) the Trust Estate for any fee as compensation for its services
hereunder; provided, however, that the Owner Trustee shall have a lien upon the
Trust Estate (subject, however, to the lien of the Trust Indenture) for any
such fee not paid by Lessee as contemplated by the last paragraph of Section
7(c) of the Participation Agreement. Pursuant to Section 7(c) of the
Participation Agreement and subject to Section 16 thereof, Lessee shall be
required to pay the reasonable fees and expenses of the Owner Trustee
comprising the compensation and reimbursement of expenses to which the Owner
Trustee is entitled under this Section 6.07.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement of all monies under this Trust Agreement or any
agreement contemplated hereby. The Owner Participant shall be responsible for
causing to be prepared and filed all income tax returns required to be filed by
the Owner Participant. The Owner Trustee shall be responsible for causing to
be prepared, at the request and expense of the Owner Participant, all income
tax returns required to be filed with respect to the trust created hereby and
shall execute and file such returns. The Owner Participant or the Owner
Trustee, as the case may be, upon request, will furnish the Owner Trustee or
the Owner Participant, as the case may be, with all such information as may be
reasonably required from the Owner Participant or the Owner Trustee, as the
case may be, in connection with the preparation of such income tax returns.
The Owner Trustee will give to the Owner Participant, upon request, such
periodic information concerning receipts and disbursements by it with respect
to the Trust Estate as would be helpful to the Owner Participant in preparing
its tax returns.
SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding
anything herein to the contrary, the Owner Trustee shall not be authorized and
shall have no power to "vary the investment" of the Owner Participant within
the meaning of Treasury Regulations Section 301.7701-4(c)(1).
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ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnify, protect, save and keep harmless FSBU in its individual capacity and
its successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by FSBU in its individual capacity on or measured
by any compensation received by FSBU in its individual capacity for its
services hereunder or in connection with the transactions contemplated by the
Operative Documents or otherwise excluded in subclause (e) below), claims,
actions, suits, costs, expenses or disbursements (including, without
limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees
and expenses, and including, without limitation, any liability of an owner, any
strict liability and any liability without fault) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against FSBU in its
individual capacity (whether or not also indemnified against by Lessee under
the Lease or under the Participation Agreement or also indemnified against by
any other person but only to the extent not otherwise paid or reimbursed by
Lessee or such other person) in any way relating to or arising out of this
Trust Agreement or any of the Operative Documents or the enforcement of any of
the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark or
copyright infringement), or in any way relating to or arising out of the
administration of the Trust Estate or the action or inaction of the Owner
Trustee or FSBU in its individual capacity hereunder, except (a) in the case of
willful misconduct or gross negligence on the part of the Owner Trustee or FSBU
in its individual capacity in the performance or non-performance of its duties
hereunder or under any of the other Operative Documents to which the Owner
Trustee is a party or (b) those resulting from the inaccuracy of any
representation or warranty of FSBU in its individual capacity (or from the
failure of FSBU in its individual capacity to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to
representations or warranties of FSBU in its individual capacity only, in
Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the
Participation Agreement or in any of the other Operative Documents or (c) as
may result from a breach by FSBU in its individual capacity of its covenants in
the last sentence of Section 5.04 hereof or (d) in the case of the failure to
use ordinary care on the part of the Owner Trustee or FSBU in its individual
capacity in the disbursement of funds or (e) those claims arising under any
circumstances or upon any terms where Lessee would not have been required to
indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b)
or 7(c) of the Participation Agreement (disregarding, for this purpose,
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Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein
results from the Owner Trustee acting in accordance with written instructions
of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from
the willful misconduct or gross negligence of the Owner Participant to the
extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that
such failure referred to therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7 (c)(D) (to
the extent such disposition therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant),
7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and
disregarding, for this purpose, those claims arising or resulting from any
action taken by or inaction of the Owner Trustee in accordance with written
instructions of the Owner Participant). The indemnities contained in this
Section 7.01 extend to FSBU only in its individual capacity and shall not be
construed as indemnities of the Trust Indenture Estate or the Trust Estate
(except to the extent, if any, that FSBU in its individual capacity has been
reimbursed by the Trust Indenture Estate or the Trust Estate for amounts
covered by the indemnities contained in this Section 7.01). The indemnities
contained in this Section 7.01 shall survive the termination of this Trust
Agreement. In addition, if necessary, FSBU in its individual capacity shall be
entitled to indemnification from the Trust Estate, subject to the Lien of the
Trust Indenture, for any liability, obligation, loss, damage, penalty, tax,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.01 to the extent not reimbursed by Lessee, the Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same FSBU in its individual
capacity shall have a Lien on the Trust Estate, subject to the Lien of the
Trust Indenture, which shall be prior to any interest therein of the Owner
Participant. The payor of any indemnity under this Article VII shall be
subrogated to any right of the person indemnified in respect of the matter as
to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of
Section 8(n) of the Participation Agreement shall (with the same force and
effect as if set forth in full, mutatis mutandis, in this Section 8.01) be
applicable to any assignment, conveyance or other transfer by any Owner
Participant of its right, title or interest in and to the Participation
Agreement, the Trust Estate or this Trust Agreement. If there is more than one
Owner Participant, no assignment, conveyance or other transfer by an Owner
Participant of any of its right, title or interest in and to this Trust
Agreement or the Trust Estate shall be valid unless each other Owner
Participant's prior written consent (which consent may be withheld in the sole
discretion of such other Owner Participants) is given to such assignment,
conveyance or other transfer.
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SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any
time prior to the termination of this Trust Agreement there is more than one
Owner Participant, then during such time, if any action is required to be taken
by all Owner Participants and whenever any direction, authorization, approval,
consent, instruction, or other action is permitted to be given or taken by the
Owner Participant it shall be given or taken only upon unanimous agreement of
all Owner Participants; provided, however, that the termination of this Trust
Agreement pursuant to Section 11.01 hereof may be effected upon the election of
any Owner Participant.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) Resignation or Removal. The Owner Trustee or any
successor Owner Trustee (i) shall resign if required to do so pursuant to
Section 8(c) of the Participation Agreement and (ii) may resign at any time
without cause by giving at least sixty (60) days' prior written notice to the
Owner Participant, the Indenture Trustee (so long as the Lien of the Trust
Indenture has not been fully discharged) and Lessee (so long as the Lease is in
effect), such resignation to be effective upon the acceptance of appointment by
the successor Owner Trustee under Section 9.01(b) hereof. In addition, the
Owner Participant may at any time remove the Owner Trustee without cause by a
notice in writing delivered to the Owner Trustee, the Indenture Trustee (so
long as the Lien of the Trust Indenture has not been fully discharged) and
Lessee (so long as the Lease is in effect), such removal to be effective upon
the acceptance of appointment by the successor Owner Trustee under Section
9.01(b) hereof. In the case of the resignation or removal of the Owner
Trustee, the Owner Participant may appoint a successor Owner Trustee by an
instrument signed by the Owner Participant. If a successor Owner Trustee shall
not have been appointed within thirty (30) days after such notice of
resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the
Indenture Trustee may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor shall
have been appointed as above provided. Any successor Owner Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor
Owner Trustee, however appointed, shall execute and deliver to the predecessor
Owner Trustee and the Owner Participant an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further act,
shall become vested with all the estates, properties, rights, powers, duties
and trusts of the predecessor Owner Trustee in the trusts
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<PAGE> 18
hereunder with like effect as if originally named the Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer,
deliver and pay over to such successor Owner Trustee all monies or other
property then held by such predecessor Owner Trustee upon the trusts herein
expressed. Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will execute such documents as are provided to it by
such successor Owner Trustee and will take such further actions as are
requested of it by such successor Owner Trustee as are reasonably required to
cause registration of the Aircraft included in the Trust Estate to be
transferred upon the records of the Federal Aviation Administration, or other
governmental authority having jurisdiction, into the name of the successor
Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement and shall also be
a bank or trust company organized under the laws of the United States or any
state thereof having a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally qualified to perform
the duties of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any
time it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which all or any part of the Trust Estate is located, or the
Owner Trustee being advised by counsel shall determine that it is so necessary
or prudent in the interest of the Owner Participant or the Owner Trustee, or
the Owner Trustee shall have been directed to do so by the Owner Participant,
the Owner Trustee and the Owner Participant shall execute and deliver an
agreement supplemental hereto and all other instruments and agreements
necessary or proper to constitute another bank or trust company or one or more
persons (any and all of which shall be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement)
approved by the Owner Trustee and the Owner Participant, either to act as
co-trustee, jointly with the Owner Trustee, or to act as separate trustee
hereunder (any such co-trustee or separate trustee being herein sometimes
referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture
18
<PAGE> 19
Event of Default not arising from a Lease Event of Default shall occur and be
continuing, the Owner Trustee may act under the foregoing provisions of this
Section 9.02 without the concurrence of the Owner Participant; and the Owner
Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to
act for it under the foregoing provisions of this Section 9.02 in such
contingency.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its
successors shall act, subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred
upon the Owner Trustee in respect of the custody,
control and management of monies, the Aircraft or
documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised
solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred or imposed upon and exercised or performed
by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of
any jurisdiction in which any particular act or acts
are to be performed (including the holding of title
to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may
be exercised by, any such additional trustee shall be
exercised hereunder by such additional trustee,
except jointly with, or with the consent in writing
of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee
hereunder;
(E) the Owner Participant, at any time, by an instrument
in writing may remove any such additional trustee
unless such additional trustee was appointed by the
Owner Trustee without the concurrence of the Owner
Participant during the occurrence of an Indenture
Event of Default not arising from a Lease Event of
Default, in which case the Owner Trustee shall have
the power to remove any such additional trustee
without the concurrence of the Owner Participant; and
the Owner Participant hereby appoints the Owner
Trustee its
19
<PAGE> 20
agent and attorney-in-fact for it in such connection
in such contingency; and
(F) no appointment of, or action by, any additional
trustee will relieve the Owner Trustee of any of its
obligations under, or otherwise affect any of the
terms of, the Trust Indenture or affect the interests
of the Indenture Trustee or the holders of the
Secured Certificates in the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01 SUPPLEMENTS AND AMENDMENTS.
(a) Supplements and Amendments. This Trust Agreement may not
be amended, supplemented or otherwise modified except by an instrument in
writing signed by the Owner Trustee and the Owner Participant. Subject to
Section 10.02 hereof and the first sentence of Section 10 of the Participation
Agreement, the Owner Trustee will execute any amendment, supplement or other
modification of this Trust Agreement or of any other Operative Document to
which the Owner Trustee is a party which it is requested to execute by the
Owner Participant, except that the Owner Trustee shall not execute any such
amendment, supplement or other modification which, by the express provisions of
any of the above documents, requires the consent of any other party unless such
consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain
Parties. A signed copy of each amendment or supplement referred to in Section
10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture
Trustee and each holder of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS.
Prior to executing any document required to be executed by it pursuant to the
terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive
an opinion of its counsel to the effect that the execution of such document is
authorized hereunder. If in the opinion of the Owner Trustee any such document
adversely affects any right, duty, immunity or indemnity in favor of the Owner
Trustee hereunder or under any other Operative Document to which the Owner
Trustee is a party, the Owner Trustee may in its discretion decline to execute
such document.
20
<PAGE> 21
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall
not be necessary for any written request furnished pursuant to Section 10.01
hereof to specify the particular form of the proposed documents to be executed
pursuant to such Section, but it shall be sufficient if such request shall
indicate the substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid,
a conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND
TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust
Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust
Agreement and the trusts created hereby shall be of no further force or effect
upon the earlier of (a) both the final discharge of the Trust Indenture
pursuant to Section 10.01 thereof and the sale or other final disposition by
the Owner Trustee of all property constituting part of the Trust Estate and the
final distribution by the Owner Trustee of all monies or other property or
proceeds constituting part of the Trust Estate in accordance with Article IV
hereof, provided that at such time Lessee shall have fully complied with all of
the terms of the Lease and the Participation Agreement or (b) twenty-one years
less one day after the death of the last survivor of all of the descendants of
the grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto, but if this Trust
Agreement and the trusts created hereby shall be or become authorized under
applicable law to be valid for a period commencing on the 21st anniversary of
the death of such last survivor (or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity of
this Trust Agreement and the trusts created hereby for a period in gross
exceeding the period for which this Trust Agreement and the trusts created
hereby are hereinabove stated to extend and be valid), then this Trust
Agreement and the trust created hereby shall not terminate under this
subsection (b) but shall extend to and continue in effect, but only if such
nontermination and extension shall then be valid under applicable law, until
the day preceding such date as the same shall, under applicable law, cease to
be valid; otherwise this Trust Agreement and the trusts created hereby shall
continue in full force and effect
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<PAGE> 22
in accordance with the terms hereof, subject to the Owner Participant's right
to revoke such trusts and cause the Trust Estate (subject to the Lien of the
Trust Indenture) to be distributed.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST
ESTATE. The Owner Participant shall not have legal title to any part of the
Trust Estate. [No transfer, by operation of law or otherwise, of any right,
title and interest of the Owner Participant in and to the Trust Estate
hereunder shall operate to terminate] this Trust Agreement or the trusts
hereunder or entitle any successors or transferees of the Owner Participant to
an accounting or to the transfer of legal title to any part of the Trust Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any
assignment, sale, transfer or other conveyance of its interest in the Aircraft
by the Owner Trustee made pursuant to the terms hereof or of the Lease or the
Participation Agreement shall bind the Owner Participant and shall be effective
to transfer or convey all right, title and interest of the Owner Trustee and
the Owner Participant in and to the Aircraft. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES
ONLY. Except for the terms of Section 8(n) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in
Articles IX and X hereof, nothing herein, whether expressed or implied, shall
be construed to give any Person other than the Owner Trustee and the Owner
Participant any legal or equitable right, remedy or claim under or in respect
of this Trust Agreement; but this Trust Agreement shall be held to be for the
sole and exclusive benefit of the Owner Trustee and the Owner Participant.
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. a. 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 telecopier, or by prepaid courier service, and shall be deemed to be
given for purposes of this Agreement on the day that such writing is delivered
or sent to the intended recipient thereof in accordance with the provisions of
this Section 11.05(a). Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 11.05(a),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures
of such parties on the signature page of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such Subsequent Owner
Participant at such address as such Subsequent Owner Participant shall have
furnished by notice to the
22
<PAGE> 23
parties hereto or (C) if to any subsequent Certificate Holder, addressed to
such Certificate Holder at its address set forth in the secured certificate
register maintained pursuant to Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and to the non-exclusive jurisdiction of
the Supreme Court of the State of New York, New York County, for the purposes
of any suit, action or other proceeding arising out of this Trust Agreement,
the Participation Agreement, the Lease, the Tax Indemnity Agreement or any
other Operative Document, the subject matter of any thereof or any of the
transactions contemplated hereby or thereby brought by any party or parties
thereto, or their successors or assigns, and (B) hereby waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that the Participation Agreement,
the Lease, the Tax Indemnity Agreement or any other Operative Document or the
subject matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing entered into in compliance with the terms of Article X hereof; and
any waiver of the terms hereof shall be effective only in the specific instance
and for the specific purpose given.
SECTION 11.08. COUNTERPARTS. This Trust 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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Owner Trustee and its successors and assigns, and the Owner Participant,
its successors and, to the extent permitted by Article VIII hereof, its
assigns. Any request, notice, direction, consent, waiver or other instrument
or action by the Owner Participant shall bind its successors and assigns. Any
Owner Participant which shall cease to have any Ownership Interest shall
thereupon cease to be a party hereto or an Owner Participant for any reason and
shall have no further obligations hereunder.
23
<PAGE> 24
SECTION 11.10. HEADINGS; REFERENCES. The headings of the
various Articles and Sections herein are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any
obligation of the Owner Trustee in its individual capacity or as Owner Trustee
hereunder or under any other Operative Document or other document contemplated
herein, may be performed by the Owner Participant and any such performance
shall not be construed as a revocation of the trust created hereby.
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
By
---------------------------------------------
Title:
-----------------------------------------
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By
---------------------------------------------
Title:
-----------------------------------------
25
<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1996 D]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 D], dated as
of June 12, 1996, between [____________], a [__________] corporation (the "OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "FSBU") and otherwise not in
its individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Trust Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner
Participant, the Owner Trustee, [____________________], as the loan participants
(collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and Trust
Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the
Participation Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to
<PAGE> 2
Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft
commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 D], dated as of
April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 D], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant
to which the Owner Trustee issued to the Original Loan Participants secured
certificates substantially in the form set forth in Article II thereof (the
"ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the
Original Loan Participants in participating in the payment of Lessor's Cost;
WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor,
the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee,
the Owner Participant, the Indenture Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as Subordination Agent, have
entered into the Refunding Agreement [NW 1996 D], dated as of June 3, 1996 (the
"REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by
Section 17 of the Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 D], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 D], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE"); and
WHEREAS, the Owner Participant and the Owner Trustee wish to
amend the Original Trust Agreement as set forth herein to give effect to the
transactions contemplated by the Refunding Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Trust Agreement is
amended as follows:
SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST
AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by
adding the following clause to the end thereof after the word "distributed":
"provided, however, such right is subject to the provisions of Section 10 of the
Participation Agreement."
SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by
deleting
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<PAGE> 3
the word "Participation" in clause (A) of the second sentence thereof and
substituting therefor the word "Refunding".
SECTION 3. DIRECTION. Pursuant to and in conformity with
Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests
the Owner Trustee to execute this Amendment.
SECTION 4. RATIFICATION. Except as hereby modified, the
Original Trust Agreement shall continue in full force and effect as originally
executed. From and after the date of this Amendment, each and every reference in
the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof"
or similar words or phrases referring to the Trust Agreement or any word or
phrase referring to a section or provision of the Trust Agreement is deemed for
all purposes to be a reference to the Trust Agreement or such section or
provision as amended pursuant to this Amendment.
SECTION 5. MISCELLANEOUS. This Amendment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[Owner Participant]
By:
------------------------------
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
By:
------------------------------
Name:
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 D]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1996 D], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly stated herein, but solely as
Owner Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 D] dated as of
April 29, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into
the Trust Agreement and Indenture Supplement [NW 1996 D] (the "SUPPLEMENT")
dated April 30, 1996 to the Original Indenture, (iii) the Original Indenture and
the Supplement were recorded by the Federal Aviation Administration on May 3,
1996 and were assigned Conveyance No. E21278 and (iv) the Lease Agreement [NW
1996 D] dated as of even date with the Original Indenture between the Owner
Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 D] were recorded by
the Federal Aviation Administration on May 1, 1996 and were assigned Conveyance
No. P06566 and (v) pursuant to the Original Indenture, the Owner Trustee issued
and sold to the Loan Participants Secured Certificates (as defined in the
Original Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participants pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines
and all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire title as provided herein and in the
Lease), all as more particularly described in the Trust Agreement and Indenture
Supplement executed and delivered with respect to the Aircraft or any such
replacements or substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent
thereunder (including, without limitation, all amounts of Interim Rent, Basic
Rent, Supplemental Rent and payments of any kind thereunder (excluding any
Excluded Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in
the Purchase Agreement Assignment), the Purchase Agreement Assignment, the
Consent and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income
of the property subjected or required to be subjected to the lien of this
Indenture;
(5) all insurance and requisition proceeds with respect
to the Aircraft, including but not limited to the insurance required under
Section 11 of the Lease, but excluding insurance proceeds described in clauses
(ii) and (iii) of the definition of Excluded Payments;
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(6) all rights of the Owner Trustee to amounts paid or
payable by Lessee to the Owner Trustee under the Participation Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts thereunder,
but excluding all Excluded Payments;
(7) all monies and securities from time to time deposited
or required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee has delivered to the Indenture Trustee the original executed
counterpart of the Lease and the Lease Supplement No. 1 (to each of which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, and the Purchase Agreement Assignment with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, and its successors and assigns, in trust for the
benefit and security of the Loan Participants and the Certificate Holders,
except as provided in Section 2.15 and Article III hereof without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in paragraphs (1)
through (8) inclusive above, subject to the terms and provisions set forth in
this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Agreements to perform all of the obligations assumed by it thereunder,
except to the extent prohibited or excluded from doing so pursuant to the terms
and provisions thereof, and the Indenture Trustee and the Certificate Holders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Indenture Trustee
or the Certificate Holders be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Subject to the terms hereof, the Owner Trustee does hereby
constitute the Indenture Trustee the true and lawful attorney of the Owner
Trustee, irrevocably, granted for good and valuable consideration and coupled
with an interest and with full power of substitution, and with full power (in
the name of the Owner Trustee or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or arising out of
the Indenture Agreements, and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or
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appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents (other than Excluded Payments) and other
sums and the security intended to be afforded hereby; provided, however, that no
action of the Indenture Trustee pursuant to this paragraph shall increase the
obligations or liabilities of the Owner Trustee to any Person beyond those
obligations and liabilities specifically set forth in this Trust Indenture and
in the other Operative Documents. Under the Lease, Lessee is directed, so long
as this Trust Indenture shall not have been fully discharged, to make all
payments of Rent (other than Excluded Payments) and all other amounts which are
required to be paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by, the Indenture
Trustee at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Trust Indenture. The Owner Trustee agrees that
promptly upon receipt thereof, it will transfer to the Indenture Trustee any and
all monies from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Indenture Trustee pursuant to this
Trust Indenture, except that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants and agrees that it will not
assign or pledge, so long as the assignment hereunder shall remain in effect,
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its right, title or interest hereby assigned, to anyone other
than the Indenture Trustee, and that it will not, except as otherwise provided
in this Trust Indenture and except with respect to Excluded Payments, (i) accept
any payment from Lessee under any Indenture Agreement, (ii) enter into any
agreement amending or supplementing any Indenture Agreement, (iii) execute any
waiver or modification of, or consent under, the terms of, or exercise any
rights, powers or privileges under, any Indenture Agreement, (iv) settle or
compromise any claim (other than those relating to an Excluded Payment) arising
under any Indenture Agreement or (v) submit or consent to the submission of any
dispute, difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) except as set forth in Section 8(bb) of the
Participation Agreement, collect or agree to the
receipt or collection of any payment of Rent,
including Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease but
excluding any Excluded Payment prior to the due date
for the payment thereof provided for by the Lease or
assign, transfer or hypothecate (other than to the
Indenture Trustee hereunder) any payment of Rent,
including Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease but
excluding any Excluded Payment, then due or to accrue
in the future under the Lease in respect of the
Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor owner
trustee, sell, mortgage, transfer, assign or
hypothecate (other than to the Indenture Trustee
hereunder) its interest in the Airframe and Engines
or any part
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thereof or in any amount to be received by it from
the use or disposition of the Airframe and Engines,
other than amounts distributed to it pursuant to
Article III hereof.
It is hereby further agreed that any and all property
described or referred to in the granting clauses hereof which is hereafter
acquired by the Owner Trustee shall ipso facto, and without any further
conveyance, assignment or act on the part of the Owner Trustee or the Indenture
Trustee, become and be subject to the Lien herein granted as fully and
completely as though specifically described herein, but nothing contained in
this paragraph shall be deemed to modify or change the obligations of the Owner
Trustee contained in the foregoing paragraphs.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any
Principal Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be
redeemed shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in
Section 22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time
of one or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
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<PAGE> 7
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of the Owner Trustee located at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or
such other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee and each Certificate Holder.
"Corporate Trust Office" shall mean the principal office of
the Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest Rate" in
Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section
4.03 hereof.
"Event of Default" shall have the meaning specified in Section
4.02 hereof.
"Excess Amount" shall have the meaning specified in Section
2.03(b) hereof.
"Excluded Payments" shall mean (i)(A) indemnity payments paid
or payable by Lessee to or in respect of the Owner Participant or the Owner
Trustee in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b) and 7(c) of
the Participation Agreement and (B) any other payment to the Owner Participant
pursuant to any provision of any Operative Document, (ii) proceeds of public
liability insurance (or proceeds of governmental indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims made, or losses
suffered, by the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by any of the Owner Indemnitees, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) and permitted under Section
11(e) of the Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee and all payments of Supplemental Rent by Lessee in
respect of any amounts payable under the Tax Indemnity Agreement, (v) all
Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the
Indenture Trustee pursuant to the last sentence of Section 7(c) of the
Participation Agreement, (vii) provided that the Secured Certificates shall have
been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable
to the Owner Trustee pursuant to the third sentence of Section 19(d) of the
Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest
accrued on any of the above, and (x) any right to enforce the payment of any
amount described in clauses (i) through (ix) above.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
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<PAGE> 8
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b) of
the Trust Indenture or (ii) the Indenture Trustee has taken action or notified
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 D],
dated as of April 29, 1996, entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of the Original Trust Indenture, as
said Lease Agreement has been, or may from time to time be, supplemented or
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of this Indenture. The term "Lease" shall also
include each Lease Supplement from time to time entered into pursuant to the
terms of the Lease.
"Lease Default" shall mean any event or condition that with
the giving of notice or the lapse of time or both would become a Lease Event of
Default.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation
Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the
Purchase Agreement Assignment and each other agreement between Lessee and any
other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than a majority
in aggregate unpaid Principal Amount of all Secured Certificates outstanding as
of such date (excluding any Secured Certificates held by the Owner Trustee or
the Owner Participant or any interests of the Owner Participant therein by
reason of subrogation pursuant to Section 4.03 hereof (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any Affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment banker
selected by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of such
Secured Certificate computed by discounting each such payment on a semiannual
basis from its respective Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield (plus, in the case of
Series C Secured Certificates, 75 basis points) exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "TREASURY YIELD" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Secured
Certificate and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Secured Certificate and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Secured Certificate,
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<PAGE> 9
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ], so
long as such party shall have any interest in the Trust Estate, and transferees
thereof as permitted by Section 8 of the Participation Agreement.
"Participants" shall mean and include the Loan Participants
and the Owner Participant.
"Participation Agreement" shall mean that certain
Participation Agreement [NW 1996 D], dated as of April 29, 1996, among the Owner
Trustee, the Indenture Trustee, Lessee and the Participants, as the same may
from time to time be supplemented or amended, or the terms thereof waived or
modified, to the extent permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2,
commencing on January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Secured Certificates have been
paid in full.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in accordance
with the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee,
a responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in
Section 4.04(a) hereof.
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"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Holder" shall have the meaning specified in Section
2.15(c) hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a
supplement to the Trust Agreement and to this Indenture, in substantially the
form of Exhibit A hereto, which shall particularly describe the Aircraft, and
any Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust
Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this
Amended and Restated Trust Indenture and Security Agreement [NW 1996 D] as it
may from time to time be supplemented or amended as herein provided, including
supplementing by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties referred to in
the Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes
of this Trust Indenture the terms used but not defined herein are used as
defined in the Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form
set forth below:
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THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 D] DATED AS OF APRIL 29, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N540US.
No.____ Date: [______,__]
$__________________
INTEREST RATE MATURITY DATE
[________] [________,_______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 D], dated as of
April 29, 1996, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the
Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated
as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust
Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented
from time to time. All other capitalized terms used in this Secured Certificate
and not defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on
demand, at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest and any other amounts payable hereunder which are overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount,
if any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement
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shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Trust Indenture and each holder hereof, by its acceptance of
this Secured Certificate, agrees that (A) it will look solely to the income and
proceeds from the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided, (B) neither the Owner
Trustee nor the Indenture Trustee is personally liable or liable in any manner
to the holder hereof for any amounts payable or any liability under this Secured
Certificate or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust Indenture or the
Participation Agreement, and (C) the Owner Participant is not personally liable
or liable in any manner to the holder hereof for any amounts payable or any
liability under this Secured Certificate or, except as provided in the
Participation Agreement, for any liability under the Participation Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
the right of the Indenture Trustee, subject always to the terms and provisions
of the Trust Indenture, to accelerate the maturity of this Secured Certificate
upon occurrence of an Event of Default under the Trust Indenture in accordance
with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for
the purpose of registering transfers and exchanges of Secured Certificates at
the Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at the
Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the
Trust Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Secured Certificate, except
that in the case of any final payment with respect to this Secured Certificate,
the Secured Certificate shall be surrendered promptly thereafter by the
Indenture Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured
Certificate, agrees that, except as provided in the Trust Indenture, each
payment received by it hereunder shall be applied, first, to the payment of
accrued interest on this Secured Certificate (as well as any interest on any
overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, second, to the payment of the Principal Amount of this
Secured Certificate then due, third, to the payment of Make-Whole Amount, if
any, and any other amount due hereunder or under the Trust Indenture, and
fourth, the balance, if any, remaining thereafter, to the payment of Principal
Amount of this Secured Certificate remaining unpaid in the inverse order of
their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
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<PAGE> 13
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided
in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to
the extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates] (1) [Series A and Series B Secured Certificates] (2), and this
Secured Certificate is issued subject to such provisions. The Certificate Holder
of this Secured Certificate, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Indenture Trustee
on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Trust Indenture and (c)
appoints the Indenture Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Secured Certificate shall not be entitled to any benefit under the Trust
Indenture or be valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ------------------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By ___________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By ___________________________________
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATE AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------------ ----------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series A, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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<PAGE> 17
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Certificate Holders
under this Trust Indenture, each Certificate Holder, by its acceptance of a
Secured Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the Participation Agreement
or any of the other Operative Documents or under the Secured Certificates except
as expressly provided herein or in the Participation Agreement; provided,
however, that nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms of this Trust
Indenture or such other agreements of rights and remedies against the Trust
Estate. These provisions are not intended as any release or discharge of the
indebtedness represented by the Secured Certificates and the Trust Indenture,
but are intended only as a covenant not to sue the Owner Trustee or the
Indenture Trustee in their individual capacities, except as expressly provided
herein or in the Participation Agreement, or the Owner Participant, except as
expressly provided in the Participation Agreement, for a deficiency with respect
to such indebtedness, the indebtedness represented by this Trust Indenture and
the Secured Certificates to remain in full force and effect as fully as though
these provisions were not contained in this Trust Indenture. The Owner Trustee
hereby acknowledges that the Certificate Holders have expressly reserved all
their rights and remedies against the Trust Indenture Estate, including the
right, in the event of a default in the payment of all or part of the Principal
Amount of, interest on, Make-Whole Amount, if any, or any other amount due with
respect to any Secured Certificate within the periods provided for in Section
4.02(b) hereof, or upon the occurrence and continuation of any other Event of
Default under this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate and otherwise to
enforce any other right under this Trust Indenture. Nothing in this Section
2.03(a) shall (x) release the Owner Participant from personal liability, or
constitute a covenant not to sue the Owner Participant, for any breach by it of
any of its covenants, representations or warranties contained in the
Participation Agreement for the benefit of the Indenture Trustee or the
Certificate Holders or for any of the payments it has agreed to make to the
Indemnitee Trustee or the Certificate Holders pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders or (z) release the
Owner Trustee in its individual capacity from personal liability, or constitute
a covenant not to sue the Owner Trustee in its individual capacity for any
breach by it of any representations, warranties or covenants of the Owner
Trustee made in its individual capacity in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders.
(b) If (i) all or any part of the Trust Estate becomes
the property of, or the Owner Trustee or Owner Participant becomes, a debtor
subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant
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<PAGE> 18
to such reorganization provisions, including Section 1111(b) of the Bankruptcy
Code, the Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to any Certificate
Holder or the Indenture Trustee, directly or indirectly (other than the recourse
liability of (x) the Owner Trustee (in its individual capacity) under the
Participation Agreement or this Trust Indenture or by separate agreement or (y)
the recourse liability of the Owner Participant under the Participation
Agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Secured
Certificates, (iii) the Certificate Holders shall have or shall have been
permitted to foreclose the Lien of this Trust Indenture, and (iv) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means
the amount by which such payment exceeds the amount that would have been
received by a Certificate Holder or the Indenture Trustee if the Owner Trustee
(in its individual capacity) or the Owner Participant had not become subject to
the recourse liability referred to in clause (ii) above. Nothing contained in
this Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee
from enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Trustee (in its individual capacity) or the Owner
Participant under the Participation Agreement or this Trust Indenture (and any
exhibits or annexes hereto or thereto) or by separate agreement or from
retaining any amount paid by Owner Participant under Section 2.14 or 4.03
hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole
Amount, if any, and other amounts due under each Secured Certificate or
hereunder will be payable in Dollars by wire transfer of immediately available
funds not later than 12:00 noon, New York City time, on the due date of payment
to the Indenture Trustee at the Corporate Trust Office for distribution among
the Certificate Holders in the manner provided herein. The Owner Trustee shall
not have any responsibility for the distribution of such payment to any
Certificate Holder. Notwithstanding the foregoing or any provision in any
Secured Certificate to the contrary, the Indenture Trustee will use reasonable
efforts to pay or cause to be paid, if so directed in writing by any Certificate
Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee
hereunder and under such holder's Secured Certificate or Secured Certificates to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 2:00 p.m., New York City time, on the due date of payment, to an account
maintained by such holder with a bank located in the continental United States
the amount to be distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Indenture Trustee shall fail to make any
such payment as provided in the immediately preceding sentence after its receipt
of funds at the place and prior to the time specified above, the Indenture
Trustee, in its individual capacity and not as trustee, agrees to compensate
such holders for loss of use of funds at the Debt Rate until such payment is
made and the Indenture Trustee shall be entitled to any interest earned on such
funds until such payment is made. Any payment made hereunder shall be made
without any presentment or surrender of any Secured Certificate, except that, in
the case of the final payment in respect of any Secured Certificate, such
Secured Certificate shall be surrendered to the Indenture Trustee for
cancellation promptly after such payment. Notwithstanding any other provision of
this Trust Indenture to the contrary, the Indenture Trustee shall not be
required to make, or cause to be made, wire transfers as aforesaid prior to the
first Business Day on which it is practicable for the Indenture Trustee to do so
in view of the time of day when the funds to be so transferred were received by
it if such funds were received after 12:00 noon, New York City time, at the
place of payment. Prior to the due presentment for registration of transfer of
any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem
and treat the Person in whose name any Secured Certificate is registered on the
Secured Certificate Register as the absolute owner and holder of such Secured
Certificate for the purpose of receiving payment of all amounts payable with
respect to such Secured Certificate and for all other purposes, and none of the
Owner Trustee or the Indenture Trustee shall be affected by any notice to the
contrary. So long as any signatory to the Participation Agreement or nominee
thereof shall be a
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<PAGE> 19
registered Certificate Holder, all payments to it shall be made to the account
of such Certificate Holder specified in Schedule I thereto and otherwise in the
manner provided in or pursuant to the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement) unless it
shall have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner
Trustee, shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificate Holders, that it will file any necessary United States withholding
tax returns or statements when due, and that as promptly as possible after the
payment thereof it will deliver to each Certificate Holder (with a copy to the
Owner Trustee and Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such Certificate
Holder may reasonably request from time to time. The Indenture Trustee and each
Certificate Holder agree that (i) no such withholding or action with respect
thereto shall constitute or give rise to any Event of Default and (ii) in the
event of the failure of the Indenture Trustee to withhold and pay over any such
taxes to the appropriate taxing authority, no indemnity will be sought from the
Owner Trustee, the Owner Participant or the Trust Estate.
If a Certificate Holder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Secured Certificate(s) held by
such holder is made (but prior to the making of such payment), or in either of
the two preceding calendar years, and has not notified the Indenture Trustee of
the withdrawal or inaccuracy of such form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate), the Indenture Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law. The Indenture Trustee and each Certificate Holder agree that (i)
no such withholding or action with respect thereto shall constitute or give rise
to any Event of Default and (ii) in the event of the failure of the Indenture
Trustee to withhold and pay over any such taxes to the appropriate taxing
authority, no indemnity will be sought from the Owner Trustee, the Owner
Participant or the Trust Estate.
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<PAGE> 20
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of
Principal Amount, Make-Whole Amount, if any, and interest or other amounts due
thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE
ESTATE.
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture Estate when and
if the Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture,
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as the Secured Certificates surrendered upon such registration of transfer or
exchange. Every Secured Certificate presented or surrendered for registration of
transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee and Lessee of each registration
of a transfer of a Secured Certificate. Any such transferee of a Secured
Certificate, by its acceptance of a Secured Certificate, agrees to the
provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t),
8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have
represented and warranted (except as provided above), and covenanted, to the
parties to the Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participants in the Participation Agreement.
Subject to compliance by the Certificate Holder and its transferee (if any) of
the requirements set forth in this Section 2.07, the Indenture Trustee and the
Owner Trustee shall use all reasonable efforts to issue new Secured Certificates
upon transfer or exchange within 10 Business Days of the date a Secured
Certificate is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed,
lost or stolen, the Owner Trustee shall, upon the written request of the holder
of such Secured Certificate, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new Secured Certificate,
payable in the same Principal Amount dated the same date and captioned as issued
in connection with the Aircraft. The Indenture Trustee shall authenticate each
replacement Secured Certificate on request by the Owner Trustee and shall make a
notation on each replacement Secured Certificate of the aggregate amount of all
payments of Principal Amount previously made on the mutilated, destroyed, lost
or stolen Secured Certificate with respect to which the replacement Secured
Certificate is issued and the date to which interest on such mutilated,
destroyed, lost or stolen Secured Certificate has been paid. If the Secured
Certificate being replaced has become mutilated, such Secured Certificate shall
be surrendered to the Indenture Trustee and a photocopy thereof shall be
furnished to the Owner Trustee. If the Secured Certificate being replaced has
been destroyed, lost or stolen, the holder of such Secured Certificate shall
furnish to the Owner Trustee and the Indenture Trustee such security or
indemnity as may be required by them to save the Owner Trustee and the Indenture
Trustee harmless and evidence satisfactory to the Owner Trustee and the
Indenture Trustee of the destruction, loss or theft of such Secured Certificate
and of the ownership thereof. If a "qualified institutional buyer" of the type
referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the
Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen
Secured Certificate, then the written indemnity of such QIB, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a condition to the execution and delivery of such
new Secured Certificate. Subject to compliance by the Certificate Holder of the
requirements set forth in this Section 2.08, the Indenture Trustee and the Owner
Trustee shall use all reasonable efforts to issue new Secured Certificates
within 10 Business Days of the date of the written request therefor from the
Certificate Holder.
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SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate
Holder for any registration of transfer or exchange of Secured Certificates, but
the Indenture Trustee, as Secured Certificate Registrar, may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear any such costs of registration, transfer or exchange
including, without limitation, in connection with the consummation of the
Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured
Certificates surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to
Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect
to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the
Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee
shall not have assumed all of the obligations of the Owner Trustee hereunder
pursuant to Section 2.13 hereof and to Section 8(x) of the Participation
Agreement, on the date the Lease is so terminated all the Secured Certificates
shall be redeemed in whole at a redemption price equal to 100% of the unpaid
Principal Amount thereof, together with accrued interest thereon to the date of
redemption and all other amounts payable hereunder or under the Participation
Agreement to the Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
All of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor
any purchase by the Owner Trustee of any Secured Certificate may be made except
to the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and
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payable upon each such Secured Certificate, and that, if any such Secured
Certificates are then outstanding, interest on such Secured Certificates shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Secured Certificates are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner Trustee
(or any person on behalf of the Owner Trustee) shall, to the extent an amount
equal to the redemption price for the Secured Certificates to be redeemed or
purchased on the redemption date shall not then be held in the Trust Indenture
Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00
noon on the redemption date in immediately available funds the redemption price
of the Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Secured
Certificates then outstanding shall cease to bear interest. Upon surrender of
any such Secured Certificate for redemption or purchase in accordance with said
notice, such Secured Certificate shall be redeemed at the redemption price. If
any Secured Certificate called for redemption or purchase shall not be so paid
upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable redemption date at the
interest rate in effect for such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation
Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall
assume (on a full recourse basis) all of the obligations of the Owner Trustee
hereunder, under the Secured Certificates and all other Operative Documents by
supplemental indenture satisfactory to the Indenture Trustee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and
12 of the Lease and (ii) other provisions necessary or advisable to effectuate
such assumption), then upon delivery of such supplemental indenture, payment by
Lessee of all expenses (including reasonable fees and expenses of counsel) for
the Owner Trustee and the Owner Participant, delivery by the Guarantor of a
guarantee of the Secured Certificates and other amounts owing to the Certificate
Holders substantially in the form of the Guarantee, and delivery of an opinion
of counsel for Lessee that such assumption has been duly and validly effected,
the Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
The Owner Trustee and the Owner Participant may, upon the
events and subject to the terms and conditions and for the price set forth in
this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind other than (i) of title to the
Secured Certificates so conveyed and (ii) against Liens on such Secured
Certificates arising by, through or under such holder), all of the right, title
and interest of such Certificate Holder in and to the Secured Certificates held
by it, and such purchaser or its nominee shall assume all of such holder's
obligations under the Participation Agreement and hereunder.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant upon any of the
following events, and, in any such event, the purchase price thereof shall equal
for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus
accrued and unpaid interest thereon to the date of purchase and all other
amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Participation Agreement to the
holder thereof. Such option to purchase the Secured Certificates may be
exercised: (i) upon an Indenture Trustee Event or (ii) in the event there
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shall have occurred and be continuing a Lease Event of Default, provided that if
such option is exercised pursuant to this clause (ii) at a time when there shall
have occurred and be continuing for less than 120 days a Lease Event of Default,
the purchase price thereof shall equal the price provided in the preceding
sentence plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant giving written notice of
its election of such option to the Indenture Trustee, which notice shall specify
a date for such purchase not more than 30 days or less than 15 days after the
date of such notice. The Indenture Trustee shall not exercise any of the
remedies hereunder or, without the consent of the Owner Trustee or the Owner
Participant, under the Lease, during the period from the time that a notice of
exercise by the Owner Trustee or the Owner Participant of such option to
purchase becomes irrevocable until the date on which such purchase is required
to occur pursuant to the terms of the preceding sentence. Such election to
purchase the Secured Certificates shall become irrevocable upon the sixteenth
day preceding the date specified in the written notice described in the first
sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Certificate Holders will comply with
all the provisions of Section 2.07 to enable new Secured Certificates to be
issued to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured
Certificates of any Series, each Certificate Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any
Series (other than Series A), each Certificate Holder of such Series agrees that
in the event that such Certificate Holder, in its capacity as a Certificate
Holder, shall receive any payment or distribution on any Secured Obligations in
respect of such Series which it is not entitled to receive under this Section
2.15 or Article III hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR
HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
SECTION 2.16. DEFEASANCE.
(a) The Owner Trustee will be deemed to have paid and
will be discharged from any and all obligations in respect of the Secured
Certificates on the 90th day (or such other period as may be specified in the
relevant provision of the United States Bankruptcy Code) (such period being the
"Preference Period") after the date of the deposit referred to in clause (i) of
this Section 2.16(a) if:
(i) with reference to this Section 2.16(a), the Owner
Trustee has irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee (or another trustee satisfying the
requirements of Section 8.02) and conveyed all right, title and
interest for the benefit of the Certificate Holders, under the terms of
an irrevocable trust agreement in form and substance satisfactory to
the Indenture Trustee, which provides irrevocable instructions therein
to apply such money or the proceeds of
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such U.S. Government Obligations to the payment of such principal and
interest with respect to the Secured Certificates, as trust funds in
trust, specifically entrusted to the Indenture Trustee for the benefit
of the Certificate Holders for payment of the principal of and
interest, if any, on the Secured Certificates, and dedicated solely to,
the benefit of the Certificate Holders, in and to (A) money in an
amount, (B) U.S. Government Obligations that, through the payment of
interest, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Indenture Trustee,
to pay and discharge, without consideration of the reinvestment of such
interest and after payment of all federal, state and local withholding
taxes or other similar charges and assessments in respect thereof
payable by the Indenture Trustee with respect to the amounts deposited
pursuant to clause (A), (B) or (C), the principal of and accrued
interest on the outstanding Secured Certificates at the maturity of
such principal or interest;
(ii) the Owner Trustee shall have delivered to the
Indenture Trustee (A) either (1) a ruling directed to the Indenture
Trustee received from the Internal Revenue Service to the effect that
the Certificate Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Owner Trustee's exercise
of its option under this Section 2.16(a) and will be subject to federal
income tax on that same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised
or (2) an Opinion of Counsel to the same effect as the ruling described
in clause (1) above accompanied by a ruling to that effect published by
the Internal Revenue Service, unless there has been a change in the
applicable federal income tax law since the date of this Indenture such
that a ruling from the Internal Revenue Service is no longer required
and (B) an Opinion of Counsel to the effect that (1) the creation of
the defeasance trust does not violate the Investment Company Act of
1940 and (2) after the passage of the Preference Period, the trust
funds will not be subject to the effect of Section 547 of the United
States Bankruptcy Code (or any successor or replacement provision) in a
case commenced by or against the Owner Trustee or Lessee under either
such statute, and either (I) the trust funds will no longer remain the
property of the Owner Trustee or Lessee (and therefore will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally)
or (II) if a court were to rule under any such law in any case or
proceeding that the trust funds remained the property of the Owner
Trustee or Lessee (y) assuming such funds remained in the possession of
the Indenture Trustee prior to such court ruling to the extent not paid
to the Certificate Holders, the Indenture Trustee will hold, for the
benefit of the Certificate Holders, a valid and perfected security
interest in such trust funds that is not avoidable in bankruptcy or
otherwise except for the effect of Section 552(b) of the United States
Bankruptcy Code (or any successor or replacement provision) on interest
on the trust funds accruing after the commencement of a case under such
statute and (z) the Certificate Holders will be entitled to receive
adequate protection of their interests in such trust funds if such
trust funds are used in such case or proceeding; and
(iii) the Owner Trustee shall have made arrangements
reasonably satisfactory to the Indenture Trustee for payment or
satisfaction of all amounts due under the third paragraph of Section
2.02.
After any such irrevocable deposit and satisfaction of the
condition precedent provided in clause (ii) of this Section 2.16(a), the
Indenture Trustee upon request shall execute and deliver appropriate instruments
to release the Lien of this Trust Indenture in accordance with Section 10.01 and
shall acknowledge in writing the discharge of the Owner Trustee's obligations
under the Secured Certificates and this Trust Indenture except for those
surviving obligations in the immediately succeeding paragraph.
Notwithstanding the foregoing, prior to the end of the
Preference Period, none of the Owner Trustee's obligations under this Trust
Indenture shall be discharged. Subsequent to the end of the Preference Period,
the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until
the Secured Certificates are no longer outstanding.
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(b) In lieu of satisfying its obligations set forth in
Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy
the conditions specified in clauses (i) and (ii) of Section 2.16(a) without
regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu
of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only
an Opinion of Counsel to the effect that the Certificate Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i)
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit had not
been made. If the Owner Trustee elects such option, then the Indenture Trustee
upon request shall execute and deliver appropriate instruments to release the
Lien of this Trust Indenture in accordance with Section 10.01 and the Owner
Trustee shall be released from its obligations set forth in Section 4.01 (other
than Section 4.01(a)). All other obligations of the Owner Trustee hereunder
shall remain in full force and effect. For the avoidance of doubt, the effect of
the Owner Trustee's exercise of its option set forth in this subsection (b)
shall be to create an economic defeasance rather than the legal defeasance that
would result if the option set forth in subsection (a) above were to be
exercised.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A
Secured Certificates shall be distributed to the
Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all
Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the
Certificate Holders of Series B ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series B Secured Certificate bears to the
aggregate amount of the payments then due under all
Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest
and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the
Certificate Holders of Series C ratably,
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without priority of one over the other, in the
proportion that the amount of such payment or
payments then due under each Series C Secured
Certificate bears to the aggregate amount of the
payments then due under all Series C Secured
Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Indenture Trustee
as part of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever
of the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which
event such balance shall be distributed as provided
in this clause "Second", (ii) Section 3.03 hereof
shall be applicable, in which event such balance
shall be distributed in accordance with the
provisions of such Section 3.03, or (iii) the 120th
day after the receipt of such payment in which case
such payment shall be distributed as provided in this
clause "Second".
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY
TERMINATION; REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee (i) with respect to the Aircraft as
the result of an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the
Certificate Holders for any reasonable costs or expenses
incurred in connection with such redemption for which they are
entitled to reimbursement, or indemnity by Lessee, under the
Operative Documents and then (b) to pay any other amounts then
due to the Indenture Trustee and the Certificate Holders under
this Trust Indenture, the Participation Agreement or the
Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series A Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series C Secured Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and
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such investment earnings) shall be released to Lessee at Lessee's written
request upon the release of such damaged Airframe or Engine and the replacement
thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an
Event of Default shall have occurred and be continuing and after the occurrence
of an Indenture Trustee Event, as well as all payments or amounts then held by
the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other
loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents,
revenues, issues, products and profits of, the property
included in the Trust Indenture Estate (all such property
being herein called the "MORTGAGED PROPERTY") pursuant to
Section 4.05(b) hereof) , but other than income tax on, or
measured by, fees payable to the Indenture Trustee in its
individual capacity pursuant to the Operative Documents to
which it is a party incurred by the Indenture Trustee (to the
extent not previously reimbursed), the expenses of any sale,
taking or other proceeding, reasonable attorneys' fees and
expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Certificate Holders in the protection, exercise or enforcement
of any right, power or remedy or any damages sustained by the
Indenture Trustee or any Certificate Holder, liquidated or
otherwise, upon such Event of Default shall be applied by the
Indenture Trustee as between itself and the Certificate
Holders in reimbursement of such expenses and any other
expenses for which the Indenture Trustee or the Certificate
Holders are entitled to reimbursement under any Operative
Document and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid, then ratably,
without priority of one over the other, in proportion to the
amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate
Holders for payments made pursuant to Section 5.03 hereof (to
the extent not previously reimbursed) shall be distributed to
such then existing or prior Certificate Holders ratably,
without priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Certificate Holder pursuant to said Section
5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid
Principal Amount of all Series A Secured
Certificates, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series A
Secured Certificates (other than Make-Whole Amount)
to the date of distribution, shall be distributed to
the Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by
all such holders plus the accrued but unpaid interest
and other amounts due thereon (other than Make-Whole
Amount) to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much
of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid
Principal Amount of all Series B Secured
Certificates, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series B
Secured Certificates [(other than Make-Whole Amount)]
to the date of distribution, shall be distributed to
the Certificate Holders of Series B, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than
the Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by
all such holders plus the accrued but unpaid interest
and other amounts due thereon (other than the
Make-Whole Amount) to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much
of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid
Principal Amount of all Series C Secured
Certificates, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series C
Secured Certificates (other than Make-Whole Amount)
to the date of distribution, shall be distributed to
the Certificate Holders of Series C, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Principal
Amount of all Series C Secured Certificates held by
each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than
the Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal
Amount of all Series C Secured Certificates held by
all such holders plus the accrued but unpaid interest
and other amounts due thereon (other than the
Make-Whole Amount) to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for
which no provision as to the application thereof is made in this Trust Indenture
and for which such provision is made in the Lease, the Participation Agreement
or any other Operative Document shall be applied forthwith to the purpose for
which such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or Lessee in
respect of (i) the Indenture Trustee in its individual capacity, (ii) any
Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider,
and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
entitled thereto. Any payment received by the Indenture Trustee under clause (b)
of the third paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the
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Intercreditor Agreement, and any payment received by the Indenture Trustee under
clause (c) of the third paragraph of Section 2.02 shall be distributed directly
to the Persons entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in
this Trust Indenture, any amounts received by the Indenture Trustee which
constitute Excluded Payments shall be distributed promptly upon receipt by the
Indenture Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture
to the contrary, any amounts held by the Indenture Trustee that would, but for
the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is made
in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or
in any other Operative Document shall be distributed by the Indenture Trustee to
the extent received or realized at any time (i) prior to the payment in full of
all Secured Obligations due the Certificate Holders, in the order of priority
specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after
payment in full of all Secured Obligations due the Certificate Holders, in the
following order of priority:
FIRST, to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated
to indemnify against thereunder, in the manner provided in
clause "First" of Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03
hereof.
Further, and except as otherwise provided in Sections 3.02,
3.03 and 3.04 hereof, all payments received and amounts
realized by the Indenture Trustee under the Lease or otherwise
with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft
after the termination of the Lease with respect thereto), to
the extent received or realized at any time after payment in
full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of
priority specified in clause (ii) of the immediately preceding
sentence of this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to
the Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
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All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants
and agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Secured Certificates and hereunder in
accordance with the terms of the Secured Certificates and this Trust
Indenture and all amounts, if any, payable by it to the Certificate
Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge
of an Event of Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Event of Default or Event of Loss to the
Indenture Trustee, each Certificate Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Certificate Holders
and the Indenture Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates and
other instruments furnished to the Owner Trustee under the Lease,
including, without limitation, a copy of any Termination Notice and a
copy of each report or notice received pursuant to Section 9(a) and
11(c) of the Lease to the extent that the same shall not have been
furnished to the Certificate Holders or the Indenture Trustee pursuant
to the Lease;
(e) except with the consent of the Indenture Trustee (acting
pursuant to instructions given in accordance with Section 9.01 hereof),
the Owner Trustee will not contract for, create, incur, assume or
suffer to exist any Debt (other than the Secured Certificates), and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the
leasing thereof to Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever
the reason for such Event of Default and whether such event shall be voluntary
or involuntary or come about or be effected by operation of Law
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or pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease
Event of Default caused solely by a failure of Lessee to pay to the
Owner Trustee or the Owner Participant when due any amount that is
included in the definition of Excluded Payments shall not constitute an
Event of Default unless notice is given by the Owner Trustee to the
Indenture Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, interest on, Make-Whole Amount, if any,
or other amount due and payable under any Secured Certificate or
hereunder (other than any such failure arising by virtue of a tax
withheld pursuant to Section 2.04(b) hereof or as a result of a Lease
Event of Default or a Lease Default) and such failure shall have
continued unremedied for ten Business Days in the case of any payment
of Principal Amount or interest or Make-Whole Amount, if any, thereon
and, in the case of any other amount, for ten Business Days after the
Owner Trustee or the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee,
in its individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the
Participation Agreement, or by the Owner Participant pursuant to
Section 8(h) of the Participation Agreement shall remain undischarged
for a period of 30 days after the Owner Trustee or the Owner
Participant, as the case may be, shall have received written notice
from the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee herein, in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) or in any certificate furnished by the Owner Participant or
the Owner Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any
failure by the Owner Trustee or Owner Participant to observe or perform
in any material respect any other covenant or obligation of the Owner
Trustee or Owner Participant, as the case may be, for the benefit of
the Indenture Trustee or the Certificate Holders contained in the
Participation Agreement, Section 4.01(a) of the Trust Agreement, the
Secured Certificates or this Trust Indenture which is not remedied
within a period of 60 days after notice thereof has been given to the
Owner Trustee and the Owner Participant (or, if such failure cannot be
remedied during such 60-day period and the Owner Trustee and/or the
Owner Participant have been and are diligently proceeding to remedy
such failure, such additional period not in excess of 120 days, if such
failure is capable of being remedied during such additional period, as
may be necessary to remedy such failure); or
(f) if at any time when the Aircraft is registered under the
laws of the United States, the Owner Participant shall not be a Citizen
of the United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f)
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unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary
case or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
(A) a final non-appealable order, judgment or decree shall be entered
in such case or proceeding by a court or a trustee, custodian, receiver
or liquidator, or (B) an opinion of counsel, reasonably satisfactory to
the Indenture Trustee, shall be provided by the Owner Participant, in
each case to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g); provided
further that an event referred to in this Section 4.02(f) with respect
to the Owner Participant shall not constitute an Event of Default if,
not later than 90 days following such event, the Owner Participant has
been replaced with an entity eligible to act as Owner Participant in
accordance with Section 8(n) of the Participation Agreement.
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the
Owner Trustee and the Owner Participant prompt written notice of any Event of
Default of which the Indenture Trustee has Actual Knowledge and, if any such
Event of Default results from a Lease Event of Default that can be cured by the
payment of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied), shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days' prior written notice of the date
(the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in
respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the
Lease, the Indenture Trustee shall have insufficient funds to make any payment
of Principal Amount and interest on any Secured Certificate on the day it
becomes due and payable, the Owner Trustee may, without the consent or
concurrence of any Certificate Holder, but shall not be obligated to, pay the
Indenture Trustee prior to the Enforcement Date, in the manner provided in
Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an
amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of
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payments of Basic Rent on each of the three immediately preceding Basic Rent
payment dates, or the Owner Trustee has cured six previous Events of Default in
respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would otherwise have arisen on account of the nonpayment
by Lessee of such installment of Interim Rent or Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the
payment of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied) has occurred, the Owner Trustee may, without the consent or
concurrence of any Certificate Holder, but shall not be obligated to, cure such
Event of Default by making such payment prior to the Enforcement Date as is
necessary to accomplish the observance or performance of the defaulted covenant,
condition or agreement to the party entitled to the same.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the
first or second preceding paragraphs of this Section 4.03, the Owner Trustee
shall be subrogated to the rights of the Indenture Trustee and the Certificate
Holders in respect of the Interim Rent or Basic Rent which was overdue at the
time of such payment and interest payable by Lessee on account of its being
overdue and any Supplemental Rent in respect of the reimbursement of amounts
paid by Owner Trustee pursuant to the immediately preceding paragraph (but in
either case shall have no rights as a secured party hereunder), and thereafter,
the Owner Trustee shall be entitled to receive such overdue Interim Rent or
Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Indenture Trustee; provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Interim Rent, Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not be
entitled to seek to recover any such payment (or any payment in lieu thereof)
except pursuant to the foregoing right of subrogation until payment of the
Principal Amount and interest that has become due in accordance with Section
4.04(b) hereof.
SECTION 4.04. REMEDIES.
(a) If an Event of Default shall have occurred and be
continuing and so long as the same shall continue unremedied, then and in every
such case the Indenture Trustee may, subject to the second paragraph of this
Section 4.04(a), exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article IV and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and, in the event such Event of Default is also a Lease Event of Default,
any and all of the remedies pursuant to Section 15 of the Lease and may take
possession of all or any part of the properties covered or intended to be
covered by the Lien created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee and Lessee and all persons claiming under any of
them wholly or partly therefrom, provided, that the Indenture Trustee shall give
the Owner Trustee and the Owner Participant twenty days' prior written notice of
its intention to sell the Aircraft or foreclose the Lien of this Trust
Indenture. Unless an Event of Default not resulting from or relating to a Lease
Event of Default has occurred and is continuing, the Owner Participant may bid
at any public sale and become the purchaser. Without limiting any of the
foregoing but subject to the immediately succeeding paragraph, it is understood
and agreed that the Indenture Trustee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Indenture Trustee shall not be entitled to exercise any
remedy hereunder as a result of an Event of Default which arises solely by
reason of one
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or more events or circumstances which constitute a Lease Event of Default unless
the Indenture Trustee as security assignee of the Owner Trustee shall have
exercised or concurrently be exercising one or more of the remedies provided for
in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is
not subsequently re-leased to Lessee or an Affiliate thereof) or take possession
and/or sell the Aircraft with respect to the Aircraft; provided, however, that
such requirement to exercise one or more of such remedies under the Lease shall
not apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under the Lease (a
"CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to
exercise one or more of such remedies under the Lease shall nonetheless be
applicable during a Continuous Stay Period subsequent to the expiration of the
Section 1110 Period to the extent that the continuation of such Continuous Stay
Period subsequent to the expiration of the Section 1110 Period (A) results from
an agreement by the trustee or the debtor-in-possession in such proceeding
during the Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy
Code and continues to perform as required by Section 1110(a)(1)(A-B) of the
Bankruptcy Code or (B) is an extension of the Section 1110 Period with the
consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy
Code or (C) results from Lessee's assumption during the Section 1110 Period with
the approval of the relevant court of the Lease pursuant to Section 365 of the
Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure
to give any requisite notice to any person. In the event that the applicability
of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by
Lessee in judicial proceedings, so long as the Indenture Trustee fails to
participate in such proceedings, the Owner Trustee shall have the right (without
affecting in any way any rights or remedy of the Indenture Trustee hereunder) to
participate in such proceedings.
It is expressly understood and agreed that, subject only to
the immediately preceding paragraph, the inability, described in such
paragraphs, of the Indenture Trustee to exercise any right or remedy under the
Lease shall in no event and under no circumstances prevent the Indenture Trustee
from exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Indenture Trustee may (and shall,
upon receipt of a written demand therefor from a Majority in Interest of
Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery
of written notice or notices to the Owner Trustee and the Owner Participant,
declare all the Secured Certificates to be due and payable, whereupon the unpaid
Principal Amount of all Secured Certificates then outstanding, together with
accrued but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition
that, if at any time after the Principal Amount of the Secured Certificates
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Secured Certificates and all other amounts payable
under the Secured Certificates (except the Principal Amount of the Secured
Certificates which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Certificate Holders may (but shall not
be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee's declaration and its consequences; but
no such rescission or annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereon.
(c) The Certificate Holders shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to credit against any
purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Trust Indenture (but only to the extent that such purchase price would have been
paid to such Certificate Holder pursuant to Article III hereof if such purchase
price were paid in cash and the foregoing provisions of this subsection (c) were
not given effect).
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(d) In the event of any sale of the Trust Indenture Estate, or
any part thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Trust Indenture,
the unpaid Principal Amount of all Secured Certificates then outstanding,
together with accrued interest thereon (without Make-Whole Amount), and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is
a Certificate Holder, the Indenture Trustee will not be authorized or empowered
to acquire title to any Mortgaged Property or take any action with respect to
any Mortgaged Property so acquired by it if such acquisition or action would
cause any Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC
(a) If an Event of Default shall have occurred and be
continuing and the Indenture Trustee shall have foreclosed, or shall
concurrently be foreclosing, the Lien of this Trust Indenture and shall be
taking steps for the sale or repossession of the Aircraft, subject to Section
4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or an agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Mortgaged
Property included in the Trust Indenture Estate to which the Indenture Trustee
shall at the time be entitled hereunder. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent permitted by
applicable law, and (ii) pursue all or part of such Mortgaged Property wherever
it may be found and, in the event that a Lease Event of Default has occurred and
is continuing, may enter any of the premises of Lessee wherever such Mortgaged
Property may be or be supposed to be and search for such Mortgaged Property and
take possession of and remove such Mortgaged Property. All expenses of obtaining
such judgment or of pursuing, searching for and taking such property shall,
until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture
Trustee may, from time to time, at the expense of the Mortgaged Property, make
all such expenditures for maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modifications or alterations to and
of the Mortgaged Property, as it may deem proper. In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, insure,
lease, control, manage, dispose of, modify or alter the Mortgaged Property and
to carry on the business and to exercise all rights and powers of the Owner
Participant and the Owner Trustee relating to the Mortgaged Property, as the
Indenture Trustee shall deem best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation, storage,
insurance, leasing, control, management, disposition, modification or alteration
of the Mortgaged Property or any part thereof as the Indenture Trustee may
determine, and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Mortgaged Property and every part thereof, except Excluded
Payments, without prejudice, however, to the right of the Indenture Trustee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Indenture Trustee hereunder. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, improvement,
modification or alteration of the Mortgaged Property and of conducting the
business thereof, and to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Mortgaged Property or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trustee), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Trust Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee, and of all persons
properly engaged and employed by the Indenture Trustee with respect hereto.
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SECTION 4.06. REMEDIES CUMULATIVE.
Subject to the other provisions of Article IV hereof, each and
every right, power and remedy given to the Indenture Trustee specifically or
otherwise in this Trust Indenture shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Indenture Trustee, then and in every such case the Owner Trustee, the
Owner Participant, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Owner Participant, the Indenture
Trustee or Lessee shall continue as if no such proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of
Certificate Holders, the Indenture Trustee shall waive any past Default or Event
of Default hereunder and its consequences and upon any such waiver such Default
or Event of Default shall cease to exist and any Event of Default arising from
any such Default shall be deemed to have been cured for every purpose of this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Certificate Holders,
the Indenture Trustee shall not waive any Default or Event of Default (i) in the
payment of the Principal Amount, Make-Whole Amount, if any, and interest and
other amounts due under any Secured Certificate then outstanding, or (ii) in
respect of a covenant or provision hereof which, under Article IX hereof, cannot
be modified or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee thereof) for all or any part of the Mortgaged Property,
whether such receivership be incidental to a proposed sale of the Mortgaged
Property or the taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Mortgaged
Property shall be entitled to exercise all the rights and powers of the
Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee
the true and lawful attorney-in-fact of the Owner Trustee in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Indenture Trustee or any purchaser, the
Owner Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing
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and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this Trust Indenture,
the right of any Certificate Holder to receive payment of principal of, and
premium, if any, and interest on a Secured Certificate on or after the
respective due dates expressed in such Secured Certificate, or to bring suit for
the enforcement of any such payment on or after such respective dates in
accordance with the terms hereof, shall not be impaired or affected without the
consent of such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay Rent, the
Indenture Trustee shall give prompt written notice thereof to the Owner Trustee,
the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms
of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such
action, or refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture Trustee, which failure
shall constitute knowledge of a Default) unless notified in writing by Lessee,
the Owner Trustee, the Owner Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a),
4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from
time to time of a Majority in Interest of Certificate Holders, the Indenture
Trustee shall, subject to the terms of this Section 5.02, take such of the
following actions as may be specified in such instructions: (i) give such notice
or direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided,
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that anything contained in this Trust Indenture, the Lease or the other
Operative Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, at all
times without the consent of the Indenture Trustee, (A) to the
exclusion of the Indenture Trustee demand, collect, sue for or
otherwise obtain all amounts included in Excluded Payments from Lessee,
(B) unless the Lien of this Trust Indenture shall have been foreclosed
upon, grant or withhold its consent to amendments or supplements to
Indenture Agreements required in accordance with Article IX hereof and
(C) seek legal or equitable remedies to require Lessee to maintain the
insurance coverage referred to in Section 11 of the Lease; provided,
that the rights referred to in this clause (1) shall not be deemed to
include the exercise of any remedies provided for in Section 15 of the
Lease other than the right to proceed by appropriate court action,
either at law or in equity, to enforce payment by Lessee of such
amounts included in Excluded Payments or performance by Lessee of such
insurance covenant or to recover damages for the breach thereof;
(2) at all times prior to the foreclosure of the Lien of this
Trust Indenture, the Indenture Trustee shall not, without the consent
of the Owner Trustee, which consent shall not be unreasonably withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be diminished or impaired thereby, (i) enter into, execute and
deliver amendments, modifications, waivers or consents in respect of
any of the provisions of the Lease, or (ii) approve any accountants,
engineers, appraisers or counsel as satisfactory to render services for
or issue opinions to the Owner Trustee pursuant to the Operative
Documents;
(3) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, each of the Owner
Trustee, the Owner Participant and, except with respect to clauses
(iii) and (iv), the Indenture Trustee shall have the right (i) to
receive from Lessee all notices, certificates, reports, filings,
opinions of counsel and other documents and all information which any
thereof is permitted or required to give or furnish to the Owner
Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on
Lessor, and (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor
under Section 21 of the Lease;
(4) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee shall
at all times, to the exclusion of the Indenture Trustee, have the right
to adjust Rent, Stipulated Loss Values and Termination Values as
provided in Section 3(d) of the Lease;
(5) unless an Indenture Trustee Event shall have occurred, to
exercise all of the rights of Lessor under Section 7(b) of the Lease;
(6) whether or not a Default or Event of Default shall have
occurred and is continuing, the Owner Trustee may, without the consent
of the Indenture Trustee, (i) solicit and make bids with respect to the
Aircraft under Section 9 of the Lease in respect of a termination of
the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair
market sales value" and "fair market rental value" under Section 19 of
the Lease for all purposes except following an Event of Default
pursuant to Section 15 of the Lease, and (iii) make an election
pursuant to and in accordance with the provisions of Section 9(c) of
the Lease; and
(7) so long as no Event of Default shall have occurred and be
continuing, all other rights of the "Lessor" under the Lease shall be
exercised by the Owner Trustee to the exclusion of the Indenture
Trustee including, without limitation, the right to (i) exercise all
rights with respect to Lessee's use and
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operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease and (iii)
request further assurances pursuant to Section 16 of the Lease;
provided that the foregoing shall not limit (A) any rights separately
granted to the Indenture Trustee under the Operative Agreements or (B)
the right of the Indenture Trustee to receive any funds to be delivered
to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein
(including this Section 5.02), the Indenture Trustee shall have the right, to
the exclusion of the Owner Trustee and the Owner Participant (other than with
respect to Excluded Payments), to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to
take any action under this Trust Indenture or any other Operative Document and
nothing herein or therein shall require the Indenture Trustee to expend or risk
its own funds or otherwise incur the risk of any financial liability in the
performance of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it (the written indemnity of any
Certificate Holder who is a QIB, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to Indenture Trustee
shall be accepted as reasonable assurance of adequate indemnity). The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE
OR INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in
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written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they
will not use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Indenture Estate
except (i) as required by the terms of the Lease or (ii) in accordance with the
powers granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Trust Indenture and in accordance with the
express terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting
such release specifically describing the Airframe and/or Engine(s) so to be
released.
(2) A certificate signed by a duly authorized officer of
Lessee stating the following:
A. With respect to any Replacement Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to
be received (including the manufacturer,
model, FAA registration number (or other
applicable registration information) and
manufacturer's serial number) as
consideration for the Airframe to be
released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Airframe the Owner Trustee will
be the legal owner of such Replacement
Airframe free and clear of all Liens except
as are permitted by Section 6 of the Lease,
that such Replacement Airframe will on such
date be in good working order and condition,
and that such Replacement
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Airframe has been or, substantially
concurrently with such withdrawal, will be
duly registered in the name of the Owner
Trustee under the Federal Aviation Act or
under the law then applicable to the
registration of the Airframe and that an
airworthiness certificate has been duly
issued under the Federal Aviation Act (or
such other applicable law) with respect to
such Replacement Airframe, and that such
registration and certificate is in full
force and effect, and that Lessee will have
the full right and authority to use such
Replacement Airframe;
(iv) the existence of the insurance required by
Section 11 of the Lease with respect to such
Replacement Airframe and the payment of all
premiums then due thereon;
(v) that the Replacement Airframe is of the same
or an improved model as the Airframe
requested to be released from this
Indenture;
(vi) the fair market value of the Replacement
Airframe as of the date of such certificate
(which in the judgment of Lessee shall be
not less than the then fair market value of
the Airframe requested to be released
(assuming such Airframe was in the condition
and repair required to be maintained under
the Lease));
(vii) the fair market value of the Airframe
immediately prior to the date the Airframe
suffered an Event of Loss (assuming that
such Airframe was in the condition and
repair required under the Lease);
(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or
both, would become a Lease Event of Default,
has occurred which has not been remedied or
waived, and that Lessee will not be in
default, by the making and granting of the
request for release and the addition of a
Replacement Airframe, in the performance of
any of the terms and covenants of the Lease;
and
(ix) that the release of the Airframe so to be
released will not be in contravention of any
of the provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
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(ii) a description of the Replacement Engine
(including the manufacturer's name and
serial number) as consideration for the
Engine to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be
the legal owner of such Replacement Engine
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that
such Replacement Engine will on such date be
in good working order and condition and that
such Replacement Engine is substantially the
same as the Engine to be released (or as
improved model);
(iv) the fair market value of the Replacement
Engine as of the date of such certificate
(which value shall not be less than the then
fair market value of the Engine to be
released (assuming such Engine was in the
condition and repair required to be
maintained under the Lease));
(v) the fair market value of the Engine to be
released (immediately prior to any Event of
Loss suffered by such Engine and assuming
that such Engine was in the condition and
repair required under the Lease);
(vi) that each of the conditions specified in
Section 10(b) of the Lease with respect to
such Replacement Engine have been satisfied
and that Lessee will not be in default, by
the making and granting of the request for
release and the addition of the Replacement
Engine, in the performance of any of the
terms and covenants of the Lease;
(vii) that, with respect to the replacement of an
Engine pursuant to Section 9(d) of the
Lease, no Lease Event of Default and no
event which, with lapse of time or notice,
or both, would become a Lease Event of
Default has occurred which has not been
remedied or waived; and
(viii) that the release of the Engine so to be
released will not be in contravention of any
of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring
to the Owner Trustee title to the Replacement Airframe or Replacement Engine to
be received as consideration for the Airframe or Engine to be released and (ii)
assigning to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting
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such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any
Engine, such Uniform Commercial Code financing statements covering the lien
created by this Indenture as deemed necessary or desirable by counsel for the
Indenture Trustee to protect the lien under the Indenture in the Replacement
Engine.
(4) A certificate from either an aircraft engineer (who
may be an employee of Lessee) or a firm of independent aircraft appraisers
selected by Lessee confirming the accuracy of the information set forth in
clause (2)A(vi) of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other
counsel satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other
instruments and/or property which have been
or are therewith delivered to and deposited
with the Indenture Trustee conform to the
requirements of this Trust Indenture and the
Lease and, upon the basis of such
application, the property so sold or
disposed of may be lawfully released from
the lien of this Trust Indenture and all
conditions precedent herein provided for
relating to such release have been complied
with; and
(ii) the Replacement Airframe or Replacement
Engine has been validly subjected to the
lien of this Indenture and covered by the
Lease, the instruments subjecting such
Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Trust
Indenture, as the case may be, have been
duly filed for recordation pursuant to the
Federal Aviation Act or any other law then
applicable to the registration of the
Aircraft, and no further action, filing or
recording of any document is necessary or
advisable in order to establish and perfect
the right, title, estate and interest of the
Owner Trustee to and the lien of this Trust
Indenture on such Replacement Aircraft or
Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
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SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of
this Trust Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the
Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of
the Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or
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inaction of the other or of the Owner Participant. The Owner
Trustee shall not be deemed to be a trustee for the Certificate Holders for any
purpose.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance
with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT
OR DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE
UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual capacity
warrants that (i) the Owner Trustee has received on the Delivery Date whatever
title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the Owner
Trustee in its individual capacity. Neither the Owner Trustee, in its individual
capacity or as Owner Trustee under the Trust Agreement, nor the Indenture
Trustee, in its individual or trust capacities, makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as
to the correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Indenture Trustee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement). The Loan Participants, the Certificate
Holders and the Owner Participant make no representation or warranty hereunder
whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee
pursuant to any provision hereof and not then required to be distributed to the
Certificate Holders, Lessee or the Owner Trustee as provided in Article III
hereof need not be segregated in any manner except to the extent required by Law
or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Indenture Trustee shall not be liable for any interest thereon (except that the
Indenture Trustee shall invest
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all monies held as directed by Lessee so long as no Lease Event of Default or
Lease Default has occurred and is continuing (or in the absence of such
direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall
incur any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein
and in the Trust Agreement provided, and not in its individual capacity, except
as otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the reasonable
fees and expenses of counsel), for all services rendered hereunder and shall, on
and subsequent to an Event of Default hereunder, have a priority claim on the
Trust Indenture Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
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instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely
as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder except only in the case of willful misconduct or gross negligence (or
negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in Section 8 of the Participation Agreement or Section 6.03 hereof, or as
provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof,
or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the
Participation Agreement from Lessee's indemnities under such Sections; provided
that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise
prohibited by law, shall not make any claim under this Section 7.01 for any
claim or expense without first making demand on Lessee for the payment on behalf
of Lessor of such claim or expense pursuant to the Lease or the Participation
Agreement, including, without limitation, Section 7(b) or 7(c) of the
Participation Agreement. In addition, if necessary, the Indenture Trustee shall
be entitled to indemnification from the Trust Indenture Estate for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner
Trustee pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign
at any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In
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addition, a Majority in Interest of Certificate Holders may at any time (but
only with the consent of Lessee, which consent shall not be unreasonably
withheld, except that such consent shall not be necessary if a Lease Event of
Default is continuing) remove the Indenture Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the Owner
Participant and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Certificate Holder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a Majority in
Interest of Certificate Holders may appoint a successor Indenture Trustee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Indenture Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the
Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate
Holder may apply to any court of competent jurisdiction to appoint a successor
Indenture Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having its principal place of business in the Borough
of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Indenture Trustee and the Indenture Trustee under this Trust Indenture without
further act, except that such Person shall give prompt subsequent notice of such
transaction to the Owner Trustee and the Owner Participant.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary
or desirable in order to conform to any law of any jurisdiction in which all or
any part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or
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one or more persons approved by the Indenture Trustee, either to act jointly
with the Indenture Trustee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Indenture
Trustee or a Majority in Interest of Certificate Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional and separate trustee,
subject in each case to the remaining provisions of this Section 8.03. If the
Owner Trustee shall not have taken any action requested of it under this Section
8.03(a) that is permitted or required by its terms within 15 days after the
receipt of a written request from the Indenture Trustee so to do, or if an Event
of Default shall have occurred and be continuing, the Indenture Trustee may act
under the foregoing provisions of this Section 8.03(a) without the concurrence
of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which
appointment is coupled with an interest) the Indenture Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute, deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee
appointed under this Section 8.03(a) shall die, become incapable of acting,
resign or be removed, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall revert to the
Indenture Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon the
Indenture Trustee in respect of the custody, investment and payment of monies
and all monies received by any such additional or separate trustee from or
constituting part of the Trust Indenture Estate or otherwise payable under any
Operative Document to the Indenture Trustee shall be promptly paid over by it to
the Indenture Trustee. All other rights, powers, duties and obligations
conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Indenture Trustee and such additional or separate trustee
jointly except to the extent that applicable Law of any jurisdiction in which
any particular act is to be performed renders the Indenture Trustee incompetent
or unqualified to perform such act, in which event such rights, powers, duties
and obligations (including the holding of title to all or part of the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed by
such additional or separate trustee. No additional or separate trustee shall
take any discretionary action except on the instructions of the Indenture
Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the
consequences of its lack of reasonable care in selecting, and Indenture
Trustee's own actions in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section 8.03 shall be
subject to, and shall have the benefit of Articles IV through VIII and Article X
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 8.03 shall not
in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no
longer necessary or desirable in order to conform to any such law or take any
such action or shall be advised by such counsel that it is no longer so
necessary or desirable in the interest of the Certificate Holders, or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Certificate Holders, the Indenture Trustee and,
upon the written request of the Indenture Trustee, the Owner Trustee, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Indenture Trustee may act on behalf of the Owner Trustee under this Section
8.03(c) when and to the extent it could so act under Section 8.03(a) hereof.
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ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, the Owner
Trustee agrees it shall not enter into any amendment of or supplement to the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement or the Guarantee, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Guarantee, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Indenture Trustee and a Majority in Interest of
Certificate Holders. Anything to the contrary contained herein notwithstanding,
without the necessity of the consent of any of the Certificate Holders or the
Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant
may be modified, amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may
enter into amendments of or additions to the Lease to modify Section 5 (except
to the extent that such amendment would affect the rights or exercise of
remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so
long as such amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments (other than Excluded
Payments) until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof,
the Indenture Trustee agrees with the Certificate Holders that it shall not
enter into any amendment, waiver or modification of, supplement or consent to
this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Guarantee or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Certificate Holders, or does not adversely
effect the Certificate Holders, but upon the written request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Manufacturer; provided, however, that, without the
consent of each holder of an affected Secured Certificate then outstanding, no
such amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Guarantee or the Participation Agreement or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or
Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add
an Event of Default) of the Lease, the definitions of "Event of Default",
"Default", "Lease Event of Default", "Lease Default", "Majority in Interest of
Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the
percentage of Certificate Holders required to take or approve any action
hereunder, (ii) reduce the amount, or change the time of payment or method of
calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or
interest with respect to any Secured Certificate, or alter or modify the
provisions of Article III hereof with respect to the order of priorities in
which distribution thereunder shall be made as among the Certificate Holders,
the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in
favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders
(except that the Owner Trustee (in its individual capacity) or the Indenture
Trustee, as the case may be, may consent to any waiver or reduction of an
indemnity payable to it), (iv) consent to any change in the Trust Indenture or
the Lease which would permit redemption of Secured Certificates earlier than
permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured
Certificates other than as permitted by Section 2.14 hereof, (v) except as
contemplated by the Lease or the Participation Agreement, reduce the amount or
extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value,
or Termination Value for the Aircraft in each case as set forth in the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the
Aircraft or altering the absolute and unconditional character of the obligations
of Lessee to pay Rent as set forth in Sections
-51-
<PAGE> 52
3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee
under the Trust Agreement or the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 9.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 9.01 hereof,
the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR
TRUST AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
-52-
<PAGE> 53
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal
Amount of, Make-Whole Amount, if any, and interest on and all other amounts due
under all Secured Certificates and provided that there shall then be no other
Secured Obligations due to the Certificate Holders and the Indenture Trustee
hereunder or under the Participation Agreement, the Owner Trustee shall direct
the Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale,
the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment
with the Consent and Agreement attached thereto from the assignment and pledge
thereof hereunder and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and give written notice thereof to Lessee; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Indenture Trustee of all property
constituting part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all monies or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Trust Indenture and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to
any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS
BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or
any part thereof (including any part thereof or interest therein), by the
Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind
the Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied,
shall be construed to give any person other than the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders,
any legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
-53-
<PAGE> 54
addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and
in the table of contents hereto are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-54-
<PAGE> 55
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a
vote of a Majority in Interest of Certificate Holders, except as otherwise
provided herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture
or the Trust Agreement to the contrary, neither the Indenture Trustee nor the
Owner Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-55-
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee, as
Owner Trustee
By: __________________________________
Name: __________________________________
Title:
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By: __________________________________
Name: __________________________________
Title:
-56-
<PAGE> 57
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 D]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 D],
dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under
that certain Trust Agreement [NW 1996 D] dated as of April 29, 1996 (the "TRUST
AGREEMENT"), between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 D], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft (such term and
other terms used but not defined herein having the respective meanings ascribed
thereto in the Trust Indenture), and shall specifically mortgage such Aircraft
to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and
Engines described below, and a counterpart of the Trust Indenture is attached
hereto and made a part hereof and this Trust Indenture Supplement, together with
such counterpart of the Trust Indenture, is being filed for recordation on the
date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth
that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on
the Trust Indenture Estate covers all of Owner Trustee's right, title and
interest in and to the following described property:
<PAGE> 58
AIRFRAME
One airframe identified as follows:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
<S> <C> <C> <C>
</TABLE>
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
<S> <C> <C>
</TABLE>
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest
in and to all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above
subject, however, to all of the terms of the Trust Indenture including, without
limitation, the rights of the Owner Trustee and the Owner Participant under
Section 5.02 of the Trust Indenture.
Notwithstanding any provision hereof, no Excluded Payment
shall constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Certificate Holders, except
EXHIBIT A-2
<PAGE> 59
as provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Indenture Supplement is being delivered in the
State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 60
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee, Owner
Trustee
By: ___________________________________
Name:
Title:
EXHIBIT A-4
<PAGE> 61
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A $25,255,419 7.67%
Series B $ 8,282,397 8.07%
Series C $ 6,462,184 8.97%
</TABLE>
<PAGE> 62
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N540US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ -----------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.61637786%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.04965912%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.04965912%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.04965912%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.04965912%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.04965912%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.04965912%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.04965912%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.04965912%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.04965912%
Jul 2, 2007 0.00000000%
Jan 2, 2008 2.04965912%
Jul 2, 2008 0.00000000%
Jan 2, 2009 2.04965912%
Jul 2, 2009 0.00000000%
Jan 2, 2010 11.69834482%
Jul 2, 2010 0.00000000%
Jan 2, 2011 12.72737942%
Jul 2, 2011 0.00000000%
Jan 2, 2012 13.70356992%
Jul 2, 2012 17.07826744%
Jan 2, 2013 15.79303040%
Jul 2, 2013 0.87716620%
Jan 2, 2014 3.95961358%
</TABLE>
<PAGE> 63
SERIES B
AIRCRAFT: N540US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ -----------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.08333409%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.08333409%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.08333409%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.08333409%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.08333409%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.08333409%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.08333409%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.08333409%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.08333409%
Jul 2, 2007 0.00000000%
Jan 2, 2008 11.46938501%
Jul 2, 2008 0.00000000%
Jan 2, 2009 26.33173706%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.37180058%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 38.03291487%
Jul 2, 2014 4.77498241%
Jan 2, 2015 0.26917328%
</TABLE>
<PAGE> 64
SERIES C
AIRCRAFT: N540US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ -----------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.55481738%
Jul 2, 1999 0.00000000%
Jan 2, 2000 3.61387110%
Jul 2, 2000 0.00000000%
Jan 2, 2001 4.76790819%
Jul 2, 2001 0.00000000%
Jan 2, 2002 6.02548612%
Jul 2, 2002 0.00000000%
Jan 2, 2003 7.39584326%
Jul 2, 2003 0.00000000%
Jan 2, 2004 8.88914646%
Jul 2, 2004 0.00000000%
Jan 2, 2005 10.51638270%
Jul 2, 2005 0.00000000%
Jan 2, 2006 5.39156731%
Jul 2, 2006 0.00000000%
Jan 2, 2007 11.71413565%
Jul 2, 2007 0.00000000%
Jan 2, 2008 12.33483912%
Jul 2, 2008 0.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 0.00000000%
Jul 2, 2014 0.00000000%
Jan 2, 2015 26.79600271%
</TABLE>
<PAGE> 65
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 D]
This LEASE AGREEMENT [NW 1996 D], dated as of April 29, 1996,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (as defined in Section 1 hereof) (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. The following terms shall have
the following meanings for all purposes of this Lease Agreement [NW 1996 D] and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Administrative Agent" means [_______________], a
[_______] banking corporation, as administrative agent pursuant
to the Participation Agreement, and any successor acting as
administrative agent.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"After-Tax Basis" means an additional amount which
when added to the amount of payment otherwise required to be
made on an After-Tax Basis, after deduction of all Federal,
state, local and foreign taxes required to be paid by or on
behalf of a Person in respect of the receipt or realization of
any such amounts, results in a sum equal to the payment
required under the provisions of the Operative Documents to be
made on an After-Tax Basis. Any payment under the Operative
Documents which does not actually result in an increase (or a
decrease in a refund) of the Owner Participant's Federal,
state, local or foreign income tax liability for the year of
the accrual or receipt of such payment but which reduces any
net operating loss or business credit or foreign tax credit
carryover of the recipient shall be treated as giving rise to
an actual increase in (or a decrease in a refund of) tax
liability for the year in which such tax attribute if not
reduced thereby would have given rise to a reduction in such
recipient's tax liability (or such recipient's allowable
refund in respect of any
<PAGE> 2
such taxes). With respect to the Owner Participant, for
purposes of this definition, it shall be assumed that United
States federal, state, local and foreign income taxes are
payable at the Highest Marginal Rate (as defined in the Tax
Indemnity Agreement) then applicable to the Owner Participant.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the two Engines initially leased
hereunder (or any engine substituted for either of such
Engines pursuant to the terms hereof), whether or not any of
such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after
removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at
such time as an aircraft (except Engines or engines from time
to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but
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<PAGE> 3
subject always to the provisions of Section 3(d)(v) hereof
and, for any Renewal Term, Basic Rent determined pursuant to
Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on January 2, 2019, or such
earlier date as this Lease may be terminated in accordance
with the provisions hereof.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Bill of Sale, free
and clear of all liens, encumbrances and rights of others
except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston,
Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota
and, in connection with any payment of Rent and so long as any
Secured Certificate is a Eurodollar Loan (as defined in the
Trust Indenture), such day is also a day for trading by and
between banks in the interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the
United States holding a carrier operating certificate issued
by the Secretary of Transportation pursuant to Chapter 447 of
Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo or
that otherwise is certified or registered to the extent
required to fall within the purview of 11 U.S.C. Section 1110
or any analogous successor provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning
specified in Section 40102(a)(15) of Title 49 of the United
States Code or any similar legislation of the United States of
America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil
Reserve Air Fleet Program currently administered by the United
States Air Force Air Mobility Command pursuant to Executive
Order No. 11490, as amended, or any substantially similar
program.
"Code" means the Internal Revenue Code of 1986, as
amended.
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<PAGE> 4
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be,
to finance the Owner Trustee's payment of Lessor's Cost for
the Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1996 D], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated
as of November 2, 1995, among Lessee, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, [_____________], as documentation
agent, [_______________], as administrative agent, and
[________________], as syndication agent, as the same
may be amended, supplemented or otherwise modified from time
to time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default.
"Delivery Date" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 2003, provided,
however, that if the chief legal officer or chief tax officer
of Lessee has actual knowledge that the Depreciation Period is
other than the period specified in the Tax Assumptions as a
result of an "Operative Event" (as defined in the Tax
Indemnity Agreement), then ending on the last day of the Owner
Participant's taxable year in which a depreciation or cost
recovery deduction is allowed or allowable with respect to the
Aircraft.
"Documentation Agent" means [_______________], a bank
organized under the laws of [_______________], as
documentation agent pursuant to the Participation Agreement,
and any successor acting as documentation agent.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the two Pratt & Whitney
Model PW2037 engines listed by manufacturer's serial number in
the initial Lease Supplement,
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<PAGE> 5
whether or not from time to time thereafter installed on the
Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for either of such
two engines, together in each case with any and all Parts
incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine; provided, however,
that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term
"Engines" means, as of any date of determination, all Engines
then leased hereunder.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any agency
or instrumentality of any thereof whose obligations are backed
by the full faith and credit of such government) which in the
case of any event referred to in this clause (iii) (other than
a requisition of title) shall have resulted in the loss of
possession of such property by Lessee for a period in excess
of 180 consecutive days or, if earlier, until the end of the
Term or, in the case of a requisition of title by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and designated therein as a "Specified Country" or
any agency or instrumentality of any thereof whose obligations
are backed by the full faith and credit of such government, as
the case may be, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of
title or, if earlier, at the end of the Term (it being
understood that a requisition of title by any government other
than as expressly provided above shall constitute an immediate
Event of Loss); (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration
or other governmental body of the government of registry of
the Aircraft having jurisdiction, the use of such property in
the normal course of the business of air transportation shall
have been prohibited for a period of 180 consecutive days,
unless Lessee, prior to the
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<PAGE> 6
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward in a manner that does not
discriminate against the Aircraft all steps which are
necessary or desirable to permit the normal use of such
property by Lessee, and, within one year of such prohibition,
Lessee shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of
the same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the
Aircraft by Lessee, provided, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss
if such use shall have been prohibited for a period of two
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any
instrumentality or agency of any thereof whose obligations are
backed by the full faith and credit of such government, which
shall have occurred during the Basic Term (or the Interim Term
or any Renewal Term) and shall have continued for thirty (30)
days beyond the Term, provided, however, that no Event of Loss
pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section
10(d) hereof; (vi) any divestiture of title to or interest in
an Engine treated as an Event of Loss pursuant to Section 7(b)
hereof; and (vii) the operation of or location of the
Aircraft, while under requisition for use by any government,
in an area excluded from coverage by any insurance policy in
effect with respect to the Aircraft required by this
Agreement, unless in the case of a requisition by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and is designated a "Specified Country" or any
agency or instrumentality of any thereof whose obligations are
backed by the full faith and credit of such government, Lessee
shall have obtained an indemnity in lieu thereof from such
government or such agency or instrumentality. 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
Airframe.
"Excess Amount" for the Transition Date means an
amount equal to the amount determined by multiplying Lessor's
Cost by the percentage set forth in Exhibit B hereto under the
heading "Excess Amount" opposite the Transition Date;
provided, however, that, to the extent that the aggregate
amount of interest due and payable on the Transition Date on
the Secured Certificates for the period from and including the
Delivery Date to but excluding the Transition Date is less
than the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the
Transition Date if such Secured Certificates had borne
interest at the Assumed Interest Rate for such period, the
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<PAGE> 7
corresponding percentage set forth in Exhibit B shall be
decreased by the amount which when multiplied by Lessor's Cost
will equal such differential.
"Expenses" has the meaning specified in Section 7(c)
of the Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the
United States Code comprising those provisions formerly
referred to as the Federal Aviation Act of 1958, as amended,
or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency
or instrumentality of the United States government succeeding
to their functions.
"Funding Loss Amount" has the meaning assigned to
that term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 D], dated as
of the date hereof, made by the Guarantor in favor of the
Parties, as such Guarantee may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of
their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
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<PAGE> 8
"Indenture Trustee's Liens" means any Lien which
arises as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by,
or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 of the
Participation Agreement pursuant to said Section 7, or (D)
claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust
Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of
the Lease or Article IV or V of the Trust Indenture, or a
transfer of the Aircraft pursuant to Section 15 of the Lease
while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due
pursuant to the Trust Indenture.
"Interest Period" means Interest Period as defined
in the Trust Indenture.
"Interim Rent" means the rent payable for the
Aircraft for the Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1996 D] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date and each
succeeding period commencing on the date immediately following
the preceding Lease Period Date.
"Lease Period Date" means July 2, 1997 and each
succeeding January 2 and July 2, to and including the last
such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the
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<PAGE> 9
Delivery Date for the purpose of leasing the Aircraft under
and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with
the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it relates to the Aircraft),
the FAA Bill of Sale, the Bill of Sale, the Purchase Agreement
Assignment and the Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
First Security Bank of Utah, National Association, in its
individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii)
any act or omission of the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) claims
against the Owner Participant, Lessor, or First Security Bank
of Utah, National Association, in its individual capacity,
with respect to Taxes or Expenses against which Lessee is not
required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising
out of any transfer by Lessor or the Owner Participant of all
or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of
the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or pursuant to the
exercise of the remedies set forth in Section 15 hereof,
provided, however, that any Lien which is attributable solely
to First Security Bank of Utah, National Association or the
Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the
use, possession, operation, or quiet enjoyment of the Aircraft
by Lessee (or any Sublessee), (3) the existence of such Lien
does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First
Security Bank of Utah, National Association or the Owner
Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a
material risk of interference with the payment of Rent (other
than Excluded Payments in favor of First Security Bank of
Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
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<PAGE> 10
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub-sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in
Section 10(a) hereof.
"Majority in Interest of Certificate Holders" has the
meaning assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Economic Return" shall have the meaning ascribed
to such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net after-tax
present value, as of the Delivery Date, of Basic Rent set
forth in Exhibit B hereto through and including the date on
which the Special Purchase Price is payable pursuant to
Section 19(d) hereof, and the Special Purchase Price payable
as of such date, computed on the basis of the same
methodology, constraints and assumptions as were utilized in
determining Basic Rent, the Special Purchase Price, Stipulated
Loss Value and Termination Value percentages as of the
Delivery Date.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement
covering the Aircraft, the Secured Certificates, the Bill of
Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as
it relates to the Aircraft), the Guarantee, the Owner
Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
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<PAGE> 11
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
Person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust
Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement
and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
"Owner Participant Guarantor" means the entity
executing the Owner Participant Guaranty as guarantor
thereunder.
"Owner Participant Guaranty" means the Owner
Participant Guaranty [NW 1996 D], dated as of the date hereof,
made by the Owner Participant Guarantor in favor of Lessee,
Lessor, the Loan Participants and the Indenture Trustee, as
such Owner Participant Guaranty may be amended or supplemented
from time to time pursuant to the applicable provisions
thereof.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1996 D], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture
Trustee and the Participants.
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<PAGE> 12
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum (calculated based on the actual
number of days elapsed in a year consisting of 365 days or 366
days, as the case may be) equal to (x) 1% over the Base Rate
for the first 5 Business Days from the date such payment
became due, and (y) 3% over the Base Rate thereafter.
"Permitted Carrier" means an air carrier domiciled
and principally based in a country set forth on Exhibit C to
the Participation Agreement and designated therein as a
"Specified Country".
"Permitted Lien" means any Lien referred to in
clauses (i) through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a
country listed in Exhibit C to the Participation Agreement.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section
3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1996 D], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
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<PAGE> 13
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Interim Rent, Basic Rent and
Supplemental Rent, collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Restricted Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Return Site" means a major airport on Lessee's route
system located within the forty-eight contiguous states of the
United States.
"S&P" means Standard & Poor's Corporation.
"Secured Certificates" has the meaning assigned to
that term in the Trust Indenture.
"Special Purchase Price" shall mean the amount
denominated as such in Exhibit B hereto.
"Specified Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost for
the Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease
Period in which such Stipulated Loss Value Date occurs up to
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential.
"Stipulated Loss Value" as of any date after January 2, 2019
shall be the amount determined as provided in Section 19(a)
hereof.
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<PAGE> 14
"Stipulated Loss Value Date" means the 2nd calendar
day of each calendar month during the Interim Term, Basic Term
and any Renewal Term.
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Interim Rent and Basic Rent) which
Lessee assumes or agrees to pay to Lessor or others hereunder,
under the Participation Agreement, under the Tax Indemnity
Agreement or under any of the other Operative Documents. The
parties acknowledge that Supplemental Rent is a general
category and, accordingly, agree that any provision of any
Operative Document which calls for the payment of Supplemental
Rent and also calls for the payment of specific items which
are includable in Supplemental Rent is not to be interpreted
as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
the Loan Participants and each other Certificate Holder, and
each of their respective Affiliates, successors and permitted
assigns.
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1996 D], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, receipts,
sales, rental, use, turnover, value added, property (tangible
and intangible), excise and stamp taxes), license, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a
"TAX").
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
"Termination Value" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of
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<PAGE> 15
Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D hereto opposite the Termination Date with respect to
which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof
and in Section 7 of the Tax Indemnity Agreement). In the
event that the Termination Date with respect to which
Termination Value is determined is a date on which Basic Rent
is payable in advance as indicated on Exhibit B, to the extent
that the actual amount of interest paid and to be paid on the
Secured Certificates during the Lease Period ending on such
Termination Date is greater or less than the amount included
in calculating the corresponding percentage set forth in
Exhibit D with respect to such Termination Date on account of
such interest, the corresponding percentage set forth in
Exhibit D shall be adjusted appropriately to compensate for
such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under
the Trust Agreement, such information to be furnished by the
Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees,
taxes and other charges payable in connection with the
recording or filing of instruments and financing statements
(but excluding any sales, use and other transfer taxes which
apply to the Aircraft), such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, and the
reasonable out-of-pocket expenses of the Owner Participant,
such information to be furnished by the Owner Participant,
(iv) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture, such
information to be furnished by the Indenture Trustee, (v) the
fees of Aeroeconomics, Inc. and BK Associates, Inc. with
respect to the appraisals of the Aircraft pursuant to Sections
4(a)(xx) and 4(a)(xxix), respectively, of the Participation
Agreement, such information to be furnished by the Owner
Participant in the case of Aeroeconomics, Inc. and by the
Documentation Agent in the case of BK Associates, Inc., (vi)
the reasonable and actual fees, expenses and disbursements of
Dewey Ballantine, special counsel to the Owner Participant,
such information to be furnished by the Owner Participant,
(vii) the fee and reasonable disbursements of Babcock and
Brown Financial Corporation, such information to be furnished
by Lessee, and (viii) the fee payable to the Loan Participants
on the Delivery Date.
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<PAGE> 16
"Transition Date" means the date designated as such
in Exhibit B hereto.
"Trust Agreement" means that certain Trust Agreement
[NW 1996 D], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National
Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without
limitation, supplementation thereof by one or more Trust
Supplements entered into pursuant to the applicable provisions
thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1996 D], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier
as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations
under the Federal Aviation Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or
engines installed thereon to a third party pursuant to which
such Airframe and Engines or engines (i) shall be operated
solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be
required under the Federal Aviation Act or, if the Aircraft is
not registered in the United States, all certificates and
licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions
within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not
be regular employees of Lessee (or any Sublessee)) and (ii)
shall be maintained by Lessee (or any Sublessee) in accordance
with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees
(subject to satisfaction of the conditions set forth in Section 4(a) of the
Participation Agreement) to accept the transfer of title from and
simultaneously to lease to Lessee hereunder, and Lessee hereby agrees (subject
to satisfaction of the conditions set forth in Section 4(b) of the
Participation Agreement) to lease from Lessor hereunder, the Aircraft as
evidenced by the execution by Lessor and Lessee of a Lease Supplement leasing
the Aircraft hereunder. Lessee hereby
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<PAGE> 17
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic
Term. The Interim Term shall commence on the Delivery Date and end on and
include the day immediately preceding the Commencement Date unless earlier
terminated pursuant to the provisions hereof. The Basic Term shall commence on
the Commencement Date and end on January 2, 2019, or such earlier date as this
Lease may be terminated in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the
Commencement Date in an amount equal to Lessor's Cost multiplied by the
percentage specified in Exhibit B hereto for Interim Rent on the Commencement
Date.
Although the Interim Rent percentage set forth in Exhibit B
hereto has been computed on the assumption that the rate of interest on the
Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee
recognize that the actual rate of interest on the Secured Certificates may be a
rate from time to time which may be greater or less than the Assumed Interest
Rate and that the related basis upon which interest on the Secured Certificates
will be computed will be as provided in the Trust Indenture. Accordingly, the
Interim Rent payable on the Commencement Date shall be increased or decreased
(but not below zero) by the difference between (i) the aggregate amount of
interest due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to but excluding the
Commencement Date and (ii) the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the Secured Certificates
on the Commencement Date relating to the period from the Transition Date to the
Commencement Date if such Secured Certificates had borne interest at the
Assumed Interest Rate. If the amount determined in accordance with clause (i)
of the preceding sentence shall be greater than the amount determined in
accordance with clause (ii) of such sentence, the amount of Interim Rent
payable on the Commencement Date shall be increased by such difference. If the
amount determined in accordance with clause (i) of the preceding sentence shall
be less than the amount determined in accordance with clause (ii) of such
sentence, the amount of Interim Rent payable on the Commencement Date shall be
decreased (but not below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect
to each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 6.5% per annum, computed on
the basis of a 360-day year of twelve 30-day
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<PAGE> 18
months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the
actual rate of interest on the Secured Certificates may be a rate from time to
time which may be greater or less than the Assumed Interest Rate and that the
related basis upon which interest on the Secured Certificates will be computed
will be as provided in the Trust Indenture. Accordingly, each installment of
Basic Rent shall be increased or decreased (but not below zero), as the case
may be, by the Rent Differential Amount (as defined herein). For purposes
hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with
respect to the Basic Term, the difference between (i) the aggregate amount of
interest due and payable on such Lease Period Date on the Secured Certificates,
and (ii) the aggregate amount of interest on the Secured Certificates that
would have been due and payable on such Lease Period Date if such Secured
Certificates had borne interest at the Assumed Interest Rate, in each case for
the period from and including the Lease Period Date (or the Commencement Date
in the case of the first Lease Period) next preceding such Lease Period Date to
but excluding such Lease Period Date. If, as of any Lease Period Date, the
amount determined in accordance with clause (i) of the immediately preceding
sentence shall be greater than the amount determined in accordance with clause
(ii) of such sentence, the amount of Basic Rent payable on such Lease Period
Date shall be increased by the Rent Differential Amount. If, as of any Lease
Period Date, the amount determined in accordance with such clause (ii) shall
exceed the amount determined in accordance with such clause (i), the amount of
Basic Rent due on such Lease Period Date shall be decreased (but not below
zero) by the Rent Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date
occurs other than on April 30, 1996, or (B) Transaction
Expenses paid by Lessor pursuant to Section 16 of the
Participation Agreement are determined to be other than 1.0%
of Lessor's Cost, then in each case the Basic Rent percentages
set forth in Exhibit B and Stipulated Loss Value percentages
set forth in Exhibit C, the Termination Value percentages set
forth in Exhibit D and the Special Purchase Price shall be
recalculated on or prior to November 15, 1996 using the same
methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages and
Special Purchase Price, in order to: (1) maintain the Owner
Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing as
contemplated by Section 17 of the Participation Agreement,
then the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by the Owner Participant as contemplated by such
Section to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause
(1) hereof, minimize the Net Present Value of Rents to Lessee
and (B) in the event that Lessee elects, subject to the Owner
Participant's consent, which the Owner
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<PAGE> 19
Participant may withhold in its sole discretion, to satisfy
any indemnity obligation under the Tax Indemnity Agreement
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement,
then the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by Owner Participant, using the same methods and
assumptions (except to the extent such assumptions shall be
varied to take into account the Loss (as defined in the Tax
Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used to
calculate the Basic Rent percentages, the Stipulated Loss
Value percentages and the Termination Value percentages and
the Special Purchase Price on the Delivery Date, in order to
(1) maintain the Owner Participant's Net Economic Return and
(2) to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant
to this Section 3(d), the Owner Participant shall redetermine
the Excess Amount set forth in Exhibit B in a manner
consistent with such recalculation. In addition, (X) any
recalculation of Basic Rent, Stipulated Loss Value or
Termination Value percentages made pursuant to this Section
3(d) shall take into account any decrease in the Excess Amount
with respect to the Transition Date required by the proviso to
the definition of "Excess Amount", (Y) after January 31, 1997
but prior to July 2, 1997, the Basic Rent percentages set
forth in Exhibit B, the Stipulated Loss Value percentages set
forth in Exhibit C and the Termination Value percentages set
forth in Exhibit D shall be recalculated to take into account
any decrease in Excess Amount with respect to the Transition
Date that has not theretofore been taken into account in
accordance with clause (X) of this sentence, and (Z) at the
time of any payment of Stipulated Loss Value or Termination
Value, the Stipulated Loss Value percentage set forth in
Exhibit C or the Termination Value percentage set forth in
Exhibit D, by reference to which the amount of such payment is
determined shall be recalculated to take into account any
decrease in the Excess Amount with respect to the Transition
Date that has not theretofore been taken into account in
accordance with clause (X) or clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess
Amount, Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price pursuant to this
Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in
Exhibit E hereto. In addition, notwithstanding any other
provisions herein, in no event shall the Special Purchase
Price be adjusted to an amount that is less than the greater
of (A) the Termination Value as of July 2, 2012, (B) the
estimated fair market value of the Aircraft on July 2, 2012,
determined as of the Delivery Date and set forth in the
opinion received from Aeroeconomics, Inc. pursuant to Section
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<PAGE> 20
4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and
(C) 101% multiplied by the present value as of July 2, 2012 of
(x) the remaining scheduled Basic Rent through the end of the
Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair
market value of the Aircraft as of the end of the Basic Term
as set forth in the Appraisal) (the present value calculation
described in this clause (C) shall utilize a semi-annual
compounded discount rate no lower than that utilized by the
Owner Participant in determining the Special Purchase Price as
of the Delivery Date, but in no event shall such discount rate
be less than 11.8% per annum). Such recalculated Basic Rent,
Excess Amount and Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price shall be set forth
in a Lease Supplement or an amendment to this Lease.
(v) Anything contained in the Participation
Agreement or this Lease to the contrary notwithstanding, each
installment of Interim Rent and Basic Rent payable hereunder,
whether or not adjusted in accordance with this Section 3(d),
shall, together with the amount of the Excess Amount in
respect of the date on which such installment is payable, and
each payment of Termination Value and Stipulated Loss Value,
whether or not adjusted in accordance with this Section 3(d),
shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in
any event, in an amount at least sufficient to pay in full, on
the date on which such amount of Rent is due, any payments
then required to be made on account of the principal of,
premium, if any, and interest on the Secured Certificates. It
is agreed that no installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased
or adjusted by reason of (i) any attachment or diversion of
Rent on account of (A) Lessor Liens or (B) any Loan
Participant Lien or other Lien on or against the Trust Estate,
any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to
the transactions contemplated by the Operative Documents, (ii)
any modification of the payment terms of the Secured
Certificates made without the prior written consent of Lessee
or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of
Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this
Section 3(d) shall be (A) in compliance with the tests of
Sections 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28
and with Section 467 of the Internal Revenue Code of 1986, as
amended, as each is then in effect as long as the Schedule of
Basic Rent was in compliance with Section 467 of the Code as
in effect on the Closing Date, it being understood that, to
the extent that any grandfather, effective date, or similar
provisions in any regulations under Section 467 or other
administrative pronouncement interpreting Section 467
promulgated or issued after the Closing
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<PAGE> 21
Date causes such regulations or pronouncement not to be
applicable to the Schedule of Basic Rent in effect on the
Closing Date, such Schedule shall be deemed to be in
compliance with Section 467 as in effect on the Closing Date
(provided that the test of Rev. Proc. 75-28 Section 4.08(1)
and Section 467 shall be applied on a prospective basis from
the date of such adjustment if and to the extent permitted by
applicable law, as then in effect) and (B) subject to
verification pursuant to Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be
paid) promptly to Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent constituting Stipulated Loss Value or Termination Value
as the same shall become due and owing and all other amounts of Supplemental
Rent within five days after demand or within such other relevant period as may
be provided in any Operative Document, and in the event of any failure on the
part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or in any other Operative
Document or by law or equity or otherwise in the case of nonpayment of Basic
Rent. Lessee shall pay, on behalf of Lessor, as Supplemental Rent when due any
amount of premium payable when due under the Trust Indenture and shall pay on
behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16
and Section 11.02 of the Trust Indenture, as and when the same shall become due
and payable. Lessee also will pay to Lessor, or to whomsoever shall be
entitled thereto, on demand, as Supplemental Rent, to the extent permitted by
applicable law, interest at the Past Due Rate on any part of any installment of
Interim Rent and Basic Rent not paid when due for any period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due for
the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be
made directly by Lessee (whether or not any Sublease shall be in effect) by
wire transfer of immediately available funds prior to 10:30 A.M., New York
time, on the date of payment, to Lessor at its account at First Security Bank
of Utah, National Association, 79 South Main Street, Salt Lake City, Utah
84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate
Trust Department, Credit Northwest/NW 1996 D (or such other account of Lessor
in the continental United States as Lessor shall direct in a notice to Lessee
at least 10 Business Days prior to the date such payment of Rent is due);
provided that so long as the Trust Indenture shall not have been fully
discharged, Lessor hereby irrevocably directs and Lessee agrees, that, unless
the Indenture Trustee shall otherwise direct, all Rent payable to Lessor and
assigned to the Indenture Trustee pursuant to the Trust Indenture shall be paid
prior to 10:30 A.M., New York time on the due date thereof in funds of the type
specified in this Section 3(f) directly to the Indenture Trustee at its account
at State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention:
Corporate Trust Department, Reference: Northwest/NW 1996 D (or such other
account of the Indenture Trustee in the continental United States as the
Indenture Trustee shall direct in a notice to Lessee at least 10 Business Days
prior to the date such payment of Rent is due). All payments of Supplemental
Rent owing to the Indenture Trustee or to a Loan Participant or any other
Certificate Holder pursuant to the Participation Agreement shall be made in
Dollars in immediately available funds prior to 10:30 A.M., New
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<PAGE> 22
York time, on the due date thereof at the office of the Indenture Trustee or at
such other office of such other financial institution located in the
continental United States as the party entitled thereto may so direct at least
10 Business Days prior to the due date thereof. All payments of Supplemental
Rent payable to the Owner Participant, to the extent that such amounts
constitute Excluded Payments (as defined in the Trust Indenture), shall be made
in Dollars in immediately available funds prior to 10:30 A.M., New York time,
on the due date thereof, to the account of the Owner Participant specified in
Schedule I to the Participation Agreement (or to such other account as may be
specified in writing by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent,
if any, that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by 10:30
A.M., New York time, on the Transition Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall on the Transition Date, prepay on the
Transition Date a portion of Basic Rent equal to the Excess Amount not so paid
(the amount of such Basic Rent to be prepaid by Lessee being herein called
"PREPAID RENT"); provided that Lessee shall, under all circumstances and
whether or not an Event of Default shall be continuing on the Transition Date,
pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount
equal to the excess, if any, of the interest on the Secured Certificates
relating to the period from and including the Delivery Date to but excluding
the Transition Date over the Excess Amount payable on the Transition Date;
provided, further, that Lessee will also pay to the Indenture Trustee, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate in effect from time to time on any part of any
Prepaid Rent and on the amount, if any, payable pursuant to the immediately
preceding proviso not paid when due for any period for which the same shall be
overdue. Lessor agrees to reimburse Lessee in the manner provided in the
following sentence for (x) the Prepaid Rent so paid by Lessee, plus (y) any
Supplemental Rent paid with respect to Prepaid Rent by Lessee pursuant to this
Section 3(g), plus (z) accrued interest on the unreimbursed portion thereof at
a rate equal to the Base Rate as in effect from time to time plus 5% per annum
from the date such amount is paid by Lessee to but not including the date of
each such reimbursement (such amounts to be reimbursed being herein called the
"REIMBURSEMENT AMOUNT"). Lessor shall pay to Lessee, in funds of the type
specified in Section 3(f) hereof, within five days after Lessor, the Owner
Participant and the Indenture Trustee shall have received written notice from
Lessee demanding payment, the Reimbursement Amount. In addition, if, for any
reason, Lessor shall fail to pay to Lessee the Reimbursement Amount as above
provided, Lessee shall be entitled to offsets (without duplication) against
each succeeding payment (other than as limited by the proviso to this sentence)
due from Lessee to Persons other than the Loan Participants, the Indenture
Trustee
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<PAGE> 23
and the Owner Trustee in its individual capacity (including, without
limitation, Basic Rent, payments due under Section 9, 10, 15 and 19 hereof,
payments due under the Tax Indemnity Agreement and payments due to Persons
other than the Loan Participants, the Indenture Trustee and Lessor in its
individual capacity under Section 7 of the Participation Agreement), until
Lessee has been fully reimbursed for the Reimbursement Amount; provided,
however, that in the case of any payment due from Lessee which is distributable
under the terms of the Trust Indenture, Lessee's right of offset shall be
limited to amounts distributable to Lessor thereunder. No such offset or
aggregate combined effect of separate offsets shall reduce the amount of any
installment of Interim Rent or Basic Rent to an amount insufficient, together
with the Excess Amount and all other amounts payable simultaneously by Lessee,
to pay in full the payments then required to be made on account of the
principal of and interest on (and premium, if any, due with respect to) the
Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES.
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS,"
"WHERE-IS." NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES,
HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS
AND WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
PART THEREOF, except that First Security Bank of Utah, National Association, in
its individual capacity, (i) represents and warrants that on the Delivery Date,
Lessor shall have received whatever title to the Aircraft was conveyed to it by
Lessee, (ii) represents and warrants that on the Delivery Date the Aircraft
shall be free of Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to it, (iii) covenants that it will not, through its own actions
or inactions, interfere in Lessee's quiet enjoyment of the Aircraft during the
Term, (iv) agrees that it will not directly or indirectly create, incur, assume
or suffer to exist any Lessor Lien attributable to it on or with respect to the
Airframe or any Engine or any portion of the Trust Estate and (v) represents
and warrants that it is a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement, and agrees that
if at any time it shall cease to be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement it
will promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Loan Participants, the Owner Participant or
Lessee), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. None of the provisions of
this Lease shall be deemed to amend, modify or
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<PAGE> 24
otherwise affect the representations, warranties or other obligations (express
or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not, through its own actions or inactions, interfere
in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and agrees
that it will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to the Airframe or
any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon
Return. Unless purchased by Lessee pursuant to Section 19 hereof, upon the
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c) or 15, Lessee, at its own expense, will return the
Airframe to Lessor at a Return Site then being serviced by Lessee's 757-200
aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable
to Lessee (provided, that at Lessor's request, Lessee will consider in good
faith a Return Site not then being serviced by Lessee's 757-200 aircraft,
provided, further, that, in the case of a return to a Return Site not then
being serviced by Lessee's 757-200 aircraft, Lessee is able to return the
Airframe immediately following a revenue passenger flight with the Airframe to
such Return Site), and Lessor will give Lessee at least ten (10) days' prior
written notice of the Return Site; provided, however, that if Lessor shall have
made the request for storage pursuant to Section 5(d) hereof, Lessee shall
return the Airframe to Lessor at the site of the storage at the end of the
storage period. At the time of such return, Lessee will, unless otherwise
requested by Lessor at least ninety (90) days prior to the return hereunder,
cause the Aircraft, if it is not then so registered, to be registered under the
laws of the United States with the Federal Aviation Administration in the name
of the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by
reason of the failure of Lessor or its designee to be eligible on such date to
own an aircraft registered with the Federal Aviation Administration or (ii)
such registration is otherwise prohibited by applicable law and not due to any
act or failure to act on the part of Lessee; the Airframe will be fully
equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two
engines of the same or another manufacturer of not less than equivalent
utility, fair market sales value and remaining useful life, and suitable for
installation and use on the Airframe without impairing the value, utility or
remaining useful life of the Aircraft; provided that both engines shall be of
the same make and model) duly installed thereon. Also, at the time of such
return, such Airframe and Engines or engines (i) shall be certified (or, if not
then registered under the Federal Aviation Act, shall be eligible for
certification) as an airworthy aircraft by the Federal Aviation Administration
without the necessity of any further expense being incurred by Lessor, (ii)
shall be free and clear of all Liens (other than Lessor Liens (including for
this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens), Indenture Trustee's Liens and Loan Participant
Liens) and rights of third parties under pooling, interchange, overhaul, repair
or other similar agreements or arrangements, (iii) shall be in as good an
operating condition as when delivered to Lessee hereunder, ordinary wear and
tear excepted, or, in the case of any such engines owned by Lessee, shall have
a value, utility and remaining useful life at least
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<PAGE> 25
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit F. Lessor agrees to pay Lessee those
amounts specified in Exhibit F to be for the cost, expense or account of
Lessor.
During the last six (6) months of the Term (unless Lessee
shall have elected to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease), with reasonable notice, Lessee will cooperate,
and cause any Sublessee to cooperate, in all reasonable respects with the
efforts of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not
interfere with the operation or maintenance of the Aircraft by Lessee or any
Sublessee.
(b) Return of the Engines. In the event that any engine
not owned by Lessor shall be delivered with the returned Airframe as set forth
in paragraph (a) of this Section 5, Lessee, concurrently with such delivery,
will, at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to
the effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the
return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon
any termination of this Lease in accordance with paragraph (a) of this Section
5, (i) Lessee shall invoice Lessor, and Lessor shall pay Lessee, as
compensation for any fuel or oil contained in the fuel or oil tanks of such
Airframe, the value of such fuel or oil at the price paid by Lessee for such
fuel or oil, as the case may be, and (ii) Lessee shall deliver or cause to be
delivered to Lessor all logs, manuals and data and inspection, modification and
overhaul records required to be maintained with respect thereto under
applicable rules and regulations of each country under the laws of which the
Aircraft has been registered during the period of operation thereof, which
logs, manuals, data and records, if not maintained in English, shall be
translated into English at Lessee's expense.
(d) Storage Upon Return. If, at least thirty (30) days
prior to termination of this Lease at the end of the Basic Term or any Renewal
Term or pursuant to Section 9(c), Lessee receives from Lessor a written request
for storage of the Aircraft upon its return hereunder, Lessee will provide
Lessor, or cause Lessor to be provided, with free parking
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<PAGE> 26
facilities for the Aircraft (maintenance costs and other out-of-pocket costs
other than parking fees incurred by Lessee in connection with such storage to
be for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such
period not exceeding thirty (30) days and be reimbursed by Lessor for the
premiums thereon.
SECTION 6. LIENS. Lessee will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, title thereto or any interest therein or in this Lease, except
(i) the respective rights of Lessor as owner of the Aircraft and Lessee as
herein provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any Sublessee) either not yet due or being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture, (v)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing
obligations that are not overdue for a period of more than forty-five (45) days
or are being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or any interest therein or, so long as any Secured
Certificates shall be outstanding, adversely affect the Lien of the Trust
Indenture, (vi) Liens arising out of any judgment or award against Lessee (or
any Sublessee), unless the judgment secured shall not, within sixty (60) days
after the entry thereof, have been discharged, vacated, reversed or execution
thereof stayed pending appeal or shall not have been discharged, vacated or
reversed within sixty (60) days after the expiration of such stay, (vii) any
other Lien with respect to which Lessee (or any Sublessee) shall have provided
a bond, cash collateral or other security adequate in the reasonable opinion of
Lessor, and (viii) Liens approved in writing by Lessor. Lessee will promptly,
at its own expense, take (or cause to be taken) such actions as may be
necessary duly to discharge any such Lien not excepted above if the same shall
arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION;
POSSESSION AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance.
Lessee, at its own cost and expense, shall (or shall cause any Sublessee to):
(i) forthwith upon the delivery thereof hereunder, cause the Aircraft to be
duly registered in the name of Lessor, and, subject to the second paragraph of
this Section 7(a) and Section 8(f) of the Participation Agreement, to remain
duly registered in the name of Lessor under the Federal Aviation Act, provided
that Lessor shall execute and deliver all such documents as Lessee (or any
Sublessee) may reasonably request for the purpose of effecting and continuing
such registration, and shall not
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<PAGE> 27
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section
8(f) of the Participation Agreement and shall cause the Trust Indenture to be
duly recorded and maintained of record as a first mortgage on the Aircraft;
(ii) maintain, service, repair and overhaul (or cause to be maintained,
serviced, repaired and overhauled) the Aircraft so as to keep the Aircraft in
as good an operating condition as delivered to Lessee hereunder, ordinary wear
and tear excepted, and as may be necessary to enable the applicable
airworthiness certification for the Aircraft to be maintained in good standing
at all times (other than during temporary periods of storage in accordance with
applicable regulations or during maintenance or modification permitted
hereunder) under the Federal Aviation Act, except when all Boeing 757-200
aircraft powered by engines of the same type as those with which the Airframe
shall be equipped at the time of such grounding and registered in the United
States have been grounded by the FAA (although such certification need actually
be maintained only during such periods as the Aircraft is registered in the
United States), or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, utilizing, except during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by Lessee with respect to similar aircraft operated by
Lessee in similar circumstances and utilizing, during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by the Sublessee with respect to similar aircraft
operated by the Sublessee in similar circumstances or such manner as shall have
been approved by the Owner Participant pursuant to Section 7(b)(x) and without
in any way discriminating against the Aircraft, by reason of its leased status,
including, without limitation, the termination of airworthiness directives;
provided, however, that in all circumstances the Aircraft shall be maintained
by Lessee (or any Sublessee) in accordance with maintenance standards required
by, or substantially equivalent to those required by, the FAA or the central
civil aviation authority of Canada, France, Germany, Japan, the Netherlands or
the United Kingdom; (iii) maintain or cause to be maintained all records, logs
and other materials required to be maintained in respect of the Aircraft by the
FAA or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered (which records, logs and other
materials, as between Lessor and Lessee and all parties claiming through
Lessee, shall be the property of Lessor but shall be maintained by Lessee
during the Term and shall become the property of Lessee upon Lessee's purchase
of the Aircraft pursuant to the terms of this Lease or upon the occurrence of
an Event of Loss and Lessee's compliance with Section 10 hereof); and (iv)
promptly furnish or cause to be furnished to Lessor and the Owner Participant
such information as may be required to enable Lessor to file any reports
required to be filed by Lessor or the Owner Participant with any governmental
authority because of Lessor's ownership of the Aircraft. (II) Operation.
Lessee will not maintain, use, service, repair, overhaul or operate the
Aircraft (or permit any Sublessee to maintain, use, service, repair, overhaul
or operate the Aircraft) in violation of any law or any rule, regulation, order
or certificate of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority,
except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law,
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<PAGE> 28
rule, regulation or order in any reasonable manner which does not materially
adversely affect Lessor or the Owner Participant or, so long as any Secured
Certificates shall be outstanding, the first priority Lien of the Trust
Indenture and does not involve any material risk of sale, forfeiture or loss of
the Aircraft. Lessee will not operate the Aircraft, or permit any Sublessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 11; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in
the ordinary course of the regular operations of Lessee (or any Sublessee) and
in each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation
Agreement, shall, at the request and sole expense of Lessee, cooperate with
Lessee to take all actions required to change the registration of the Aircraft
to another country.
(b) Possession and Subleases. Lessee will not, without
the prior written consent of Lessor, sublease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe or enter into any Wet Lease; provided that, so long as no Default of
the type referred to in Section 14(a) or 14(e) or Event of Default shall have
occurred and be continuing at the time of such sublease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority lien of the Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7(b)) any Engine, and so long
as Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a)
and 11 hereof, Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or
engines then installed thereon to normal interchange
agreements or any Engine to normal pooling or similar
arrangements, in each case customary in the airline industry
and entered into by Lessee (or any Sublessee) in the ordinary
course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to
the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Permitted Carrier;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof (or for delivery thereto)
or to any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work on
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<PAGE> 29
the Airframe or Engine or any part of any thereof or for
alterations or modifications in or additions to such Airframe
or Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii) install an Engine on an airframe owned by
Lessee (or any Sublessee) free and clear of all Liens, except:
(A) Permitted Liens and those which apply only to the engines
(other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the
first priority Lien of the Trust Indenture shall not be
divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to
Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all Liens, except: (A) the rights of the parties to the
lease or conditional sale or other security agreement covering
such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and (y)
such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by
Lessee (or any Sublessee), leased to Lessee (or any Sublessee)
or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b)
hereof, subject any appliances, Parts or other equipment owned
by Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
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<PAGE> 30
(vii) subject (or permit any Sublessee to subject)
the Airframe or any Engine to the Civil Reserve Air Fleet
Program and transfer (or permit any Sublessee to transfer)
possession of the Airframe or any Engine to the United States
of America or any instrumentality or agency thereof pursuant
to the Civil Reserve Air Fleet Program, so long as Lessee (or
any Sublessee) shall (A) promptly notify Lessor upon
subjecting the Airframe or any Engine to the Civil Reserve Air
Fleet Program in any contract year and provide Lessor with the
name and address of the Contracting Office Representative for
the Air Mobility Command of the United States Air Force to
whom notice must be given pursuant to Section 15 hereof, and
(B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of
the Term, enter into a Wet Lease (which, if entered into with
tax-exempt entities during the Depreciation Period, may not
exceed three years) for the Airframe and Engines or engines
then installed thereon with any third party; provided that if
Lessee (or any Sublessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options)
Lessee shall provide Lessor written notice of such Wet Lease
(such notice to be given prior to entering into such Wet
Lease, if practicable, but in any event promptly after
entering into such Wet Lease);
(ix) for a period not to extend beyond the end of
the Term, transfer possession of the Airframe or any Engine to
the United States of America or any instrumentality or agency
thereof pursuant to a contract (the term of which, during the
Depreciation Period, may not exceed three years), a copy of
which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any
sublease with (1) a U.S. Air Carrier, (2) any Person approved
in writing by the Owner Participant and the Indenture Trustee
in their sole discretion, or (3) after the Depreciation
Period, any Permitted Sublessee if (A) in any such case, the
Sublessee under such sublease is not subject to a proceeding
or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into,
(B) in the event that the Sublessee under such sublease is a
foreign air carrier (other than a foreign air carrier
principally based and domiciled in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based and domiciled at the
time such sublease is entered into (or, in the case of a
sublease to a proposed Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in
effect on the Delivery Date) and (C) in the event that the
Sublessee under such sublease is domiciled and principally
based in a country listed on Exhibit C to the Participation
Agreement and designated therein as a "Restricted Country",
Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee to the effect that (I) the terms
of the proposed
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<PAGE> 31
sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally)
enforceable against the proposed Sublessee in the country in
which the proposed Sublessee is principally based and
domiciled, (II) there exist no possessory rights in favor of
the Sublessee under such Sublease under the laws of such
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee and assuming at such
time such Sublessee is not insolvent or bankrupt, prevent the
return or repossession of the Aircraft in accordance with the
terms of this Lease, (III) the laws of such Sublessee's
country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into Dollars for the loss of use of the Aircraft
in the event of the requisition by such government of such
use, (IV) the laws of such Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to
the registry of the Aircraft in the name of Lessor (or Lessee,
as "lessee", or the proposed Sublessee, as "sublessee", as
appropriate) and to the Lien of the Trustee Indenture, (V)
such Sublease will not result in a risk of unindemnified Taxes
to Lessor or the Owner Participant (it being agreed that in
the event such opinion cannot be given in a form reasonably
satisfactory to the Owner Participant, such opinion will be
waived if (A) the Owner Participant has received assurances
satisfactory to it to the effect that such Sublease will not
result in any such risk, or (B) Lessee shall have entered into
a binding agreement to indemnify in a manner satisfactory in
form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant for such
unindemnified Taxes; provided, however, that if (a) Lessee
(or, so long as the Guarantee remains in full force and
effect, the Guarantor) has outstanding publicly issued or
privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (b) Lessee
provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and substance
to Lessor, the amount of which is sufficient (as determined by
the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner
Participant has been indemnified by Lessee under the Operative
Documents in addition to any additional adverse tax
consequences resulting from such subleasing or (c) the
anticipated indemnified amount (as determined by the Owner
Participant in its reasonable judgment) is less than $50,000,
then, in determining whether the indemnity to be provided by
Lessee is satisfactory in form and substance to the Owner
Participant, the Owner Participant will not take into account
the creditworthiness of Lessee), (VI) none of the Owner
Trustee, the Owner Participant or the Indenture Trustee will
be required to register to do business in such country as a
result of such sublease, after (A) taking into account any
other contacts of the Owner Trustee and the Owner Participant
with such jurisdiction (provided, that upon request by Lessee
(such request having been acknowledged by the Owner
Participant's general counsel), the Owner Trustee and the
Owner Participant must respond
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<PAGE> 32
within fourteen (14) Business Days after receipt of such
request describing its contacts in such jurisdiction, or else
such party shall be deemed for purposes of this clause (VI) to
have no such contacts) and (B) assuming that the Indenture
Trustee has no other contacts with such jurisdiction, and
(VII) there is no tort liability for owners not in possession
of aircraft in such country more onerous than under the laws
of the United States or any state thereof (it being agreed
that in the event such opinion cannot be given in a form
reasonably satisfactory to the Owner Participant, such opinion
will be waived if insurance reasonably satisfactory to the
Owner Participant is provided to cover the risk of such tort
liability), provided, however, that no sublease entered into
pursuant to this clause (x) shall extend beyond the expiration
of the Basic Term or any Renewal Term then in effect unless
Lessee shall have irrevocably committed to purchase the
Aircraft; provided, further, that in the event the Sublessee's
maintenance program for the Airframe will be a block overhaul
program, a sublease entered into pursuant to this clause (x)
to such Sublessee shall not extend beyond the date which is
six months prior to the expiration of the Basic Term or any
Renewal Term then in effect (and Lessee, if the last Sublessee
was not a U.S. Air Carrier, shall upon expiration of the
sublease to such Sublessee (1) incorporate the Aircraft into
Lessee's approved maintenance program for aircraft of the same
make and model and in active commercial service and (2) place
the Aircraft into active passenger service or, in lieu
thereof, upon the return of the Aircraft to Lessor pursuant to
Section 5, Lessee shall comply with those return conditions
that would have been applicable had Lessee adopted a block
overhaul program) unless either the Owner Participant shall
have previously approved in writing the maintenance procedures
of the Sublessee or Lessee shall have irrevocably committed to
purchase the Aircraft at, or extend the Term of this Lease by
a period of at least six months from, the end of the Basic
Term or such Renewal Term, as the case may be.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any Sublease permitted by this
paragraph (b) shall be expressly subject and subordinate to, all the terms of
this Lease and to the Lien of the Trust Indenture, including, without
limitation, the covenants contained in Section 7(a) hereof and Lessor's rights
to repossession pursuant to Section 15 hereof and to avoid such Sublease upon
such repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided
herein, the terms of any such Sublease shall not permit any Sublessee to take
any action not permitted to be taken by Lessee in this Lease with respect to
the Aircraft. No pooling agreement, sublease or other relinquishment of
possession of the Airframe or any Engine or Wet Lease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or
constitute a waiver of Lessor's rights or remedies hereunder. Any sublease
permitted under Section 7(b) shall expressly prohibit any further sub-sublease
by the Sublessee. Lessor agrees, for the benefit of Lessee (and any Sublessee)
and for the benefit of any mortgagee or other holder of a
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<PAGE> 33
security interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee
(or any Sublessee) and any conditional vendor of any engine (other than an
Engine) purchased by Lessee (or any Sublessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that none of Lessor,
its successors or assigns will acquire or claim, as against Lessee (or any
Sublessee) or any such mortgagee, lessor or conditional vendor or other holder
of a security interest or any successor or assignee of any thereof, any right,
title or interest in such engine as the result of such engine being installed
on the Airframe; provided, however, that such agreement of Lessor shall not be
for the benefit of any lessor or secured party of any airframe (other than the
Airframe) leased to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security agreement or for the
benefit of any mortgagee of or any other holder of a security interest in an
airframe owned by Lessee (or any Sublessee), unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against Lessor, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Sublease
hereunder (such notice to be given not later than (A) fifteen (15) days prior
to entering into any Sublease with a term of more than one (1) year, (B) five
(5) Business Days prior to entering into any Sublease with a term equal to or
less than one (1) year with a Permitted Sublessee and (C) five (5) days prior
to entering into any Sublease with a term equal to or less than one (1) year
with any proposed Sublessee other than a Permitted Sublessee, if practicable,
but in any event promptly after entering into any such Sublease) and (ii) a
copy of each Sublease which has a term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as
soon as practicable thereafter, Lessee agrees to affix and maintain (or cause
to be affixed and maintained), at its expense, in the cockpit of the Airframe
adjacent to the airworthiness certificate therein and on each Engine a
nameplate bearing the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
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<PAGE> 34
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be placed on the Airframe or on any
Engine as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Lessee (or any Sublessee)
from placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee,
at its own cost and expense, will promptly replace or cause to be replaced all
Parts which may from time to time be incorporated or installed in or attached
to the Airframe or any Engine and which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever, except as
otherwise provided in paragraph (c) of this Section 8 or if the Airframe or an
Engine to which a Part relates has suffered an Event of Loss. In addition,
Lessee (or any Sublessee) may, at its own cost and expense, remove in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or any Sublessee), except as otherwise provided in paragraph (c) of
this Section 8, will, at its own cost and expense, replace such Parts as
promptly as practicable. All replacement Parts shall be free and clear of all
Liens (except for Permitted Liens and pooling arrangements to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis) and shall be
in as good operating condition as, and shall have a value and utility at least
equal to, the Parts replaced assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof. Except as otherwise
provided in paragraph (c) of this Section 8, all Parts at any time removed from
the Airframe or any Engine shall remain the property of Lessor, no matter where
located, until such time as such Parts shall be replaced by Parts which have
been incorporated or installed in or attached to the Airframe or such Engine
and which meet the requirements for replacement Parts specified above.
Immediately upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine as above provided, without further act
(subject only to Permitted Liens and any pooling arrangement to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis), (i) title to
such replacement Part shall thereupon vest in Lessor, (ii) such replacement
Part shall become subject to this Lease and be deemed part of the Airframe or
such Engine for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine, and
(iii) title to the replaced Part shall thereupon vest in Lessee (or, if a
Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe
or any Engine as provided in paragraph (a) of this Section 8 may be subjected
by Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part
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<PAGE> 35
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or Engine a further replacement
Part owned by Lessee (or any Sublessee) free and clear of all Liens except
Permitted Liens (other than pooling arrangements) and by causing title to such
further replacement Part to vest in Lessor in accordance with such paragraph
(a).
(c) Alterations, Modifications and Additions. Lessee, at
its own expense, will make (or cause to be made) such alterations and
modifications in and additions to the Airframe and Engines as may be required
from time to time to meet the applicable standards of the FAA or any applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
adversely affect Lessor, the Owner Participant, or, so long as any Secured
Certificates are outstanding, the Indenture Trustee. In addition, Lessee (or
any Sublessee), at its own expense, may from time to time add further parts or
accessories and make such alterations and modifications in and additions to the
Airframe or any Engine as Lessee (or any Sublessee) may deem desirable in the
proper conduct of its business, including, without limitation, removal of Parts
which Lessee (or any Sublessee) has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such
Engine (such parts, "OBSOLETE PARTS"); provided that no such alteration,
modification or addition shall diminish the value, utility or remaining useful
life of the Airframe or such Engine, or materially impair the condition or
airworthiness thereof, below the value, utility, remaining useful life,
condition or airworthiness thereof immediately prior to such alteration,
modification or addition, assuming the Airframe or such Engine was then in the
condition required to be maintained by the terms of this Lease, except that the
value (but not the utility or remaining useful life) of the Airframe or any
Engine may be reduced by the value of Obsolete Parts which shall have been
removed so long as the aggregate original cost of all Obsolete Parts which
shall have been removed and not replaced shall not exceed $500,000. Title to
all Parts incorporated or installed in or attached or added to the Airframe or
an Engine as the result of such alteration, modification or addition (the
"ADDITIONAL PARTS") shall, without further act, vest in Lessor.
Notwithstanding the foregoing sentence, Lessee (or any Sublessee) may remove or
suffer to be removed any Additional Part, provided that such Additional Part
(i) is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or
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<PAGE> 36
any Engine at the time of delivery thereof hereunder or any Part in replacement
of, or substitution for, any such Part, (ii) is not required to be incorporated
or installed in or attached or added to the Airframe or any Engine pursuant to
the terms of Section 7 hereof or the first sentence of this paragraph (c) and
(iii) can be removed from the Airframe or such Engine without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Airframe or such Engine would have had at the time of removal had
such alteration, modification or addition not occurred, assuming that such
Airframe or Engine was in the condition and repair required to be maintained by
the terms hereof. Upon the removal by Lessee (or Sublessee) of any Part as
provided above, title thereto shall, without further act, vest in Lessee (or
any Sublessee, as the case may be) and such Part shall no longer be deemed part
of the Airframe or Engine from which it was removed. Any Part not removed by
Lessee (or any Sublessee) as above provided prior to the return of the Airframe
or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination
Event. (1) [Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate
this Lease on any Lease Period Date occurring on or after January 2, 2003 if
Lessee shall have made the good faith determination, which shall be evidenced
by a resolution duly adopted by its Board of Directors (or the Executive
Committee thereof), that the Aircraft is obsolete or surplus to its needs.
(3) Lessee shall give to Lessor at least one hundred
twenty (120) days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) that Lessee has determined that the Aircraft is obsolete or surplus to its
needs. Any Termination Notice shall become irrevocable fifteen (15) days prior
to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that
Lessee shall have exercised its right to terminate this Lease under Section
9(a)(2), then during the period from the giving of the notice referred to in
Section 9(a)(3) until the proposed Termination Date (unless Lessee shall have
revoked the Termination Notice specifying such proposed Termination Date),
Lessee, as agent for Lessor and at no expense to Lessor, shall use its best
efforts to obtain bids in Dollars in the worldwide market for the purchase of
the Aircraft and, in the event it receives any bid, Lessee shall, within five
Business Days after receipt thereof and at least ten Business Days prior to the
proposed Termination Date, certify to Lessor in writing the amount and terms of
such bid, and the name and address of the party or parties (who shall not be
Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such
Affiliate has an arrangement or understanding regarding the future use, lease
or ownership of the Aircraft by Lessee or any such Affiliate but who may be the
Owner Participant, any Affiliate thereof or any Person contacted by the Owner
Participant) submitting such bid. After Lessee shall have certified to Lessor
all bids received, the Owner Participant, any Affiliate thereof or any Person
contacted by the Owner Participant may submit a further
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<PAGE> 37
bid or bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date). Subject to the
next succeeding sentence, on or before the Termination Date, subject to the
release of all mortgage and security interests with respect to the Aircraft
under the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
Aircraft to be delivered, to the bidder(s), if any, which shall have submitted
the highest cash bid therefor (net of any brokerage commissions) at least ten
(or, in the case of the Owner Participant, any Affiliate thereof, or Person
contacted by the Owner Participant, five) Business Days prior to such
Termination Date, in the same manner and in the same condition and otherwise in
accordance with all the terms of this Lease as if delivery were made to Lessor
pursuant to Section 5, and shall duly transfer to Lessor title to any engines
not owned by Lessor all in accordance with the terms of Section 5, (2) Lessor
shall comply with the terms of the Trust Indenture and shall, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), subject to prior or concurrent payment by Lessee of all
amounts due under clause (3) of this sentence, sell all of Lessor's right,
title and interest in and to the Aircraft for cash in Dollars to such
bidder(s), the total sales price realized at such sale to be retained by
Lessor, and (3) Lessee shall simultaneously pay or cause to be paid to Lessor
in funds of the type specified in Section 3(f) hereof, an amount equal to the
sum of (A) the excess, if any, of (i) the Termination Value for the Aircraft,
computed as of the Termination Date, over (ii) the sale price of the Aircraft
sold by Lessor after deducting the reasonable expenses incurred by Lessor, the
Owner Participant or the Indenture Trustee in connection with such sale, (B)
all unpaid Basic Rent with respect to the Aircraft due prior to such
Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect
to the Aircraft, and (C) on behalf of Lessor, the premium and Funding Loss
Amount, if any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor
shall give to Lessee written notice of such election at least five Business
Days prior to the Termination Date accompanied by an irrevocable undertaking by
the Owner Participant to make available to the Lessor for payment to the
Indenture Trustee on the Termination Date the amount required to pay in full
the unpaid principal amount of the Secured Certificates outstanding on the
Termination Date plus interest accrued thereon through the Termination Date.
Upon receipt of notice of such an election by Lessor and the accompanying
undertaking by the Owner Participant, Lessee shall cease its efforts to obtain
bids as provided above and shall reject all bids theretofore or thereafter
received. On the Termination Date, Lessor shall (subject to the payment by
Lessee of all Rent due on or prior to such date as set forth below) pay in full
the unpaid principal amount of the Secured Certificates outstanding on the
Termination Date plus interest accrued thereon through the Termination Date
together with all premium and Funding Loss Amount, if any, due on the Secured
Certificates and, so long as
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<PAGE> 38
the Secured Certificates are paid as aforesaid, Lessee shall deliver the
Airframe and Engines or engines to Lessor in accordance with Section 5 and
shall pay all Basic Rent due prior to the Termination Date and, if such Basic
Rent is payable in arrears on such Termination Date as indicated on Exhibit B,
on such Termination Date, and all Supplemental Rent (other than Termination
Value) due on or prior to the Termination Date. If no sale shall have occurred
on the Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, if Lessee
revokes its Termination Notice or, unless Lessee shall have provided Lessor
with an opinion of counsel selected by Lessee and reasonably acceptable to
Lessor to the effect that payment by Lessee of the amount specified in clause
(3)(A) above in connection with a termination where Lessor has not elected to
retain title will not constitute a preference under applicable U.S. bankruptcy
laws, a Default or an Event of Default of the type referred to in Section 14(e)
hereof shall exist on such Termination Date (unless, in the case of any such
Default or Event of Default, Lessee has obtained an order from the applicable
bankruptcy court approving the payment of any such amount), this Lease shall
continue in full force and effect as to the Aircraft, Lessee shall pay the
reasonable costs and expenses incurred by the Owner Participant, the Indenture
Trustee and Lessor (unless such failure to terminate the Lease is a consequence
of the failure of Lessor or the Owner Participant without due cause to make, or
cause to be made, the payment referred to in the immediately preceding
sentence, in which case Lessee shall pay only the reasonable costs and expenses
of the Indenture Trustee), if any, in connection with preparation for such sale
and Lessee may give one or more additional Termination Notices in accordance
with Section 9(a)(2), subject to the last sentence of this Section 9(c). In
the event of any such sale or such retention of the Aircraft by Lessor and upon
compliance by Lessee with the provisions of this paragraph, Basic Rent or any
other amounts hereunder arising subsequent to such date of sale or retention
shall cease to accrue, Lessee shall have no further obligation in this respect
and this Lease shall terminate. Lessor may, but shall be under no duty to,
solicit bids, inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than to transfer (in
accordance with the foregoing provisions) to the purchaser named in the highest
bid certified by Lessee to Lessor all of Lessor's right, title and interest in
the Aircraft, against receipt of the payments provided herein. Lessee may
revoke a Termination Notice given pursuant to Section 9(a)(2) no more than two
times during the Term and a Termination Notice may be given not more than once
during any 365-day period.
If (x) there is a sale of the Aircraft pursuant to this
Section 9(c), (y) an Event of Default of the type described in Section 14(c)
relating to Section 7(a) or Section 8 shall have occurred and be continuing on
the date of such sale and (z) the fair market sales value of the Aircraft on
the date of such sale is lower than it would have been had no such Event of
Default occurred, Lessee shall pay to Lessor, in addition to any other amounts
due hereunder, the amount in excess of Termination Value that Lessor would have
received had no such Event of Default occurred. Lessor and Lessee shall confer
in good faith with a view to reaching agreement on what the fair market sales
value of the Aircraft would have been in the absence of such Event of Default.
If Lessor and Lessee have not so agreed within 10 days after notice by Lessor
or the Owner Participant of the occurrence of such Event of Default, the
question
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shall be determined by an appraisal in accordance with the procedures described
in Section 19(c).
(d) Termination as to Engines. So long as no Event of
Default shall have occurred and be continuing, Lessee shall have the right at
its option at any time during the Term, on at least thirty (30) days' prior
written notice, to terminate this Lease with respect to any Engine. In such
event, and prior to the date of such termination, Lessee shall replace such
Engine hereunder by complying with the terms of Section 10(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine, and
Lessor shall transfer such right, title and interest as it may have to the
replaced Engine as provided in Section 5(b). No termination of this Lease with
respect to any Engine as contemplated by this Section 9(d) shall result in any
reduction of Interim Rent or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a)
Event of Loss with Respect to the Aircraft. Upon the occurrence of an Event of
Loss with respect to the Airframe or the Airframe and the Engines and/or
engines then installed thereon, Lessee shall forthwith (and in any event,
within fifteen (15) days after such occurrence) give Lessor written notice of
such Event of Loss, and within forty-five (45) days after such Event of Loss
Lessee shall give Lessor written notice of its election to perform one of the
following options (it being agreed that if Lessee shall not have given such
notice of election within such period, Lessee shall be deemed to have elected
the option set forth in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause
(i), in which event not later than the earlier of (x) the
Business Day next succeeding the 120th day following the
occurrence of such Event of Loss or (y) the third Business Day
following the receipt of insurance proceeds in respect of such
occurrence (but not earlier than thirty (30) days after such
occurrence) (the "LOSS PAYMENT DATE") Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in
Section 3(f) hereof, an amount equal to the Stipulated Loss
Value of the Aircraft corresponding to the Stipulated Loss
Value Date occurring on or immediately following the Loss
Payment Date; provided, however, that if the Commencement Date
or a Lease Period Date shall occur prior to the Loss Payment
Date with respect to which Stipulated Loss Value is
determined, Lessee shall pay on such Lease Period Date an
amount equal to the Interim Rent or Basic Rent that would have
been due on the Commencement Date or such Lease Period Date as
if such Event of Loss had not occurred, or
(ii) so long as no Default of the type referred to
in Section 14(a) or 14(e) or Event of Default shall have
occurred and be continuing, substitute an aircraft or an
airframe or an airframe and one or more engines, as the case
may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee
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shall pay or cause to be paid to Lessor on the Business Day next succeeding the
120th day following the occurrence of such Event of Loss the amount specified
in clause (i) above.
At such time as Lessor shall have received the amounts
specified in subparagraph (i) above, together with all other amounts that then
may be due hereunder (including, without limitation, all Basic Rent due before
the date of such payment, and, if Basic Rent is payable in arrears on the date
of such payment as indicated on Exhibit B hereto, Basic Rent due on such
payment date, and all Supplemental Rent), under the Participation Agreement and
under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent,
Stipulated Loss Value, Termination Value or any other amount due hereunder
shall cease to accrue, and Lessee shall have no further obligation in any such
respect, provided, that the obligations of Lessee under the other Operative
Documents which, by their express terms, are stated to survive shall not be
terminated, (2) this Lease shall terminate, (3) Lessor will comply with the
terms of the Trust Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest
in and to the Airframe and any Engines subject to such Event of Loss, as well
as any Engines not subject to such Event of Loss, and furnish to or at the
direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, and (4)
Lessee will be subrogated to all claims of Lessor, if any, against third
parties, for damage to or loss of the Airframe and any Engines which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft. Notwithstanding anything to the contrary contained in the foregoing,
in the event that any payment of Stipulated Loss Value is to be made pursuant
to this Section 10(a) on a date that is subsequent to the scheduled expiration
of the Term, then Lessee shall, in addition to any other amounts payable
pursuant to this Section 10(a), pay on the relevant Loss Payment Date such
additional amount as is necessary to preserve the Owner Participant's Net
Economic Return. Any calculation of any such additional amount shall be made
by the Owner Participant and shall be subject to the verification procedures
set forth in Exhibit E hereto.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause
to be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or
an airframe or an airframe and one or more engines which, together with the
Engines constituting a part of the Aircraft but not installed thereon at the
time of such Event of Loss constitute the Aircraft) free and clear of all Liens
(other than Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Aircraft subject to such Event of Loss (Lessee shall
in connection therewith provide the certificate or the appraisal described in
Section 5.06(4) of the Trust Indenture) assuming that the Aircraft had been
maintained in accordance with this Lease; provided that any aircraft, airframe
or engine so substituted hereunder shall be of the same or improved model as
those initially leased hereunder and any airframe so substituted hereunder
shall have a year of manufacture after December 31, 1994 and (B) prior to or at
the time of any such substitution, Lessee (or any Sublessee), at its own
expense, will (1) furnish Lessor with a full warranty bill of sale and a
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Federal Aviation Administration bill of sale, in form and substance reasonably
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an
opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not,
other counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the substitute aircraft, provided that such
opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, (7)(x) furnish Lessor with an opinion of tax counsel
chosen by the Owner Participant and reasonably acceptable to Lessee to the
effect that such substitution will not result in any adverse tax consequences
to the Owner Participant or (y) indemnify the Owner Participant as to such tax
consequences in a manner reasonably satisfactory in form and substance, which
may include consideration of the creditworthiness of Lessee, to the Owner
Participant; provided, however, that if (a) Lessee (or, so long as the
Guarantee remains in full force and effect, the Guarantor) has outstanding
publicly issued or privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB+/Baa1" or better from either
S&P or Moody's so long as the rating by the other agency is not less than "BBB"
or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant
with cash collateral or a letter of credit reasonably satisfactory in form and
substance to Lessor, the amount of which is sufficient (as determined by the
Owner Participant in its reasonable judgment) to cover any anticipated adverse
tax consequences for which the Owner Participant has been indemnified by Lessee
under the Operative Documents in addition to any additional adverse tax
consequences resulting from such substitution or (c) the anticipated
indemnified amount (as determined by the Owner Participant in its reasonable
judgment) is less than $50,000, then, in determining whether the indemnity to
be provided by Lessee is satisfactory in form and substance to the
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<PAGE> 42
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee, and (8) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe
or the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60)
days after the occurrence of such Event of Loss, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to which such Event of
Loss occurred, title to another Pratt & Whitney Model PW2037 engine (or engine
of the same or another manufacturer of the same, an equivalent or an improved
model and suitable for installation and use on the Airframe without impairing
the value, utility or remaining useful life of the Aircraft, and Lessee shall
in connection therewith provide the certificate or appraisal described in
Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both Engines shall
be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine,
(ii) cause a Lease Supplement and Trust Supplement to be duly executed by
Lessee and to be filed for recording pursuant to the Federal Aviation Act, or
the applicable laws, rules and regulations of any other jurisdiction in which
the Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (B) all claims, if any,
against third parties, for damage to or loss of the Engine subject to such
Event of Loss, and such Engine shall thereupon cease to be the Engine leased
hereunder. For all purposes hereof, each such replacement engine shall, after
such conveyance, be deemed part of the property leased hereunder, and shall be
deemed an
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<PAGE> 43
"ENGINE". No Event of Loss with respect to an Engine under the circumstances
contemplated by the terms of this paragraph (b) shall result in any reduction
in Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with
respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to
the Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement
of Lessor (as provided in Section 7.01 of the Trust
Agreement) and the Owner Participant for reasonable costs and
expenses, so much of such payments remaining as shall not
exceed the Stipulated Loss Value required to be paid by
Lessee pursuant to Section 10(a), shall be applied in
reduction of Lessee's obligation to pay Stipulated Loss
Value, if not already paid by Lessee, or, if already paid by
Lessee, shall be applied to reimburse Lessee for its payment
of Stipulated Loss Value, and following the foregoing
application, the balance, if any, of such payments will be
paid to Lessor and Lessee, as their interests may appear;
provided that Lessee shall have fully performed or,
concurrently therewith, will fully perform the terms of the
last paragraph of Section 10(a) with respect to the Event of
Loss for which such payments are made; and
(ii) if such payments are received with respect
to an Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after reimbursement
of Lessor (as provided for in Section 7.01 of the Trust
Agreement) and the Owner Participant for reasonable costs and
expenses shall be paid over to, or retained by, Lessee,
provided that Lessee shall have fully performed, or
concurrently therewith will perform, the terms of Section
10(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of the Aircraft which is a
Specified Country. In the event of the requisition for use of the Airframe and
the Engines or engines installed on the Airframe during the Term by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any instrumentality or agency of any thereof whose
obligations are backed by the full faith and credit of such government, Lessee
shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government, instrumentality or agency, as the case may be, prior to the
end of the Term, Lessee shall be obligated to return the Airframe and such
Engines or engines to Lessor
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<PAGE> 44
pursuant to, and in all other respects in compliance with the provisions of,
Section 5 promptly on the date of such return by such government,
instrumentality or agency. If, in the event of any such requisition, Lessee
shall fail to return the Aircraft on or before the thirtieth day beyond the end
of the Term, such failure shall constitute an Event of Loss which shall be
deemed to have occurred on the last day of the Term and in such event Lessee
shall make the payment contemplated by Section 10(a)(i) in respect of such
Event of Loss; provided, however, that Lessor may notify Lessee in writing on
or before the twentieth day prior to the last day of the Term that, in the
event Lessee shall fail by reason of such requisition to return the Airframe
and such Engines or engines on or before the thirtieth day beyond the end of
the Term, such failure shall not be deemed an Event of Loss. Upon the giving
of such notice and such failure to return by the thirtieth day beyond the end
of the Term, Lessee shall be relieved of all of its obligations pursuant to the
provisions of Section 5 (including Exhibit F) but not under any other Section,
except that if any engine not owned by Lessor shall then be installed on the
Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be furnished,
to Lessor a full warranty (as to title) bill of sale with respect to each such
engine, in form and substance reasonably satisfactory to Lessor (together with
an opinion of counsel to the effect that such full warranty bill of sale has
been duly authorized and delivered and is enforceable in accordance with its
terms and that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), against receipt from Lessor of a
bill of sale evidencing the transfer, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), by Lessor
to Lessee or its designee of all of Lessor's right, title and interest in and
to any Engine constituting part of the Aircraft but not then installed on the
Airframe. All payments received by Lessor or Lessee from such government for
the use of such Airframe and Engines or engines during the Term shall be paid
over to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and
all payments received by Lessor or Lessee from such government for the use of
such Airframe and Engines or engines after the end of the Term shall be paid
over to, or retained by, Lessor unless Lessee shall have exercised its purchase
option hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft which is a Specified
Country. In the event of the requisition for use of an Engine by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any agency or instrumentality of any thereof whose
obligations are backed by the full faith and credit of such government (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with
the terms of Section 10(b) to the same extent as if an Event of Loss had
occurred with respect thereto, and, upon compliance with Section 10(b) hereof,
any payments received by Lessor or Lessee from such government with respect to
such requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any
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<PAGE> 45
Sublessee) shall not be paid to or retained by Lessee (or such Sublessee) if at
the time of such payment or retention, an Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or such Sublessee) under this Lease and, if Lessor
declares this Lease to be in default pursuant to Section 15 hereof, applied
against Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Default, such amount shall
be paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and
Property Damage Insurance. (I) Except as provided in clause (II) of this
Section 11(a), Lessee will carry or cause to be carried at its or any
Sublessee's expense (i) aircraft public liability (including, without
limitation, passenger legal liability) (and including aircraft war risk and
hijacking insurance, if and to the extent the same is maintained by Lessee (or
any Sublessee) with respect to other aircraft owned or leased, and operated by
Lessee (or such Sublessee) on the same routes) insurance and property damage
insurance (exclusive of manufacturer's product liability insurance) with
respect to the Aircraft, in an amount not less than the greater of (x) the
amount of public liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee of the same type as the
Aircraft and (y) such amount per occurrence as may have been agreed to on the
Delivery Date by the Owner Participant and (ii) cargo liability insurance, in
the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft operated by Lessee of
the same type as the Aircraft and (B) which is maintained in effect with
insurers of recognized responsibility. Any policies of insurance carried in
accordance with this paragraph (a) and any policies taken out in substitution
or replacement for any of such policies (A) shall be amended to name Lessor, in
its individual capacity and as owner trustee, the Indenture Trustee and the
Owner Participant (but without imposing on any such parties liability to pay
the premiums for such insurance) (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds
as their respective interests may appear, (B) shall provide that in respect of
the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) in such policies the insurance shall not be
invalidated by any action or inaction of Lessee (or, if any Sublease is then in
effect, any Sublessee) or any other Person and shall insure Lessor, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) regardless of
any breach or violation of any warranty, declaration or condition contained in
such policies by Lessee (or, if any Sublease is then in effect, any Sublessee),
(C) may provide for self-insurance to the extent permitted by Section 11(d) and
(D) shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of Lessor, the Indenture Trustee or the Owner Participant
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), or such insurance shall lapse for non-payment of premium,
such cancellation, lapse or change shall not be effective as to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty (30)
days (seven (7) days in the case of war risk and allied perils coverage) after
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<PAGE> 46
issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (2) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, and (3) shall
waive any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
Lessor or the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) to
the extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft.
(I) Except as provided in clause (II) of this Section 11(b), Lessee shall
maintain or cause to be maintained in effect, at its or any Sublessee's
expense, with insurers of recognized responsibility, all-risk ground and flight
aircraft hull insurance covering the Aircraft and all-risk ground and flight
coverage of Engines and Parts while temporarily removed from the Aircraft and
not replaced by similar components (including, without limitation, war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance, if and to the extent the
same is maintained by Lessee (or, if a Sublease is then in effect, any
Sublessee) with respect to other aircraft owned or operated by Lessee (or such
Sublessee) on the same routes, except that Lessee (or such Sublessee) shall
maintain war risk and governmental confiscation and expropriation (other than
by the government of registry of the Aircraft) and hijacking insurance if the
Aircraft is operated on routes where the custom is for major international air
carriers flying comparable routes to carry such insurance) which is of the type
as from time to time applicable to aircraft owned by Lessee of the same type as
the Aircraft; provided that such insurance shall at all times while the
Aircraft is subject to this Lease be for an amount (subject to self-insurance
to the extent permitted by Section 11(d)) not less than the Stipulated Loss
Value for the Aircraft. Any policies carried in accordance with this paragraph
(b) covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Lessor, as owner trustee, the
Indenture
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<PAGE> 47
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds,
as their respective interests may appear (but without imposing on any such
party liability to pay premiums with respect to such insurance), (ii) may
provide for self-insurance to the extent permitted in Section 11(d), (iii)
shall provide that (A) in the event of a loss involving proceeds in excess of
$3,500,000 (or, if the Aircraft is then under a Sublease, in excess of
$2,000,000), the proceeds in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so long
as the Trust Indenture shall not have been discharged, the Indenture Trustee)
(except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be
held for the account of Lessor (or, so long as the Trust Indenture shall not
have been discharged, the Indenture Trustee) whether such payment is made to
Lessee (or any Sublessee) or any third party), it being understood and agreed
that in the case of any payment to Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, Lessor (or the Indenture Trustee) shall,
upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,500,000 (or, if the Aircraft is then under a Sublease, of $2,000,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless an Event of
Default or a Default of the type referred to in Section 14(a) or 14(e) shall
have occurred and be continuing and the insurers have been notified thereof by
Lessor or the Indenture Trustee, (iv) shall provide that if the insurers cancel
such insurance for any reason whatever, or such insurance lapses for
non-payment of premium or if any material change is made in the insurance which
adversely affects the interest of Lessor, the Indenture Trustee or the Owner
Participant, such cancellation, lapse or change shall not be effective as to
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) for
thirty (30) days (seven (7) days in the case of hull war risk and allied perils
coverage) after issuance to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), respectively, of written notice by such insurers
of such cancellation, lapse or change, provided, however, that if any notice
period specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be reasonably
obtainable, (v) shall provide that in respect of the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) in
such policies the insurance shall not be invalidated by any action or inaction
of Lessee (or, if a Sublease is then in effect, any Sublessee) or any other
Person and shall insure the respective interests of Lessor, the Indenture
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if a Sublease is then in effect, any
Sublessee), (vi) shall be primary without any right of contribution from any
other insurance which is carried by Lessor, the Owner Participant or the
Indenture Trustee (or, if
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<PAGE> 48
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease),
and (viii) shall waive any right of the insurers to set-off or counterclaim or
any other deduction, whether by attachment or otherwise, in respect of any
liability of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or
any Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee
or the Owner Participant. In the case of a loss with respect to an engine
(other than an Engine) installed on the Airframe, Lessor shall hold any payment
to it of any insurance proceeds in respect of such loss for the account of
Lessee or any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to
the Airframe (or the Airframe and the Engines installed
thereon), (i) unless such property is replaced pursuant to the
last paragraph of Section 10(a), so much of such payments
remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) and the Owner Participant
for reasonable costs and expenses, as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a) hereof shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if not
already paid by Lessee, or, if already paid by Lessee, shall
be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such
payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee);
or (ii) if such property is replaced pursuant to the last
paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), provided that Lessee shall have fully performed
or, concurrently therewith, will fully perform the terms of
the last paragraph of Section 10(a) with respect to the Event
of Loss for which such payments are made; and
(y) if such payments are received with respect to
an Engine under the circumstances contemplated by Section
10(b) hereof, so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) and the Owner Participant for reasonable
costs and expenses, shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided
that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any
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<PAGE> 49
balance (or if already paid for by Lessee (or any Sublessee), all such
insurance proceeds) remaining after compliance with such Sections with respect
to such loss shall be paid to Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft
owned by Lessee of the same type similarly on the ground and not in operation,
provided that Lessee shall maintain insurance against risk of loss or damage to
the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft
during such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants
or the Owner Participant to anyone except (A) to permitted transferees of
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's interest who agree to hold such information confidential, (B) to
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's counsel or independent certified public accountants or independent
insurance advisors who agree to hold such information confidential or (C) as
may be required by any statute, court or administrative order or decree or
governmental ruling or regulation. Lessee will cause such Insurance Brokers to
agree to advise Lessor, the Indenture Trustee and the Owner Participant in
writing of any default in the payment of any premium and of any other act or
omission on the part of Lessee of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate of insurance, substantially in the same form as delivered by Lessee
to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or
the Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or
the Indenture Trustee, as the case may be, without waiver of
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<PAGE> 50
any other rights Lessor or the Indenture Trustee may have; provided, however,
that no exercise by Lessor or the Indenture Trustee, as the case may be, of
said option shall affect the provisions of this Lease, including the provisions
of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to
this Section 11 under a program applicable to all aircraft in Lessee's fleet,
but in no case shall the aggregate amount of self-insurance in regard to
Section 11(a) and Section 11(b) exceed during any policy year, with respect to
all of the aircraft in Lessee's fleet (including, without limitation, the
Aircraft), the lesser of (a) 50% of the largest replacement value of any single
aircraft in Lessee's fleet or (b) 1-1/2% of the average aggregate insurable
value (during the preceding policy year) of all aircraft (including, without
limitation, the Aircraft) on which Lessee carries insurance. In addition,
Lessee (and any Sublessee) may self-insure to the extent of any applicable
mandatory minimum per aircraft (or, if applicable, per annum or other period)
hull or liability insurance deductible imposed by the aircraft hull or
liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee
(and any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance with respect
to its interest in the Aircraft, provided that such insurance does not prevent
Lessee (or any Sublessee) from carrying the insurance required or permitted by
this Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written
consent of Lessor, other government of registry of the Aircraft or any agency
or instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) Application of Payments During Existence of an Event
of Default. Any amount referred to in paragraph (b) of this Section 11 which
is payable to or retainable by Lessee (or any Sublessee) shall not be paid to
or retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default or a Default of the type referred to in Section
14(a) or 14(e) shall have occurred and be continuing, but shall be held by or
paid over to Lessor as security for the obligations of Lessee (or any
Sublessee) under this Lease and, if Lessor declares this Lease to be in default
pursuant to Section 15 hereof, applied against Lessee's obligations hereunder
as and when due. At such time as there shall not be continuing
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any such Event of Default or Default, such amount shall be paid to Lessee (or
such Sublessee) to the extent not previously applied in accordance with the
preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, and
upon at least 15 days' prior written notice to Lessee, Lessor, the Owner
Participant or the Indenture Trustee or their respective authorized
representatives may (not more than once every calendar year (unless an Event of
Default has occurred and is continuing when such inspection right shall not be
so limited)) inspect the Aircraft and inspect and make copies (at Lessor's, the
Owner Participant's or the Indenture Trustee's expense, as the case may be
unless an Event of Default shall have occurred and be continuing) of the books
and records of Lessee relating to the maintenance of the Aircraft; any such
inspection of the Aircraft shall be limited to a visual, walk-around inspection
and shall not include opening any panels, bays or the like without the express
consent of Lessee; provided that no exercise of such inspection right shall
interfere with the operation or maintenance of the Aircraft by, or the business
of, Lessee (or any Sublessee). Upon receipt by Lessee of a written request
from the Owner Participant specifying that the Owner Participant desires to
have an authorized representative observe the next scheduled major overhaul to
be performed on the Aircraft, Lessee shall cooperate with the Owner Participant
to enable the Owner Participant's authorized representative to observe the next
scheduled major overhaul to be performed on the Aircraft; provided that Lessee
shall be required to so cooperate only to the extent necessary to enable the
Owner Participant's authorized representative to observe one scheduled major
overhaul during each three-year period of the Term; provided that the Owner
Participant's authorized representative shall merely observe such major
overhaul, shall not interfere with or extend in any manner the conduct or
duration of the major overhaul and shall not be entitled to direct any of the
work performed in connection with such overhaul. None of Lessor, the Owner
Participant or the Indenture Trustee shall have any duty to make any such
inspection nor shall any of them incur any liability or obligation by reason of
not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided
herein, Lessee will not, without prior written consent of Lessor, assign in
whole or in part any of its rights or obligations hereunder. Lessor agrees
that it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as provided herein, in the Trust Agreement or in
the Participation Agreement. Subject to the foregoing, the terms and
provisions of this Lease shall be binding upon and inure to the benefit of
Lessor and Lessee and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following
events shall constitute an Event of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
each such Event of Default shall continue so long as, but only as long as, it
shall not have been remedied:
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(a) Lessee shall not have made a payment of
Interim Rent, Basic Rent or Stipulated Loss Value within ten
(10) days after the same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for
ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax
Indemnity Agreement or any failure of Lessee to pay to Lessor
or the Owner Participant when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(c) Lessee shall have failed to perform or
observe (or caused to be performed and observed) in any
material respect any covenant or agreement (except the
covenants set forth in the Tax Indemnity Agreement and in
clauses (i)(B) and (ii) of the first sentence of second
paragraph of Exhibit F) to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of thirty (30) days after receipt by
Lessee of written notice thereof from Lessor or the Indenture
Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause
(ii) or clause (iii) of the first sentence of Section 7(a), or
under the second sentence of Section 7(a) as it relates to
maintenance, service, repair or overhaul or under Section 8
and, notwithstanding the diligence of Lessee in attempting to
cure such failure, such failure is not cured within said
thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so
long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such
written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose and except the representations and warranties
in, or in connection with, the Credit Agreement) shall prove
to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the
interests of the Owner Participant, Lessor or the Certificate
Holders) within thirty (30) days after the receipt by Lessee
of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
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<PAGE> 53
(e) the commencement of an involuntary case or
other proceeding in respect of Lessee in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its
property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of ninety
(90) consecutive days or an order, judgment or decree shall be
entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Lessee, a
receiver, trustee or liquidator of Lessee, or of any
substantial part of its property, or sequestering any
substantial part of the property of Lessee and any such order,
judgment or decree or appointment or sequestration shall be
final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of
entry thereof; or
(f) the commencement by Lessee of a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as
Lessee is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event
of Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one
or more of the following with respect to all or any part of the Airframe and
any or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then in effect; provided, however, that during any period
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 7(b) hereof and in possession of the United
States government or an agency or instrumentality of the United States, Lessor
shall
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<PAGE> 54
not, on account of any Event of Default, be entitled to do any of the following
in such manner as to limit Lessee's control under this Lease (or any
Sublessee's control under any Sublease) of any Airframe or any Engines
installed thereon, unless at least sixty (60) days' (or such lesser period, if
any, as may then be applicable under the Air Mobility Command program of the
United States Government) written notice of default hereunder shall have been
given by Lessor by registered or certified mail to Lessee (and any Sublessee)
with a copy addressed to the Contracting Office Representative for the Air
Mobility Command of the United States Air Force under any contract with Lessee
(or any Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at
Lessee's expense, cause Lessee to return promptly, and Lessee
shall return promptly, the Airframe or any Engine as Lessor
may so demand to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of
the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or
otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all
without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public
or private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Stipulated
Loss Value Date not earlier than ten days from the date of
such notice, may demand that the Lessee pay to Lessor, and
Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Interim Rent or Basic Rent for
the Aircraft due on or after the payment date specified in
such notice), any unpaid Interim Rent or Basic Rent due on the
payment date so specified (unless Basic Rent is payable in
advance on such date but including, without limitation, any
adjustments to Basic Rent payable pursuant to Section 3(d)),
plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from
such specified payment date until the date of actual payment
of such amount): (i) an amount equal to the excess, if any,
of the Stipulated Loss Value for the Aircraft, computed as of
the Stipulated Loss Value Date specified as the payment date
in
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<PAGE> 55
such notice, over the aggregate fair market rental value
(computed as hereafter in this Section 15 provided) of such
Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the
Stipulated Loss Value Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 3%;
or (ii) an amount equal to the excess, if any, of the
Stipulated Loss Value for such Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
such notice over the fair market sales value of such Aircraft
(computed as hereafter in this Section provided) as of the
Stipulated Loss Value Date specified as the payment date in
such notice;
(d) in the event Lessor, pursuant to paragraph
(b) above, shall have sold the Airframe and/or any Engine,
Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the
installments of Interim Rent or Basic Rent for the Aircraft
due on or after such date), any unpaid Interim Rent or Basic
Rent with respect to the Aircraft due prior to such date
(including, without limitation, any adjustments to Basic Rent
payable pursuant to Section 3(d)) plus the amount of any
deficiency between the net proceeds of such sale (after
deduction of all reasonable costs of sale) and the Stipulated
Loss Value of such Aircraft, computed as of the Stipulated
Loss Value Date on or immediately following the date of such
sale together with interest, if any, on the amount of such
deficiency, at the Past Due Rate, from the date of such sale
to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to
the Aircraft, and/or may exercise any other right or remedy
which may be available to it under applicable law or proceed
by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser,
as the case may be, under no compulsion to lease or purchase, as the case may
be, and an informed and willing lessor or seller in possession under no
compulsion to sell, as the case may be, in each case based upon the actual
condition and location of the Aircraft and an all cash, contemporaneous sale,
which value shall be determined by mutual agreement or, in the absence of
mutual written agreement, pursuant to an appraisal prepared and delivered by a
nationally recognized firm of independent aircraft appraisers nominated by
Lessor, and Lessor shall immediately notify Lessee of such nomination. Unless
Lessee shall have objected in writing within ten days after its receipt of
Lessor's notice, Lessor's nomination shall be conclusive and binding. If
Lessee shall object, however, Lessor and Lessee shall endeavor, within ten days
after such objection is made, to
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<PAGE> 56
select a mutually acceptable appraiser; provided that, if Lessee shall not so
endeavor to make such selection, Lessor's nomination referred to in the
preceding sentence hereof shall be conclusive and binding. If Lessor and
Lessee fail to reach agreement (except for the reason referred to in the
proviso in the preceding sentence), or if any appraiser selected fails to act
for any reason, then the question shall be determined by an appraisal (applying
the definitions of "fair market rental value" and "fair market sales value" as
set forth above based upon the actual condition of the Aircraft) mutually
agreed to by two recognized independent aircraft appraisers, one of which
appraisers shall be chosen by Lessor and one by Lessee within five Business
Days after Lessor or Lessee shall have received written notice from the other
party of a demand that such an appraisal be made, which notice shall specify
the appraiser chosen by the party giving the notice or, if such appraisers
cannot agree on the amount of such appraisal within twenty Business Days after
the end of such five-day period, each shall render its own appraisal and shall
by mutual consent choose another appraiser within five Business Days after the
end of such twenty-day period. If, within such five-day period, such two
appraisers fail to appoint a third appraiser, then either Lessor or Lessee, on
behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall
be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. The cost of
such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any
and all unpaid Rent due hereunder before, after or during the exercise of any
of the foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) or Lessee may bid for and purchase such property. Lessor
will endeavor to give Lessee at least fifteen (15) days' prior written notice
of the date fixed for any public sale of the Airframe or any Engine and any
such public sale shall be conducted in general so as to afford Lessee (and any
Sublessee) a commercially reasonable opportunity to bid (it being understood
that Lessor shall
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incur no liability for its failure to provide any such notice). Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all of such other remedies. No waiver by Lessor of any Event
of Default shall in any way be, or be construed to be, a waiver of any future
or subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN
MATTERS. Forthwith upon the execution and delivery of each Lease Supplement
and Trust Supplement from time to time required by the terms hereof and upon
the execution and delivery of any amendment to this Lease, to the Trust
Indenture or to the Trust Agreement, Lessee will cause such Lease Supplement,
Trust Supplement (and, in the case of the initial Lease Supplement and Trust
Supplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. In addition, Lessee will at its expense promptly and duly execute
and deliver to Lessor such further documents and take such further action as
Lessor or the Indenture Trustee may from time to time reasonably request in
order more effectively to carry out the intent and purpose of this Lease and to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor and the Indenture Trustee hereunder, including, without
limitation, if requested by Lessor or the Indenture Trustee, at the expense of
Lessee, the execution and delivery of supplements or amendments hereto or to
the Trust Indenture, each in recordable form, subjecting to this Lease and the
Trust Indenture, any airframe or engine substituted for the Airframe or any
Engine pursuant to the terms thereof and the recording or filing of
counterparts thereof, in accordance with the laws of such jurisdictions as
Lessor or the Indenture Trustee may from time to time deem advisable. Lessee
agrees to furnish to Lessor and the Indenture Trustee promptly after execution
and delivery of any supplement and amendment hereto and promptly after the
execution and delivery of any supplement and amendment to the Trust Indenture
(except for any such supplement or amendment which does not require or receive
the approval of Lessee pursuant to the Operative Documents and is not required
pursuant to the terms of the Operative Documents), an opinion of counsel
reasonably satisfactory to Lessor and the Indenture Trustee as to the due
recording or filing of such supplement or amendment. Commencing in 1997, on or
before April 30 of each year during the Term, Lessee will deliver to Lessor and
the Indenture Trustee a certificate of Lessee, signed by the President, a Vice
President or the Chief Financial Officer of Lessee to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and
the signer does not have actual knowledge of the existence, as of the date of
such certificate, of any condition or event which constitutes a Default or an
Event of Default. Lessee agrees that if the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer
of Lessee has actual knowledge of the existence of a Default, then Lessee shall
promptly give to Lessor, the Owner Participant and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor, the Owner
Participant or the Indenture Trustee may reasonably request. Lessee agrees
that if an officer of Lessee has knowledge of the existence of an Event of
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Default, Lessee shall promptly give to Lessor and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor or the Indenture
Trustee may reasonably request. Lessee will deliver to Lessor, the Owner
Participant and the Indenture Trustee (i) within sixty (60) days after the end
of each of the first three quarterly periods of each fiscal year of the
Guarantor, the publicly filed Form 10-Q report of the Guarantor; and (ii)
within one hundred twenty (120) days after the close of such fiscal year, the
publicly filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the
terms and provisions hereof shall be by telecopy or other telecommunication
means (with such telecopy or other telecommunication means to be confirmed in
writing), or if such notice is impracticable, by registered, first-class
airmail, with postage prepaid, or by personal delivery of written notice and
any such notice shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice President-Finance and
Treasurer (Telecopy No. (612) 726-0665), or to such other
address or telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address or
telecopy number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at
such address or telecopy number as such Loan Participant, the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at its address
or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease
is a net lease. All Rent shall be paid by Lessee to Lessor in funds of the
type specified in Section 3(f). Except as provided in Section 3(g) hereof,
Lessee's obligation to pay all Rent payable hereunder shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which Lessee may have against Lessor, in its individual capacity or as Owner
Trustee under the Trust Agreement, the Indenture Trustee (in its individual
capacity or as Indenture Trustee), any Loan Participant, the Owner Participant,
or anyone else for any reason whatsoever (whether in connection with the
transactions contemplated hereby or any other transactions), including, without
limitation, any breach by Lessor or the Owner Participant of their respective
warranties, agreements or covenants contained in any of the Operative
Documents,
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<PAGE> 59
(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in or prohibition of the use or
possession thereof by Lessee (or any Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation or prohibition
resulting from the act of any government authority, (iii) any insolvency,
bankruptcy, reorganization or similar case or proceedings by or against Lessee
(or any Sublessee) or any other person, or (iv) any other circumstance,
happening, or event whatsoever, whether or not unforeseen or similar to any of
the foregoing. 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 without limitation of the other
rights or remedies of Lessor hereunder, subject to the rights of Lessee to
setoff under Section 3(g) hereof, to pay to Lessor an amount equal to each Rent
payment at the time such payment would have become due and payable in
accordance with the terms hereof had this Lease not been terminated in whole or
in part. Lessee hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS;
VALUATION. (a) Renewal Options. (1) Fixed Renewal Term. Lessee shall have
the right, upon compliance with the notice provisions set forth in Section
19(e) hereof, to renew this Lease for up to three consecutive one year renewal
terms the first of which shall commence only upon the expiration of the Basic
Term (any such renewal term, a "FIXED RENEWAL TERM"). Basic Rent during any
Fixed Renewal Term shall be payable in an amount and at the times specified in
Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the
third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the
option, upon compliance with the notice provisions set forth in Section 19(e)
hereof, to renew this Lease for a renewal term of not less than one year and
not more than three years for a Basic Rent equal to the "fair market rental
value" of the Aircraft for such period (any such renewal term, a "FAIR MARKET
RENEWAL TERM"). The aggregate length of all Fair Market Renewal Terms pursuant
to this Section 19(a)(2) may not exceed five years.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(e) on or before the day specified therefor, Lessee shall
be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Default of the type referred
to in Section 14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all
necessary governmental authorizations and approvals shall have been received
and that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease
shall continue in full force
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and effect during the Renewal Term, except that (x) Lessee shall pay Lessor
Basic Rent for the Aircraft during the Renewal Term in an amount equal to the
"fair market rental value" thereof determined in accordance with Section 19(c),
but not to exceed in the case of a Fixed Renewal Term one-half of the average
Basic Rent during the Basic Term (such average being determined as the total of
all payments of Basic Rent during the Basic Term added together and divided by
the number of payments of Basic Rent during the Basic Term), which Basic Rent
shall be payable in semi-annual installments in arrears unless any portion of
Basic Rent during the Basic Term was payable in advance, in which case the same
proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic
Term divided into the total Basic Rent payable in advance during the Basic
Term) shall be payable in advance during such Renewal Term, each such
installment being due and payable on each Lease Period Date occurring during
the Renewal Term, commencing with the Lease Period Date immediately following
the commencement of the Renewal Term, and (y) the Stipulated Loss Values
applicable during the Renewal Term shall be determined separately for each
Renewal Term by the Owner Participant in good faith to reflect Stipulated Loss
Values determined in accordance with the following sentence. Stipulated Loss
Values during a Renewal Term shall on the date on which such Renewal Term
begins be equal to the fair market sales value of the Aircraft as of such date,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof, and shall decline ratably on a monthly basis to the fair
market sales value of the Aircraft as of the last day of such Renewal Term,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the fair market sales value of the Aircraft;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the purchase price by Lessee will not constitute a
preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled
to purchase the Aircraft if there shall exist on such last Business Day of the
Basic Term or any Renewal Term, as the case may be, a Default of the type
referred to in Section 14(e) hereof. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft.
(c) Valuation. For all purposes of this Section 19,
including the appraisal referred to in this Section 19(c), in determining "fair
market rental value" or "fair market sales value", the Aircraft shall be valued
(i) as if in the condition and otherwise in compliance with
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<PAGE> 61
the terms of Section 5 upon a return of the Aircraft to the United States and
as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the
basis of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding this Lease, including the purchase and renewal options
of Lessee provided in this Lease, and (iii) in the case of such valuation for
determining "fair market rental value", assuming such lessee would have
substantially the same obligations during the Fair Market Renewal Term as
provided hereunder including without limitation the obligations of Lessee to
carry and maintain the insurance required by Section 11 hereof and to make
certain payments with reference to Stipulated Loss Value during the applicable
Fair Market Renewal Term. Upon receipt of a notice from Lessee pursuant to
Section 19(e) hereof, Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred
seventy (270) days prior to the end of the Basic Term or the Renewal Term in
question, then the question shall be determined by an appraisal mutually agreed
to by two recognized independent aircraft appraisers, one of which appraisers
shall be chosen by Lessor and one by Lessee within five Business Days after
Lessor or Lessee shall have received written notice from the other party of a
demand that such an appraisal be made, which notice shall specify the appraiser
chosen by the party giving the notice or, if such appraisers cannot agree on
the amount of such appraisal within twenty Business Days after the end of such
five-day period, each shall render its own appraisal and shall by mutual
consent choose another appraiser within five Business Days after the end of
such twenty-day period. If, within such five-day period, such two appraisers
fail to appoint a third appraiser, then either Lessor or Lessee, on behalf of
both, may request such appointment by the then President of the Association of
the Bar of the City of New York (or any successor organization thereto) or, in
his absence, failure, refusal or inability to act, then either Lessor or Lessee
may apply to the American Arbitration Association (or any successor
organization thereto) in New York, New York for the appointment of such third
appraiser. The decision of the third appraiser so appointed shall be given
within twenty Business Days after the appointment of such third appraiser. As
soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. Lessee and
Lessor shall share equally all expenses relating to such appraisal procedure
provided if Lessee elects not to renew this Lease or purchase the Aircraft
following such appraisal, Lessee shall pay all expenses of such appraisal.
(d) Special Purchase Option. On July 2 , 2012 (or, if
July 2, 2012 is not a Business Day, the Business Day immediately succeeding
July 2, 2012), Lessee shall have the
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<PAGE> 62
option, upon at least ninety (90) days' irrevocable prior notice to Lessor and,
if any Secured Certificates are then outstanding, the Indenture Trustee, to
purchase the Aircraft on such date for a purchase price equal to the Special
Purchase Price; provided that, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to
the effect that the payment of the Special Purchase Price by Lessee will not
constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not
be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or,
if July 2, 2012 is not a Business Day, on the Business Day immediately
succeeding July 2, 2012) a Default of the type referred to in Section 14(e)
hereof. In addition, if on such date there shall be any Secured Certificates
outstanding, Lessee shall have the option to assume, pursuant to Section 8(x)
of the Participation Agreement and Section 2.15 of the Trust Indenture, all of
the obligations of Lessor under the Trust Indenture. If such assumption is
made, Lessee shall pay Lessor a purchase price equal to (I) the Special
Purchase Price minus (II) an amount equal to principal of, and accrued but
unpaid interest on, any Secured Certificates that are outstanding on such date.
Upon such payment in full and payment of any other amounts then due hereunder
(including costs or expenses of the Owner Participant in connection with such
purchase, any installments of Basic Rent due prior to such date and, if Basic
Rent is payable in arrears on such date as indicated on Exhibit B, on such date
(but not any installment of Basic Rent due on such date if Basic Rent is
payable in advance on such date), and all unpaid Supplemental Rent due on or
prior to such date), Lessor will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest in and to the Aircraft
and under the Trust Indenture and, unless there shall be any Secured
Certificates outstanding after such payment, exercise such rights as it has to
cause the Aircraft to be released from the Lien of the Trust Indenture.
(e) In order to exercise any right pursuant to Sections
19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than
270 days prior to the expiration of the Basic Term or any Renewal Term, as the
case may be, deliver to Lessor a notice in writing stating that it intends to
exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any
such notice shall be revocable until the date that is 270 days prior to the
expiration of the Basic Term or such Renewal Term, as the case may be. Failure
to revoke any such notice prior to such 270th day prior to the end of the Basic
Term or such Renewal Term, as the case may be, shall constitute a binding and
irrevocable election by Lessee to exercise one of the options set forth in
Sections 19(a) or 19(b) hereof. In the event that any such notice has so been
provided to Lessor, Lessee shall, no earlier than the 270th day and no later
than the 90th day prior to the expiration of the Basic Term or such Renewal
Term, as the case may be, specify which of the options in Sections 19(a) or
19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree
and acknowledge that Lessee may not specify which of the options in Sections
19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier
than the expiration of the Basic Term or such Renewal Term, as the case may be.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS
OF SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this
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<PAGE> 63
Lease, the Lease Supplements and any amendments to this Lease and to mortgage
its interest in the Aircraft in favor of the Indenture Trustee, subject to the
reservations and conditions therein set forth. To the extent, if any, that
this Lease, the Lease Supplements and any amendments to this Lease constitute
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, the
Lease Supplements and any amendments to this Lease may be created through the
transfer or possession of any counterpart other than the original counterpart,
which shall be identified as the counterpart containing the receipt therefor
executed by the Indenture Trustee on the signature page thereof. Lessee hereby
accepts and consents to the assignment of all Lessor's right, title and
interest in and to this Lease pursuant to the terms of the Trust Indenture.
Subject to Section 3(f) hereof, Lessee agrees to pay directly to the Indenture
Trustee (or, after receipt by Lessee of notice from the Indenture Trustee of
the discharge of the Trust Indenture, to Lessor), all amounts of Rent due or to
become due hereunder and assigned to the Indenture Trustee and Lessee agrees
that the Indenture Trustee's right to such payments hereunder shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, the circumstances set forth in clauses (i) through (iv) of
Section 18 hereof. Notwithstanding the foregoing assignment of this Lease, the
obligations of Lessor to Lessee to perform the terms and conditions of this
Lease shall remain in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If
Lessee fails to make any payment of Rent required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein, then
(but in each case, except in the case of failure to pay Rent or in the case of
failure to maintain insurance as required hereunder, no earlier than the
fifteenth day after the occurrence of such failure, whether or not it shall yet
constitute an Event of Default hereunder) Lessor may itself make such payment
or perform or comply with such agreement but shall not be obligated hereunder
to do so, and the amount of such payment and the amount of the reasonable
expenses of Lessor incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with
interest thereon at the Past Due Rate, shall be deemed Supplemental Rent,
payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF
LESSOR LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor
as security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of ninety (90) days or less from date of purchase
thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings as of
its last report of condition of at least $500,000,000 and having a rating of Aa
or better by Moody's or AA or better by S&P and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii) commercial
paper
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<PAGE> 64
of any holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America
or any state thereof having a rating assigned to such commercial paper of A1 by
S&P or P1 by Moody's and having a final maturity of ninety (90) days or less
from the date of purchase thereof; provided, however, that the aggregate amount
at any one time so invested in certificates of deposit issued by any one bank
shall not be in excess of 5% of such bank's capital and surplus. There shall
be promptly remitted to Lessee or its order (but no more frequently than
monthly) any gain (including interest received) realized as a result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) unless a Default of the type
referred to in Section 14(a) or 14(e) or an Event of Default shall have
occurred and be continuing. If a Default of the type referred to in Section
14(a) or 14(e) or an Event of Default shall have occurred and be continuing,
Lessor, or if the Trust Indenture shall not have been discharged, the Indenture
Trustee as assignee of Lessor, shall hold any such gain as security for the
obligations of Lessee under this Lease and apply it against such obligations as
and when due, and once all such Defaults and Events of Default have been
remedied, any gain not so applied shall be remitted to Lessee. Lessee shall be
responsible for any net loss realized as a result of any such investment and
shall reimburse Lessor (or the Indenture Trustee, as the case may be) therefor
on demand.
(b) Liability of Lessor Limited. It is expressly agreed
and understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under
the Trust Agreement, and the institution acting as Lessor shall not be liable
in its individual capacity for any breach thereof except for its gross
negligence or willful misconduct or for breach of its covenants,
representations and warranties contained herein, to the extent covenanted or
made in its individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each
hereby irrevocably submits itself to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. This Lease shall constitute an
agreement of lease, and nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee only. Neither Lessee nor any affiliate of Lessee will file any tax
returns in a manner inconsistent with the
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<PAGE> 65
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof and all references herein to numbered sections,
unless otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in
the case of the appointment of any successor Owner Trustee pursuant to the
terms of the Trust Agreement, such successor Owner Trustee shall, upon written
notice by such successor Owner Trustee, succeed to all the rights, powers and
title of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft for all purposes hereof without the necessity of any consent or
approval by Lessee (subject to Section 10 of the Participation Agreement) and
without in any way altering the terms of this Lease or Lessee's obligations
hereunder. One such appointment and designation of a successor Owner Trustee
shall not exhaust the right to appoint and designate further successor Owner
Trustees pursuant to the Trust Agreement, but such right may be exercised
repeatedly as long as this Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no
Event of Default shall have occurred and be continuing and notwithstanding any
default by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations pursuant to the Overall Transaction during the Term of this Lease,
and this Lease shall not be terminated except as expressly provided herein.
SECTION 27. HOLDOVER RENT. In the event that Lessee
shall fail to return the Aircraft in accordance with Section 5 hereof at the
scheduled expiration of the Term, then, unless such failure shall occur as a
result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee
having purchased the Aircraft pursuant to Section 19 hereof and, in the case of
either clauses (x) or (y) above, Lessee shall have made all payments required
to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such
day beyond the scheduled expiration of the Term during which the Aircraft is
not returned to Lessor in accordance with Section 5 hereof, an amount equal to
the higher of (A) the daily fair market rental value of the Aircraft during
such period, computed in accordance with Section 19(c) hereof, and (B) the
average daily Basic Rent payable by Lessee during the Term.
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<PAGE> 66
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY:
-------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:
-------------------------------
Title: Senior Vice President-
Finance and Treasurer
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of __________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:
-------------------------------
Title:
- Signature Page -
<PAGE> 67
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 D]
LEASE SUPPLEMENT NO.
[NW 1996 D]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement [NW 1996 D], dated as of
April 29, 1996, between [ ], as Owner Participant, and such Owner
Trustee (such Owner Trustee, in its capacity as such Owner Trustee, being
herein called "LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1996 D], dated as of April 29, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the Federal Aviation
Administration as one document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as
of the date hereof consists of the following components:
- --------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 68
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037
engines bearing, respectively, manufacturer's serial nos.
P______ and P______ (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such
horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as
otherwise provided in the Lease, the Term for the Aircraft shall commence on
the Delivery Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor
Basic Rent for the Aircraft throughout the Term therefor in accordance with
Section 3 of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has
accepted the Aircraft for all purposes hereof and of the Lease as being
airworthy, in good working order and repair and without defect or inherent vice
in title, condition, design, operation or fitness for use; provided, however,
that nothing contained herein or in the Lease shall in any way diminish or
otherwise affect any right Lessee or Lessor may have with respect to the
Aircraft against The Boeing Company, or any subcontractor or supplier of The
Boeing Company, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the same extent as
if fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee
on the signature page hereof.
EXHIBIT A - PAGE 2
<PAGE> 69
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By
----------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By
----------------------------------
Title:
(3) Receipt of this original counterpart of the foregoing
Lease Supplement is hereby acknowledged on this ____ day
of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
----------------------------------
Title:
- ------------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 70
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 D]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
--------------------- ------------------------
Interim Rent
Commencement (Percentage of
Date Lessor's Cost)
--------------------- ------------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
<PAGE> 71
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
--------------------- ------------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
EXHIBIT B - Page 5 of 5
<PAGE> 72
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - Page 5 of 5
<PAGE> 73
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 D]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
---------------------- ----------------------
<PAGE> 74
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1996 D]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
------------------- -----------------
<PAGE> 75
FASB 13 earnings constraint shall be not less than 94% for calendar year 1997
with respect to the first refinancing pursuant to Section 17 of the
Participation Agreement.
EXHIBIT E - PAGE 2
<PAGE> 76
EXHIBIT F
TO
LEASE AGREEMENT
[NW 1996 D]
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is
intentionally deleted from the FAA filing counterpart as the parties hereto
deem it to contain confidential information.
Unless purchased by Lessee pursuant to Section 19 of the
Lease, at the time of return of the Airframe upon the termination of the Lease
at the end of the Basic Term or any Renewal Term or pursuant to Section 9(c) or
15 of the Lease: (i) in the event that Lessee (or any Sublessee then in
possession of the Aircraft) shall not then be using a continuous maintenance
program with respect to the Airframe, Lessee agrees that during the period of
operation of the Aircraft immediately prior to such return (A) Lessee or such
Sublessee, as the case may be, shall have been using a block overhaul program
with respect to the Airframe which shall have been approved by all necessary
governmental approvals of the country under the laws of which the Aircraft
shall then have been registered and (B) the Airframe shall have remaining until
the next scheduled block overhaul at least 25% of the allowable hours between
block overhauls permitted under the block overhaul program then used by Lessee
or such Sublessee, (ii) in the event that Lessee (or any Sublessee then in
possession of the Aircraft) during the period of operation of the Aircraft
immediately prior to such return shall not have been using an on-condition
maintenance program with respect to the Engines or engines, Lessee agrees that
the average number of hours or cycles of operation (whichever shall be
applicable under the maintenance program then in use with respect to such
Engines or engines) on such Engines or engines remaining until the next
scheduled engine refurbishment shall be at least 25% of the hours or cycles
(whichever shall be applicable) between engine refurbishment allowed under the
maintenance program then in use with respect to such Engines or engines which
shall have been approved by all necessary governmental approvals of the country
under the laws of which the Aircraft shall have then been registered, (iii) the
Aircraft shall have all Lessee's and any Sublessee's exterior markings removed
or painted over and the areas where such markings were removed or painted over
refurbished as necessary to blend with adjacent areas, (iv) the Aircraft shall
have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return, (v) the Aircraft shall be in Lessee's
or such Sublessee's customary passenger configuration, and (vi) in the event
that any changes were made to the Aircraft that reduced the Aircraft's range or
take-off weight from the Aircraft's range and take-off weight in effect at the
Delivery Date, the Aircraft shall be restored to the range and take-off weight
in effect at the Delivery Date unless such changes were required by (x) any
applicable governmental authority not caused by any action or inaction of
Lessee or (y) the applicable manufacturer not caused by any action or inaction
of Lessee. In the event the FAA shall issue any directive which would require
improvements to the Aircraft in order for
<PAGE> 77
the airworthiness certificate of the Aircraft to be maintained in good
standing, Lessee shall not apply for an extension of the date of compliance
with the directive as to the Aircraft to a date after the date of return of the
Aircraft pursuant to Section 5 of the Lease, unless it shall previously or
concurrently have applied for such an extension with respect to all Boeing
757-200 aircraft in its fleet affected by such directive.
If clause (i)(B) of the first sentence of the preceding
paragraph shall be applicable but the Airframe does not meet the conditions
specified in said clause (i)(B), Lessee shall pay or cause to be paid to Lessor
a Dollar amount computed by multiplying (I) the fair market cost to a financial
lessor of obtaining at such time an airframe block overhaul of the type
referred to in said clause (i) at a location in the United States that has been
approved by the FAA for such work by (II) a fraction of which (x) the numerator
shall be the excess of 25% of hours of operation allowable between such block
overhauls over the actual number of hours of operation remaining on the
Airframe to the next such block overhaul and (y) the denominator shall be the
number of hours of operation allowable between such block overhauls in
accordance with such block overhaul program.
If clause (ii) of the first sentence of the second preceding
paragraph shall be applicable but the Engines or engines do not meet the
conditions specified in said clause (ii), Lessee shall pay or cause to be paid
to Lessor a Dollar amount computed by multiplying (aa) two by (bb) the fair
market cost to a financial lessor of obtaining at such time the scheduled
engine heavy maintenance under the maintenance program then used by Lessee for
an engine of the same model as the Engines at a location in the United States
that has been approved by the FAA for such work by (cc) a fraction of which (x)
the numerator shall be the excess of 25% of the hours or cycles of operation
(whichever is applicable) between engine refurbishment allowable for an engine
under the maintenance program then in use with respect to such Engines or
engines over the actual average number of hours or cycles of operation on such
Engines or engines remaining until the next such scheduled engine refurbishment
and (y) the denominator shall be the number of hours or cycles allowable
between such scheduled engine refurbishment.
In addition, the following conditions shall be complied with
at the time of the return of the Aircraft at the expiration of the Basic Term
or any Renewal Term: (i) Lessee shall deliver to Lessor any "no cost"
modification kits designated for the Aircraft that Lessee has in its possession
and that have not been incorporated at the time of the return of the Aircraft,
(ii) Lessor may purchase from Lessee at Lessee's cost any service bulletin kits
purchased or manufactured by Lessee for the Aircraft (provided that Lessee
shall not be obligated to sell to Lessor any service bulletin kit manufactured
by Lessee to the extent Lessee, in its reasonable judgment, considers the same
proprietary), and (iii) without limiting the obligations of Lessee set forth in
the third preceding paragraph, in the event the FAA shall issue any directive
which requires termination thereof prior to the return date, then such
directive shall be terminated prior to the return date, and if Lessee shall
have not been required to terminate such directive in the normal course of its
operations without discriminating against the Aircraft by reason of its leased
status or otherwise prior to the return of the Aircraft, but such directive
must be terminated on or before ninety (90) days
EXHIBIT F - PAGE 2
<PAGE> 78
following such return, then Lessee shall, at the sole cost and expense of
Lessor, comply with such directive but only if (x) at least 540 days prior to
the return of the Aircraft Lessee receives from Lessor a written request to
comply with such directive at Lessor's sole cost and expense (determined on the
basis of what a third party would reasonably charge for comparable services)
and (y) after receipt by Lessee of such request, the Aircraft is subject to a
maintenance check of the type at which such modification is made, in accordance
with Lessee's general maintenance program, and Lessee has, or can obtain using
commercial reasonable efforts taking into account the 540 day prior notice
received by Lessee, the personnel, parts, facilities and other resources
available to accomplish the modification and the modification can be made
without materially disrupting the operations of Lessee's maintenance facility
or Lessee's operations.
EXHIBIT F - PAGE 3
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 D]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 D], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1996 D], dated as of April 29, 1996
(in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1996 D], dated as of April 29, 1996
(the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1996 D] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N540US; manufacturer's serial No. 26487; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727170 and P727171;
WHEREAS, Section 17 of the Participation Agreement [NW 1996
D], dated as of April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants named therein,
as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street
Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured
Certificates issued by the Owner Trustee under the Trust Indenture and Security
Agreement [NW 1996 D], dated as of April 29, 1996, between Lessor (not in its
individual capacity except as expressly provided therein but as trustee) and the
Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1996 D], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price in order to reflect, among other things, the interest
rate of the refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price, Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996,
and the Trust Agreement and Indenture Supplement [NW 1996 D], dated April 30,
1996, was recorded by the Federal Aviation Administration (the "FAA") on May 1,
1996, and assigned Conveyance No. P06566;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Excess Amount",
"Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss
Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in
Section 1 of the Lease are hereby amended applicable on and after the Closing
Date to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York; Boston,
Massachusetts; or Minneapolis, Minnesota.
"EXCESS AMOUNT" for the Closing Date or the
Commencement Date means an amount equal to the amount
determined by multiplying Lessor's Cost by the percentage set
forth in Exhibit B hereto under the heading "Excess Amount"
opposite the Closing Date or the Commencement Date.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i) through
(iv), inclusive, (x) each Affiliate of the Persons described
in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of
the Persons described in clauses (i) through (viii),
inclusive, (xii) the successors and permitted assigns of the
Persons described in clauses (i) through (iv), inclusive, and
(xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
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<PAGE> 3
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of the
Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost by
the percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount is
determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any date after January 2, 2019 shall be the amount determined
as provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a)
all amounts, liabilities, indemnities and obligations (other
than Interim Rent or Basic Rent) which Lessee assumes or
agrees to pay under any Lessee Document to or on behalf of
Lessor or any other Person, (b) amounts payable by Lessor
pursuant to clause (b) of the third paragraph of Section 2.02
of the Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreement, and (d)
Lessor's pro rata share of all compensation and reimbursement
of expenses and disbursements payable to the Subordination
Agent under the Intercreditor Agreement except with respect to
any income or franchise taxes incurred by the Subordination
Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata
share" means as of any time a fraction, the numerator of which
is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes"
(as such term is defined in the Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate and the Indenture
Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with
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<PAGE> 4
respect to which the amount is determined (as such Exhibit D
may be adjusted from time to time as provided in Section 3(d)
hereof and in Section 7 of the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable
on and after the Closing Date:
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing
shall occur.
"INDEMNITY ADJUSTED PAYMENT" means any indemnity
payment made pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving
Credit Agreements between the Subordination Agent, as
borrower, and the Liquidity Provider, and any replacement
thereof, in each case as the same may be amended, modified or
supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider under the Liquidity Facilities, or any
successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture
and Security Agreement [NW 1996 D], dated as of April 29,
1996, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass
through trust agreement and supplement pursuant to which the
Class D pass through trust certificates are issued.
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<PAGE> 5
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the three separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and
Trust Company, a Massachusetts trust company, in its capacity
as trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as successor
trustee under any such Pass Through Trust Agreement.
"PURCHASERS" means the Pass Through Trustees under
each Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
"REFINANCING DATE" means the proposed date on which
the outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers pursuant
to the Trust Indenture Amendment and the Refunding Agreement
on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption of
the Secured Certificates issued on the Refinancing Date and
the concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
-5-
<PAGE> 6
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1996 D], dated as of June 3, 1996, among Lessor,
Lessee, the Owner Participant, the Purchasers, the Indenture
Trustee, the Subordination Agent, and the Guarantor, as the
same may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"SUBORDINATION AGENT" means State Street Bank and
Trust Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 D],
dated as of the Closing Date, 1996, between Lessor and State
Street Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended by deleting on
and after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended by deleting on
and after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs
other than on June 12, 1996, (B) Transaction Expenses paid by
Lessor pursuant to Section 16 of the Participation Agreement
are determined to be other than 1.0% of Lessor's Cost, or (C)
Refinancing Expenses paid by Lessor or the Owner Participant
pursuant to Section 11(a) of the Refunding Agreement are
determined to be other than 1.3281% of Lessor's Cost, then in
each case, the Basic Rent percentages set forth in Exhibit B
and the Stipulated Loss Value percentages set forth in Exhibit
C, the Termination Value percentages set forth in Exhibit D
and the Special Purchase Price shall be recalculated by the
Owner Participant, on or prior to November 15, 1996 using the
same methods and assumptions used to
-6-
<PAGE> 7
calculate original Basic Rent, Stipulated Loss Value and
Termination Value percentages and the Special Purchase Price,
in order to: (1) maintain the Owner Participant's Net Economic
Return and (2) minimize the Net Present Value of Rents to
Lessee to the extent possible consistent with clause (1)
hereof. In such recalculation there will be no change in the
amortization of the Secured Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by (i)
deleting on and after the Closing Date "(A)" at the beginning thereof, (ii)
deleting on and after the Closing Date the word "and" at the end of clause (A)
thereof and substituting a period therefor, and (iii) deleting on and after the
Closing Date clause (B) thereof in its entirety.
(e) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay, on behalf of Lessor, as
Supplemental Rent the Make-Whole Amount, if any, due pursuant
to Section 2.10(b) or Section 2.11 of the Trust Indenture in
connection with a prepayment of the Secured Certificates upon
redemption of such Secured Certificates in accordance with
such Section 2.10(b) or Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by deleting on
and after the Closing Date the numbers and punctuation "124-000-12" in the first
sentence thereof and substituting therefor the numbers and punctuation
"124-0000-12".
(h) Section 3(g) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(g) Prepayment of Certain Rent Payments. To the
extent, if any, that there shall not have been received by the
Indenture Trustee to its account and in funds of the type
specified in Section 3(f) hereof by 10:30 A.M., New York time,
on the Commencement Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall, on the Commencement
Date, prepay on the Commencement Date a portion of Basic Rent
equal to the Excess Amount not so paid (the amount of such
Basic Rent to be prepaid by Lessee being herein called
"PREPAID Rent"); provided, that Lessee will also pay to the
Indenture Trustee, on demand, as Supplemental Rent, to the
extent permitted by applicable law, interest at the Past Due
Rate in effect from time to time on any part of any Prepaid
Rent not paid when due for any period for which the same shall
be overdue. Lessor agrees to reimburse Lessee in the manner
provided in the following sentence for (x) the Prepaid Rent so
paid by Lessee, plus (y) any Supplemental Rent paid with
respect to Prepaid Rent by Lessee pursuant to this Section
3(g), plus (z) accrued interest on the unreimbursed portion
thereof at a
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<PAGE> 8
rate per annum equal to the Base Rate as in effect from time
to time plus 5% per annum from the date such amount is paid by
Lessee to but not including the date of each such
reimbursement (such amounts to be reimbursed being herein
called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to
Lessee, in funds of the type specified in Section 3(f) hereof,
within five days after Lessor, the Owner Participant and the
Indenture Trustee shall have received written notice from
Lessee demanding payment, the Reimbursement Amount. In
addition, if, for any reason, Lessor shall fail to pay to
Lessee the Reimbursement Amount as above provided, Lessee
shall be entitled to offsets (without duplication) against
each succeeding payment (other than as limited by the proviso
to this sentence) due from Lessee to Persons other than the
Loan Participants, the Indenture Trustee and the Owner Trustee
in its individual capacity (including, without limitation,
Basic Rent, payments due under Section 9, 10, 15 and 19
hereof, payments due under the Tax Indemnity Agreement and
payments due to Persons other than the Loan Participants, the
Indenture Trustee and Lessor in its individual capacity under
Section 7 of the Participation Agreement), until Lessee has
been fully reimbursed for the Reimbursement Amount; provided,
however, that in the case of any payment due from Lessee which
is distributable under the terms of the Trust Indenture,
Lessee's right to offset shall be limited to amounts
distributable to Lessor thereunder. No such offset or
aggregate combined effect of separate offsets shall reduce the
amount of any installment of Interim Rent or Basic Rent to an
amount insufficient, together with the Excess Amount and all
other amounts payable simultaneously by Lessee, to pay in full
the payments then required to be made on account of the
principal of and interest on (and Make-Whole Amount, if any,
due with respect to) the Secured Certificates then
outstanding.
(i) The following new Section 3(h) shall be added to the end
of Section 3 of the Lease to be applicable on and after the Closing Date:
(h) In the event that Lessee exercises its option to
satisfy any indemnity obligation under the Tax Indemnity
Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement, Lessee shall pay, in addition to any other payments
due hereunder, (i) on each Lease Period Date, the portion of
the Indemnity Adjusted Payments then due and payable on such
date as set forth in an appropriate schedule to the Tax
Indemnity Agreement and (ii) on the date that Stipulated Loss
Value, Termination Value or the Special Purchase Price becomes
due and payable, as the case may be, the Indemnity Adjusted
Payment then due and payable by reference to the date as of
which such Stipulated Loss Value, Termination Value or Special
Purchase Price is payable as set forth in an appropriate
schedule to the Tax Indemnity Agreement.
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<PAGE> 9
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the words "the Owner Participant and the
Indenture Trustee" and substituting therefor the word "Lessor", and (ii)
deleting on and after the Closing Date the word "their" and substituting
therefor the word "its".
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
Section 9(c) of the Lease is hereby amended by deleting on and
after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by (i) deleting
on and after the Closing Date the words "the third Business Day following the
receipt of insurance proceeds in respect of such occurrence (but not earlier
that thirty (30) days after such occurrence)" in clause (i)(y) thereof and
substituting therefor the words "an earlier Business Day irrevocably specified
fifteen days in advance by notice from Lessee to Lessor and the Indenture
Trustee" and (ii) inserting on and after the Closing Date the words and
punctuation ", which appraisal shall be from a firm of independent aircraft
appraisers satisfactory to the Owner Participant," after the words "the
certificate or the appraisal" in the third parenthetical phrase of clause (A) of
the third paragraph thereof.
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on
and after the Closing Date the words and punctuation ", the Refunding Agreement"
after the words "Participation Agreement" and (ii) adding on and after the
Closing Date the words "and except for representations or warranties contained
in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in
the Refunding Agreement) or any document or instrument furnished pursuant to
either thereof" after the word "Agreement" at the end of the first parenthetical
phrase therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of
the Lease is hereby amended to read in its entirety on and after the Closing
Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective when
received, addressed:
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<PAGE> 10
(i) if to Lessee, for U.S. Mail at 5101
Northwest Drive (A4010), St. Paul, Minnesota
55111-3034, and for overnight courier at
2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer, (Telecopy
No. (612) 726-0665), or to such other
address, telex number or telecopy number as
Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate
Trust Department (Telecopy No. (801)
246-5053), or to such other address or
telecopy number as Lessor shall from time to
time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed
to such Loan Participant, the Indenture
Trustee or the Owner Participant at such
address or telecopy number as such Loan
Participant, the Indenture Trustee or the
Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until
an address is so furnished, addressed to
such Loan Participant, the Indenture Trustee
or the Owner Participant at its address or
telecopy number set forth on the signature
pages of the Refunding Agreement."
SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The second sentence of Section 19(d) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
In addition, if on such date there shall be any
Secured Certificates outstanding, Lessee shall have
the option to assume, pursuant to Section 8(x) of the
Participation Agreement and Section 2.13 of the Trust
Indenture, all of the obligations of Lessor under the
Trust Indenture.
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of
the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date.
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<PAGE> 11
(b) The parties hereto agree that Exhibits B, C and D attached
hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss
Value and Termination Value percentages and the Special Purchase Price to take
into account the interest rates borne by the Secured Certificates as of the
Closing Date.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the
Lease set forth in Sections 1 through 10 hereof shall be effective as of the
date hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 12
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
By: ____________________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: ____________________________________________
Title:
(1) Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of ______________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By: ____________________________________________
Title:
- --------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 D]
This GUARANTEE [NW 1996 D], dated as of April 29, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1996 D], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1996 D], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1996 D], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is
fully aware of the terms and conditions of the Lease, the Participation
Agreement and the other Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby,
and does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent),
the Participation Agreement, the Tax Indemnity Agreement and the other
Operative Documents to which the Lessee is a party (such obligations of the
Lessee guaranteed hereby being hereafter referred to, individually, as a
"FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in
accordance with the terms of the Operative Documents, and the timely
performance of all other obligations of the Lessee thereunder (individually, a
"NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or,
collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor
does hereby agree that in the event that the Lessee fails to pay any Financial
Obligation when due for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party
in any such proceeding) within five days after the date on which such Financial
Obligation became due and payable and the applicable grace period has expired,
the Guarantor shall pay or cause to be paid forthwith, upon the receipt of
notice from any Party (such notice to be sent to the Lessee (to the extent such
Party is not stayed or prevented from doing so by operation of law) and the
Guarantor) stating that such Financial Obligation was not paid when due and for
five days after the applicable grace period has expired, the amount of such
Financial Obligation. The Guarantor hereby agrees that in the event the Lessee
fails to perform any Nonfinancial Obligation for any reason (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Lessee, or the disaffirmance
with respect to the Lessee of the Lease or the Operative Documents to which the
Lessee is a party in any such proceeding) within 10 Business Days after the
date on which such Nonfinancial Obligation is required to be performed (for
avoidance of doubt, to include any applicable grace period), the Guarantor
shall cause such Nonfinancial Obligation to be performed within 10 Business
Days following the receipt of notice from any Party (such notice to be sent to
the Lessee (to the extent such Party is not stayed or prevented from doing so
by operation of law) and the Guarantor) stating that such Nonfinancial
Obligation was not performed when so required and that any applicable grace
period has expired.
(b) The obligations of the Guarantor hereunder shall not
be, to the fullest extent permitted by law, affected by: the genuineness,
validity, regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
in writing shall be given effect in determining the obligations of the
Guarantor hereunder), or by any substitution, release or exchange of collateral
for or other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is
-2-
<PAGE> 3
undertaken in accordance with the terms of the Operative Documents) without the
consent of the Guarantor, or by any priority or preference to which any other
obligations of the Lessee may be entitled over the Lessee's obligations under
the Lease and the other Operative Documents to which the Lessee is a party, or
by any other circumstance that might otherwise constitute a legal or equitable
defense to or discharge of the obligations of a surety or guarantor including,
without limitation, any defense arising out of any laws of the United States of
America or any State thereof which would excuse, discharge, exempt, modify or
delay the due or punctual payment and performance of the obligations of the
Guarantor hereunder. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not, to
the fullest extent permitted by law, affect the liability of the Guarantor
hereunder: (a) the extension of the time for or waiver of, at any time or from
time to time, without notice to the Guarantor, the Lessee's performance of or
compliance with any of its obligations under the Operative Documents (except
that such extension or waiver in writing shall be given effect in determining
the obligations of the Guarantor hereunder)), (b) any assignment, transfer,
sublease or other arrangement by which the Lessee transfers possession or loses
control of the use of the Aircraft, (c) any defect in the title, condition,
design, operation or fitness for use of, or damage to or loss or destruction
of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger
or consolidation of the Lessee or the Guarantor into or with any other Person,
or any sale, transfer, lease or disposal of any of its assets or (e) any change
in the ownership of any shares of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any
unpaid amounts due or otherwise to enforce performance by the Lessee. The
Guarantor specifically agrees, to the fullest extent permitted by law, that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Party (i) file suit or proceed to obtain or
assert a claim for personal judgment against the Lessee for the Obligations, or
(ii) make any effort at collection of the Obligations from the Lessee, or (iii)
foreclose against or seek to realize upon any security now or hereafter
existing for the Obligations, including the Trust Estate or the Trust Indenture
Estate (as such term is defined in the Trust Indenture), or (iv) file suit or
proceed to obtain or assert a claim for personal judgment against any other
Person liable for the Obligations, or make any effort at collection of the
Obligations from any such other Person, or exercise or assert any other right
or remedy to which any Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, or (v) assert or file
any claim against the assets of the Lessee or any other guarantor or other
Person liable for the Obligations, or any part thereof, before or as a
condition of enforcing the liability of the Guarantor under this Guarantee or
requiring payment of said Obligations by the Guarantor hereunder, or at any
time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted
by law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be
prevented by applicable law from exercising its remedies (or any of
-3-
<PAGE> 4
them) under Section 15 of the Lease, the Lessor (or any assignee thereof,
including, without limitation, the Indenture Trustee) shall be, nevertheless,
entitled to receive hereunder from the Guarantor, upon demand therefor the sums
that would otherwise have been due from the Lessee under the Lease had such
remedies been able to be exercised. The Guarantor hereby unconditionally
waives, to the fullest extent permitted by law, any requirement that, as a
condition precedent to the enforcement of the obligations of the Guarantor
hereunder, the Lessee or all or any one or more of any other guarantors of any
of the Obligations be joined as parties to any proceedings for the enforcement
of any provision of this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee
shall not be deemed to create any right in any Person except a Party and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest
extent permitted by law, all other demands or notices whatsoever, other than
the request for payment hereunder and notice provided for in Section 1 hereof.
The obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect
of any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim
by the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings relating to
the Lessee, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Lessee, whether or
not involving insolvency or bankruptcy proceedings, in which case the
Obligations shall be paid and performed in full before any payment in
respect of a claim by the Guarantor shall be made by or on behalf of
the Lessee.
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<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless evidenced by an instrument in writing signed
by the Guarantor and each Party against whom such amendment, supplement,
waiver, modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent
provided in the Trust Indenture, the Lessor will assign, and create a security
interest in, certain of its rights hereunder to and for the benefit of the
Indenture Trustee. From and after the execution and delivery of the Trust
Indenture, and until receipt by the Guarantor of a written notice from the
Indenture Trustee to the effect that the Trust Indenture has been fully
satisfied and discharged, no remedy or election hereunder may be exercised by
the Lessor or consent given by the Lessor, except by or with the prior written
consent of the Indenture Trustee, and the Guarantor will make payment of all
amounts hereunder that are assigned to the Indenture Trustee directly to the
Indenture Trustee, and such payments shall discharge the obligations of the
Guarantor to the Lessor to the extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly
existing in good standing pursuant to the laws of the State of
Delaware. It has all requisite corporate power and authority to own
and operate its properties, to carry on its business as presently
conducted and to enter into and perform its obligations under this
Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to
authorize the execution, delivery and performance (other than as
contemplated by the Operative Documents in the case of the
-5-
<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee,
or for the legality, validity, binding effect or enforceability
hereof.
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation of
the transactions contemplated hereby, will conflict with or result in
any breach of, or constitute a default under, or result in any
creation or imposition of any Lien upon any of its property or assets
under, any applicable laws or any indenture, mortgage, deed of trust
or other instrument or agreement to which it is a party or by which it
may be bound or to which any of its property or assets may be subject,
or its Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor
in New York City as from time to time may be designated by the Guarantor in
writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to
the fullest extent permitted by applicable laws. The headings in this
Guarantee are for purposes of reference only, and shall not limit or otherwise
affect the meanings hereof.
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<PAGE> 7
10. NOTICES. All requests, notices or other
communications hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth
in the Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder or under the Lease, the Participation Agreement or
the other Operative Documents, and any other agreement or instrument relating
thereto will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further
exercise of such right or remedy or the exercise of any other right or remedy
or under the Lease, the Participation Agreement or the other Operative
Documents, and any other agreement or instrument relating thereto.
12. SURVIVAL. All representations and warranties
contained herein or made in writing by the Guarantor in connection herewith
shall survive the execution and delivery of this Guarantee regardless of any
investigation made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or any provision in any other
Operative Document, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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<PAGE> 8
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND
SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK,
NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to
any Party any and all reasonable costs and expenses (including reasonable legal
fees and expenses) incurred by such Party in enforcing, or collecting under,
this Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
------------------------------------
Name: Joseph E. Francht, Jr.
Title: Senior Vice President-Finance
and Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
-----------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
-----------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 D]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 D]
THIS PARTICIPATION AGREEMENT [NW 1996 D] dated as of April 29,
1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to
the laws of the State of Minnesota (herein called "LESSEE"), (ii) the
institution listed on Schedule I hereto and identified therein as the "OWNER
PARTICIPANT" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below, (iii) the institutions listed on Schedule I and identified
therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (herein, in such latter capacity, together with any successor
owner trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other
things, certain Boeing 757-251 aircraft, including the Aircraft which has been
delivered by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a
Purchase Agreement Assignment [NW 1996 D], dated as of the date hereof
(herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee
assigns to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and
Agreement [NW 1996 D] (herein called the "CONSENT AND AGREEMENT"),
substantially in the form attached to the Purchase Agreement
Assignment (herein called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996
D], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture and Security Agreement [NW 1996 D], dated as of the
date hereof (said Trust Indenture and Security Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
INDENTURE", such term to include, unless the context otherwise requires, the
Trust Supplement referred to below) pursuant to which the Owner Trustee issues
to each of the Loan Participants one or more secured certificates (herein
called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement
and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1996 D], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE
AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and
conditions of this agreement, each Loan Participant agrees to finance, in part,
the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a
secured loan to the Owner Trustee (herein called a "LOAN") in the amount set
forth on Schedule II opposite the name of such Loan Participant. Each Loan
Participant shall make such Loan to the Owner Trustee on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not
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<PAGE> 3
later than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite such Loan
Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the
Trust Indenture to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon. The Owner Trustee agrees to pay the
Secured Certificates in installments in the amounts and on the dates provided
in the Trust Indenture together with interest thereon and all other amounts
payable with respect thereto, all as more fully provided in the Trust
Indenture.
(b) Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite the Owner Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation
of each of the Loan Participants and the Owner Participant to be made as
provided above in the payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "COMMITMENT" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee
agrees to give each Participant, the Owner Trustee and the Indenture Trustee at
least two Business Days' telecopy
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or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in
the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner
Participant agrees that its releasing the amount of its Commitment for the
Aircraft to the account of the Owner Trustee in accordance with the terms of
Section 1 shall constitute, subject to satisfaction or waiver of the conditions
set forth in Section 4(a), without further act, authorization and direction by
the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA
Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture;
and
(vi) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of
the Loan Participants and the Owner Participant to participate in the payment
of Lessor's Cost and to make available the amount of its respective Commitment
are subject to the satisfaction prior to or on the Delivery Date of the
following conditions precedent, except that paragraphs (iii), (v)(5), (x)
(insofar as it relates to representations and warranties only contained in the
Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan
Participants), (xxvi) and (xxvii) shall not be a condition precedent to the
obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it
relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a
condition precedent to the obligations of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant
to Section 2 hereof (or shall have waived such notice either in
writing or as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the
Documentation Agent and the Owner Participant and shall be in full
force and effect and executed counterparts shall have been delivered
to the Loan Participants and the Owner Participant, or their
respective counsel, provided that only each Loan Participant shall
receive an executed original of its respective Secured Certificate and
provided, further, that an excerpted copy of the Purchase Agreement
shall only be delivered to and retained by the Owner Trustee and the
Owner Participant (but the Indenture Trustee shall also retain an
excerpted copy of the Purchase Agreement which may be inspected by the
Documentation Agent and its counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant and their respective counsel
if and only if there shall occur and be continuing an Event of
Default), the chattel paper counterpart of the Lease and the Lease
Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement
shall only be delivered to Lessee and the Owner Participant and their
respective counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent, the
Owner Participant and Lessee (herein called the "ACCEPTANCE
CERTIFICATE") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the Owner Participant Guaranty.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Documentation Agent shall have been executed and delivered by
Lessee or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
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<PAGE> 7
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified by a Vice
President, the Secretary or an Assistant Secretary of Lessee,
duly authorizing the sale of the Aircraft and the lease by
Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the Bill
of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement
covering the Aircraft, the Purchase Agreement Assignment, the
Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on or before the Delivery
Date in accordance with the provisions hereof and thereof, and
a certified copy of the Certificate of Incorporation and
By-Laws of the Guarantor and a copy of resolutions of the
Board of Directors of the Guarantor, certified by a Vice
President, the Secretary or an Assistant Secretary of the
Guarantor, duly authorizing the execution, delivery and
performance by the Guarantor of the Guarantee;
(2) such other documents and evidence with
respect to Lessee, the Guarantor, the Manufacturer, the Owner
Trustee, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, and the Loan Participants as
the Loan Participants or the Owner Participant, or the
respective counsel for the Loan Participants or the Owner
Participant, may reasonably request in order to establish the
authority of such parties to consummate the transactions
contemplated by this Agreement and the taking of all corporate
proceedings in connection therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall
be true, and the Documentation Agent and the Owner Participant shall
have received evidence satisfactory to it to the effect that:
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<PAGE> 8
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft on such Delivery
Date, free and clear of Liens other than the rights of Lessee
under the Lease and Lease Supplement covering the Aircraft,
the mortgage and security interests created by the Trust
Indenture, the rights of the Owner Participant under the Trust
Agreement and the Trust Supplement, and Liens permitted by
clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft
in the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and
as of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, as to
New York and certain federal law matters, and Lessee's and the
Guarantor's in-house or other counsel, as to Minnesota and certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and
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<PAGE> 9
perform its obligations under the Lessee Documents. Lessee is
a Certificated Air Carrier. The Guarantor is a corporation
duly organized and validly existing pursuant to the laws of
the State of Delaware and has the corporate power and
authority to enter into and perform its obligations under the
Guarantee;
(2) the execution, delivery and performance of
the Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel after due inquiry, any approval or consent of any
trustee or holders of any indebtedness or obligations of
Lessee or the Guarantor, as the case may be (or that any such
approval or consent as is required has been obtained), and
neither the execution and delivery of any thereof by Lessee or
the Guarantor, as the case may be, nor the performance by
Lessee or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on
Lessee or the Guarantor, as the case may be, or (B) to the
knowledge of such counsel after due inquiry, contravenes or
results in any breach of, or constitutes any default under, or
results in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee or the Guarantor, as the
case may be, under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, or any other agreement or instrument, corporate
charter, by-law or permit issued by any Minnesota or United
States governmental authority to which Lessee or the
Guarantor, as the case may be, is a party or by which Lessee
or the Guarantor, as the case may be, or its properties may be
bound or affected;
(3) neither the execution and delivery by Lessee
of the Lessee Documents or by the Guarantor of the Guarantee
nor the performance by Lessee or the Guarantor of their
respective obligations thereunder requires the consent or
approval of, or the giving of notice to, or the registration
with, or the taking of any other action in respect of, any
Federal or state governmental authority in the United States,
except for (A) the registration of the Aircraft (including the
placement on board of the owner's copy of the application for
registration of the Aircraft and, if necessary, a flying time
wire), recordations and other actions referred to in paragraph
5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the
Lessee Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such
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<PAGE> 10
other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft
with the Federal Aviation Administration in the name of the
Owner Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof, with
respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document
(including any financing statement with respect to the Lease
under Article 9 of the Uniform Commercial Code of Minnesota or
Utah), is necessary in any applicable jurisdiction within the
United States in order (x) to establish the Owner Trustee's
title to such portion of the Aircraft as against Lessee or any
third parties or (y) to create and perfect the Indenture
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee or any third parties. With respect
to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in
the Federal Aviation Act, except for the filing of financing
statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified
in such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and
when required, (x) under the federal laws of the United States
and the laws of the State of New York no filing or recording
of any document (including any financing statement) is
necessary under Article 9 of the Uniform Commercial Code in
order to establish the Owner Trustee's title to such portion
of the Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and
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<PAGE> 11
the laws of the State of New York no filing or recording of
any document (including any financing statement) is necessary
or advisable under Article 9 of the Uniform Commercial Code in
order to create or perfect the Indenture Trustee's security
interest in such portion of the Aircraft as against the Owner
Trustee and any third parties in any applicable jurisdiction
within the United States; and
(6) there are no legal or governmental
proceedings pending or, to the best knowledge of such in-house
counsel, threatened to which Lessee or Guarantor or any of
their respective subsidiaries is a party or to which any of
the properties of Lessee or Guarantor or any of their
respective subsidiaries is subject other than those
proceedings summarized in the Guarantor's publicly filed
annual, quarterly and other reports filed with the Securities
and Exchange Commission, and proceedings which such in-house
counsel believes would not reasonably be expected to have a
material adverse effect on Lessee and its subsidiaries, taken
as a whole, or on the power or ability of Lessee to perform
its obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of
Ray, Quinney & Nebeker with respect to the opinion in paragraph (5)
above insofar as it relates to the laws of the State of Utah and (C)
upon the representations and warranties set forth herein, including,
without limitation, in Section 8 hereof, with respect to matters of
fact, and may state that no opinion is expressed as to laws other than
laws of the State of New York (in the case of such special counsel's
opinion), the State of Minnesota and the Delaware General Corporation
Law (in the case of Lessee's in-house or other counsel's opinion) and
the Federal laws of the United States. Such counsel may assume that,
except for the filings and recordations contemplated herein, there are
no filings or recordations with respect to the Aircraft, the Lease,
the Lease Supplement covering the Aircraft, the Trust Agreement, the
Trust Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be
identified in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the
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<PAGE> 12
Manufacturer Documents and such other matters as such parties may
reasonably request.
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National
Association is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States, is a Citizen of the United States and has under
the laws of the State of Utah and federal banking law the
power, authority and legal right to execute, deliver and carry
out in its capacity as Owner Trustee or in its individual
capacity, as the case may be, the terms of the Owner Trustee
Documents, including the Secured Certificates;
(2) each of the Owner Trustee Documents has been
duly authorized, executed and delivered by First Security Bank
of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by
the Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to
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<PAGE> 13
such counsel after due inquiry to which First Security Bank of
Utah, National Association in its individual capacity or as
the Owner Trustee is a party or by which it is bound, or of
any Federal or Utah law, governmental rule or regulation
applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the
Owner Trustee and, where appropriate, by First Security Bank
of Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal law governing
the banking and trust powers of First Security Bank of Utah,
National Association or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the
Trust Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated to a substantial degree in the State of New York
and that the closing of a substantial portion of the
transactions contemplated by the Operative Documents occurred
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<PAGE> 14
in the State of New York, the choice of New York law to govern
the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which
the Owner Trustee or First Security Bank of Utah, National
Association in its individual capacity, or both, is a party
is, under the laws of the State of Utah, a valid choice of law
and should, in a properly presented case, be honored by the
courts of the State of Utah;
(8) the Owner Trustee has received from Lessee
such title to the Aircraft as Lessee had immediately prior to
the conveyance to the Owner Trustee, subject to the rights of
the Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) there are no pending or, to the knowledge of
such counsel after due inquiry, threatened proceedings against
or affecting the Owner Trustee before any court or
administrative agency, individually or in the aggregate,
which, if determined adversely to it, would materially
adversely affect the power or ability of the Owner Trustee to
perform its obligations under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such
other matters incident to the matters covered thereby as the
Documentation Agent, the Owner Participant, the Indenture Trustee or
Lessee may reasonably request. Such opinion may state that (A) no
opinion is expressed as to laws other than the laws of the State of
Utah, the Federal laws of the United States governing the banking and
trust powers of First Security Bank of Utah, National Association, and
the Federal Aviation Act as it relates to paragraph (1) and (B) no
opinion is expressed as to the priority of security interests or as to
title to any part of the Trust Estate. Such opinion may assume (M)
the due authentication of the Secured Certificates by the Indenture
Trustee, (N) that the Operative Documents (other than the Trust
Agreement) are legal, valid and binding under the laws of the State of
New York and (O) the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and of the other Operative
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<PAGE> 15
Documents by each of the parties thereto other than First Security
Bank of Utah, National Association in its individual capacity and as
the Owner Trustee.
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from Dewey Ballantine, special counsel for the
Owner Participant and the Owner Participant Guarantor, and the Owner
Participant's in-house counsel, to the collective effect that:
(1) the Owner Participant is a duly incorporated
and validly existing corporation in good standing under the
laws of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents; the Owner Participant Guarantor
is a duly incorporated and validly existing corporation in
good standing under the laws of the State of Delaware and has
the corporate power and authority to execute, deliver and
carry out the terms of the Owner Participant Guaranty;
(2) the Owner Participant Documents have been
duly authorized, executed and delivered by the Owner
Participant and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute
legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with
their respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations; the Owner Participant Guaranty has been
duly authorized, executed and delivered by the Owner
Participant Guarantor and constitutes the legal, valid and
binding obligation of the Owner Participant Guarantor,
enforceable against the Owner Participant Guarantor in
accordance with its terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(3) neither the execution and delivery by the
Owner Participant of the Owner Participant Documents or by the
Owner Participant Guarantor of the Owner Participant Guaranty
nor the consummation of any of the transactions by the Owner
Participant or the Owner Participant Guarantor contemplated
thereby requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any
other action with respect to, any governmental authority or
agency of the United States, the State of Delaware or the
State in
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<PAGE> 16
which the principal office of the Owner Participant or the
Owner Participant Guarantor is located (or any governmental
subdivision of any thereof) (except as shall have been duly
obtained or given, specifying the same);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and except that certain of the
remedial provisions in the Lease and the Trust Indenture may
be limited or rendered unenforceable by applicable laws, which
laws, however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the Indenture
Trustee as aforesaid, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) the execution, delivery and performance of
the Owner Participant Documents by the Owner Participant does
not require any approval of stockholders of the Owner
Participant, or, to the knowledge of such counsel after due
inquiry, any approval or consent of any trustee or holders of
any indebtedness or obligations of the Owner Participant (or
that any such approval or consent as is required has been
obtained), and neither the execution and delivery of the Owner
Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or
regulation or, to the knowledge of such counsel after due
inquiry, judgment or order applicable to or binding on the
Owner Participant or (B) to the knowledge of such counsel
after due inquiry, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter or by-law
or permit issued by any New York, Delaware or United States
governmental authority to which the Owner Participant is a
party or by which it or its properties may be bound or
affected; the execution,
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<PAGE> 17
delivery and performance of the Owner Participant Guaranty by
the Owner Participant Guarantor does not require any approval
of stockholders of the Owner Participant Guarantor, or, to the
knowledge of such counsel after due inquiry, any approval or
consent of any trustee or holders of any indebtedness or
obligations of the Owner Participant Guarantor (or that any
such approval or consent as is required has been obtained),
and neither the execution and delivery of the Owner
Participant Guaranty by the Owner Participant Guarantor, nor
the performance by the Owner Participant Guarantor of its
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on the
Owner Participant Guarantor or (B) to the knowledge of such
counsel after due inquiry, contravenes or results in any
breach of, or constitutes any default under, or results in the
creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner
Participant Guarantor under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other agreement or instrument,
corporate charter or by-law or permit issued by any New York,
Delaware or United States governmental authority to which the
Owner Participant Guarantor is a party or by which it or its
properties may be bound or affected; and
(7) there are no pending or, to the best
knowledge of such counsel, threatened actions or proceedings
against or affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material adverse effect on the Owner Participant or the
ability of the Owner Participant to perform its obligations
under the Owner Participant Documents; there are no pending
or, to the best knowledge of such counsel, threatened actions
or proceedings against or affecting the Owner Participant
Guarantor before any court or administrative agency
individually or in the aggregate which, if determined
adversely to the Owner Participant Guarantor, would have a
material adverse effect on the Owner Participant Guarantor or
the ability of the Owner Participant Guarantor to perform its
obligations under the Owner Participant Guaranty;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's or the Owner Participant
Guarantor's obligations in connection with this Agreement as the
Documentation Agent, the Indenture Trustee, the Owner Trustee or
Lessee may reasonably request. Such opinion may rely upon the
representations and warranties set forth herein, including, without
limitation, in Section 8 hereof, as to matters of fact. Such opinion
may state that (M) no opinion is expressed as to laws other than the
General Corporation Law of the State of Delaware, the laws of the
State of New York and the Federal laws of the United States, and (N)
no opinion is expressed as to the priority of security interests or as
to title to any part of the Trust Estate.
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<PAGE> 18
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the
Lease Supplement covering the Aircraft, the Trust Indenture
and the Trust Supplement attached thereto and the Trust
Indenture with the Trust Supplement attached thereto are in
due form for recording by and have been duly filed for
recordation with the Federal Aviation Administration in
accordance with the provisions of Section 44107 of Title 49 of
the United States Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of
all Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in
the name of the Owner Trustee and will be duly registered in
due course in the name of the Owner Trustee pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(5) the Trust Indenture as supplemented by the
Trust Supplement creates a duly and validly perfected first
priority security interest in the Aircraft and a duly
perfected assignment of all the right, title and interest of
the Owner Trustee in, to and under the Lease as supplemented
by the Lease Supplement (insofar as such security interest
affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), subject
only to the Lease and to Liens permitted by the Lease and the
Trust Indenture, it being understood that no opinion need be
expressed as to the validity or enforceability of such
security interest under local law or as against third parties
in respect of the Aircraft when the same is outside the United
States;
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<PAGE> 19
(6) none of the Trust Indenture, the Trust
Agreement, the Trust Supplement, the Lease or the Lease
Supplement is required to be filed or recorded in any other
place within the United States in order to perfect the
security interest in the Aircraft and the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), under
the applicable laws of any jurisdiction within the United
States;
(7) no authorization, approval, consent, license
or order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected; and
(8) no other registration of the Aircraft and no
filings or recordings (other than the filings and recordings
with the FAA referred to above) are necessary to provide
constructive notice to third parties in any jurisdiction
within the United States of the Owner Trustee's title to the
Aircraft or the beneficial interest of the Owner Participant
in the Aircraft.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States. Said opinion may also
contain a statement to the effect that such opinion is limited to the
records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the
filing of notice thereof with the Federal Aviation Administration,
such as Federal tax liens, liens arising under Section 1368(a) of
Title 29 of the United States Code and possessory artisans' liens, and
is subject to the accuracy of FAA personnel in the filing, indexing
and recording of instruments filed with the FAA and in the search for
encumbrance cross-reference index cards for the Engines. Said opinion
may also rely on the opinion obtained by such counsel from counsel for
the Aeronautical Center of the FAA, satisfactory in form and scope to
such counsel, and on past practice of the FAA which is consistent with
such Aeronautical Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, to the effect
that:
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power,
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<PAGE> 20
authority and legal right to enter into and perform its
obligations under the Indenture Trustee Documents and, in its
capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(2) the execution, delivery and performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby and compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with the terms thereof including,
without limitation, the authentication of the Secured
Certificates to be delivered on the Delivery Date, have been
duly authorized by all necessary corporate action on the part
of State Street Bank and Trust Company, and neither the
execution and delivery thereof nor the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby nor compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with any of the terms and
provisions thereof (i) does or will contravene any law or
governmental rule or regulation of the United States governing
the banking or trust powers of State Street Bank and Trust
Company or the Commonwealth of Massachusetts or any order or
judgment known to such counsel and applicable to or binding on
State Street Bank and Trust Company, or (ii) does or will
contravene or result in any breach of, or constitute any
default under, the charter documents or By-Laws of State
Street Bank and Trust Company or the provisions of any
indenture, mortgage, contract or other agreement, in each case
known to such counsel, to which State Street Bank and Trust
Company is a party or by which it or any of its properties is
or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby requires or required
the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document
with, or the taking of any other action in respect of, any
Federal or Massachusetts governmental authority or agency
governing the banking or trust powers of State Street Bank and
Trust Company or under any Massachusetts law;
(4) each of the Indenture Trustee Documents has
been duly executed and delivered by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each
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<PAGE> 21
such agreement is the legal, valid and binding obligation of
each other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
(5) the Secured Certificates to be issued and
dated the Delivery Date have been duly authenticated and
delivered by the Indenture Trustee pursuant to the terms of
the Indenture Trustee Documents;
(6) to the best knowledge of such counsel, there
are no pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration board or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other
governmental charges ("TAXES") payable under the laws of the
Commonwealth of Massachusetts with respect to the execution of
and delivery by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, of any of the Indenture Trustee Documents (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would not have been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts. Neither State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trust created by the Trust Agreement will, as
a result of the transactions contemplated thereby, be subject
to any taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would have not been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts, and there are no taxes under the
laws of the Commonwealth of Massachusetts or any political
subdivision thereof (except for taxes on any fees payable to
State Street Bank and Trust Company in its individual
capacity) upon or with respect to the Aircraft or any Engine
or any part of any interest therein, or the purchase,
ownership, delivery, lease, sublease, possession, presence,
use, operation, condition, storage, maintenance,
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<PAGE> 22
modification, alteration, repair, sale, return, transfer or
other disposition of the Aircraft or any Engine which would
not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts
or did not perform its administrative duties under the
Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request.
Such opinion may state that no opinion is expressed as to laws other
than the internal substantive laws of the Commonwealth of
Massachusetts and the Federal laws of the United States. Such opinion
may further state that with respect to paragraph (4) in connection
with the opinion relating to legality, validity and binding effect of
the documents there referred to, such counsel has assumed that the
laws of the jurisdictions whose laws govern such documents are not
materially different from the internal substantive laws of the
Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from
Vedder, Price, Kaufman & Kammholz, special counsel for the Loan
Participants, a favorable opinion satisfactory in substance and form
to the Documentation Agent, as to such matters incident to the
transactions contemplated hereby as the Documentation Agent may
reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive
Vice President, any Senior Vice President or any Vice President of
Lessee, dated the Delivery Date, addressed to the Loan Participants
and the Owner Participant and certifying as to the matters stated in
paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and
(xxii) of this Section 4(a). Copies of the orders, permits, waivers,
authorizations, exemptions and approvals referred to in Section
4(a)(viii) shall have been furnished to the Loan Participants and the
Owner Participant.
(xix) The Owner Participant and the Loan Participants
shall, by making their Commitments available as provided in Section
1(b) of this Agreement, be deemed to have reaffirmed the
representations and warranties made by them in Section 8 of this
Agreement.
(xx) The Owner Participant shall have received an opinion,
in form and substance satisfactory to the Owner Participant, from
Aeroeconomics, Inc., independent aircraft appraisers, or such other
recognized aircraft appraiser, to the effect, among other relevant
matters, that (A) the Aircraft will have, at the end of the third
Fixed Renewal Term, (i) at least 20% of its original economic life
remaining and (ii) a fair market value of at least 20% of Lessor's
Cost (without taking into account any increase or decrease for
inflation or deflation during the Interim Term, the Basic Term and the
Fixed Renewal Terms or the terms of any purchase option provided in
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<PAGE> 23
the Lease) and taking into account any costs to the Owner Trustee or
the Owner Participant of removal and delivery of the Aircraft to the
Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair
market value of the Aircraft on the Delivery Date is equal to Lessor's
Cost; and (C) it will be commercially feasible for a third party to
utilize the Aircraft at the end of the third Fixed Renewal Term.
(xxi) The Loan Participants and Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to the Documentation Agent and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event
of Loss (or event which with the passage of time would become an Event
of Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from Dewey
Ballantine, special counsel to the Owner Participant, a favorable
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions
of the Internal Revenue Code of 1986, as amended through the date
hereof, and the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States, all as in effect on the date
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<PAGE> 24
hereof, the effect of which might preclude the Owner Participant from
obtaining any of the income tax benefits and consequences assumed to
be available to the Owner Participant as set forth in Section 2 of the
Tax Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant
shall have received a favorable opinion addressed to the Loan
Participants and the Owner Participant, and reasonably satisfactory as
to scope and substance to the Documentation Agent and the Owner
Participant, from Cadwalader, Wickersham & Taft, special counsel for
Lessee, which opinion shall state (with customary assumptions and
qualifications) that the Owner Trustee, as lessor under the Lease, and
the Indenture Trustee, as assignee of the Owner Trustee's rights under
the Lease pursuant to the Trust Indenture, would be entitled to the
benefits of 11 U.S.C. Section 1110 with respect to the Aircraft.
(xxix) The Loan Participants shall have received an opinion,
in form and substance reasonably satisfactory to the Documentation
Agent, from BK Associates, Inc., independent aircraft appraisers, to
the effect that the fair market value of the Aircraft on the Delivery
Date is equal to Lessor's Cost.
(xxx) Lessee shall have executed and delivered to the Owner
Participant a letter from the Owner Participant to Lessee relating to
Lessee's weighted average cost of capital.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner
Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such
Lease Supplement, such Trust Supplement, the Lease and the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee.
It is agreed that the obligations of Lessee (A) to sell the Aircraft to the
Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are
all subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on
or prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers,
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exemptions, authorizations and approvals shall be in full force and
effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii),
4(a)(iii) and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall
have been duly authorized, executed and delivered by the respective
party or parties thereto (other than Lessee and the Guarantor) in the
manner specified in Section 4(a)(v), shall each be satisfactory in
form and substance to Lessee, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof (other than
the Secured Certificates) shall have been delivered to Lessee or its
special counsel.
(iv) Lessee shall have received a copy of the resolutions
or other instruments satisfactory to Lessee of the Board of Directors
of the Owner Participant, or other evidence of authority satisfactory
to Lessee, certified as of the Delivery Date by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing or
evidencing authority for the execution, delivery and performance by
the Owner Participant of all of the Owner Participant Documents, a
copy of the resolutions or other instruments satisfactory to Lessee of
the Board of Directors of the Owner Participant Guarantor, certified
as of the Delivery Date by the Secretary or Assistant Secretary of the
Owner Participant Guarantor, duly authorizing the execution, delivery
and performance by the Owner Participant Guarantor of the Owner
Participant Guaranty, and a copy of the general authorizing
resolutions of the boards of directors of the Indenture Trustee and
the Owner Trustee, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Indenture Trustee and the Owner
Trustee, respectively, which authorize the execution, delivery and
performance by the Indenture Trustee of the Indenture Trustee
Documents and the Secured Certificates and by the Owner Trustee of the
Owner Trustee Documents, together with such other documents and
evidence with respect to the Indenture Trustee, the Owner Participant,
the Owner Participant Guarantor and the Owner Trustee as Lessee or its
special counsel may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the
taking of all corporate proceedings in connection therewith and
compliance with the conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and Lessee shall have received a certificate signed by the
Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively, addressed to Lessee and
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certifying as to the foregoing matters with respect to the Indenture
Trustee, the Owner Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in
effect which, in the opinion of Lessee or its special counsel, would
make it a violation of law or regulations or guidelines for Lessee to
enter into any transaction contemplated by the Operative Documents.
(ix) In the opinion of Lessee and its special counsel,
there shall have been, since the date hereof, no amendment,
modification, addition or change in or to the Internal Revenue Code of
1986, as amended through the date hereof, the regulations promulgated
under the Code (including temporary regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. PUBLICITY. Each party hereto agrees that it
will use its best efforts not to disclose, or permit any of its employees or
agents to disclose, the identity of the Owner Participant or the terms of the
Operative Documents in connection with the issuance or release for external
publication of any article or advertising or publicity matter relating to the
terms and conditions of any of the Operative Documents or the transactions
contemplated thereby without the prior written consent of the Owner Participant
and Lessee, provided that nothing in this Section 5 shall prevent the Loan
Participants from publishing a tombstone which may include the initial
principal amount of the Secured Certificates, provided, further, that no such
tombstone shall disclose the identity of the Owner Participant without the
prior written consent of the Owner Participant.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS.
No Certificate Holder (as defined in the Trust Indenture) shall have any
further interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the principal of and
interest on all Secured Certificates held by such holder and all other sums
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payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan
Participants and, by its acceptance of a Secured Certificate, each Certificate
Holder agrees that it will look solely to the income and proceeds from the
Trust Indenture Estate to the extent available for distribution to such
Certificate Holder as provided in Article III of the Trust Indenture and that
neither the Owner Participant nor the Owner Trustee shall be personally liable
to the Loan Participants or any Certificate Holder for any amounts payable
under the Secured Certificates, the Trust Indenture or hereunder, except as
expressly provided in the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND
INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to
each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and
the Owner Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse
effect on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises
which, if not obtained, would not have a material adverse effect on
the consolidated business assets, properties or condition (financial
or otherwise) of Lessee and its subsidiaries taken as a whole or on
the ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of
the Lessee Documents will, on the Delivery Date, have been duly
authorized by all necessary corporate action on the part of Lessee, do
not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of Lessee except
such as have been duly obtained or by the Delivery Date will have been
duly obtained, and none of such agreements contravenes any law,
judgment, government rule, regulation or order binding on Lessee or
the certificate of incorporation or By-Laws of Lessee or contravenes
the provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
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<PAGE> 28
(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in
respect of, any Federal, State or foreign government authority or
agency, except for (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to
be obtained on or prior to the Delivery Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly
obtained and are, or will on the Delivery Date be, in full force and
effect (other than a flying time wire, all steps to obtain the
issuance of which will have been, on the Delivery Date, taken or
caused to be taken by Lessee), (B) the registration of the Aircraft
referred to in Section 4(a)(ix)(4) and (C) such consents, approvals,
notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only
after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court
or administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Lease with the Lease Supplement covering
the Aircraft, the Trust Indenture and the Trust Supplement attached
thereto and made a part thereof, the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof and the FAA Bill
of Sale, (C) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security and
other interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified
in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D)
the taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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
Owner Trustee's title to and the Indenture Trustee's security interest
in the Aircraft as against Lessee and any third parties in any
applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving
of notice or the passage of time or
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<PAGE> 29
both would constitute an Event of Default under the Lease) which is
presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent
by the sale of the Aircraft; after the sale of the Aircraft the
capital of Lessee will not be unreasonably small for the conduct of
the business in which Lessee is engaged or is about to engage; Lessee
has no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated
subsidiaries for the year then ended, which have been audited by
independent certified public accountants, copies of which have been
furnished to the Owner Participant and each Loan Participant, fairly
present the consolidated financial condition of the Guarantor and its
consolidated subsidiaries as at such date and the results of
operations and cash flow of the Guarantor and its consolidated
subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied and
since December 31, 1995 there has been no material adverse change in
the consolidated financial condition, cash flow or results of
operations of the Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive
good title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of
Lessee under the Lease and the Lease Supplement covering the Aircraft,
the Lien of the Trust Indenture and the beneficial interest of the
Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation G or U of the Board of Governors of
the Federal Reserve System;
(xii) Lessee is not in default in the performance of any
term or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due
and for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture
or loss of the Aircraft or any interest therein;
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(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease;
and
(xv) neither Lessee nor any subsidiary of Lessee is an
"investment company" or a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(b) General Tax Indemnity. [Reserved]
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(c) General Indemnity. [Reserved]
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<PAGE> 32
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than taxes in the nature of sales, use, license, property or
value added Taxes (except value added taxes in the nature of any income,
franchise, capital, doing business, excess profits or net worth tax)
(including, without limitation, capital gains taxes, minimum taxes, income
taxes collected by withholding and taxes on tax preference items), and Taxes
which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Owner Participant represents that it is acquiring its interest in the
Trust Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Secured Certificates
or any similar securities for sale to, or solicited any offer to acquire any of
the same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended, or the securities laws, rules and
regulations of any state.
(b) Lessee represents and warrants that neither Lessee
nor anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended, or the
securities laws, rules and regulations of any state.
(c) Each of the Owner Participant and First Security Bank
of Utah, National Association, in its individual capacity, represents and
warrants to the other parties to this Agreement that it is, and on the Delivery
Date will be, a Citizen of the United States without making use of any voting
trust, voting powers agreement or similar arrangement. The Owner Participant
agrees, solely for the benefit of Lessee and the Loan Participants, that if (i)
it shall
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cease to be, or believes itself likely to cease to be, a Citizen of the United
States and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act
and regulations then applicable thereunder, then the Owner Participant shall
(at its own expense and without any reimbursement or indemnification from
Lessee) promptly effect a voting trust, voting powers agreement or other
similar arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee
and the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole
expense of the Owner Participant, to cooperate with the Owner Participant in
complying with its obligations under the provisions of the second sentence of
this Section 8(c). First Security Bank of Utah, National Association, in its
individual capacity, agrees that if at any time an officer or responsible
employee of the Corporate Trust Department of First Security Bank of Utah,
National Association, shall obtain actual knowledge that First Security Bank of
Utah, National Association, has ceased to be a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
Lessee or the Owner Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the
Owner Participant or First Security Bank of Utah, National Association, in its
individual capacity, does not comply with the requirements of this Section
8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby
agree that an Event of Default (or an event which would constitute an Event of
Default but for lapse of time or the giving of notice or both) shall not have
occurred and be continuing under the Lease due to non-compliance by Lessee with
the registration requirements in the Lease.
(d) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that both the principal place
of business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of
Utah, National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and
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delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank of Utah, National Association, in its
individual capacity, represents that it has not offered any interest in the
Trust Estate or any Secured Certificates or any similar securities for sale to,
or solicited any offer to acquire the same from, anyone, and that no officer or
responsible employee of the Corporate Trust Department of First Security Bank
of Utah, National Association, has knowledge of any such offer or solicitation
by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
or any similar securities related to the Aircraft for sale to, or solicited any
offer to buy any Secured Certificate from, any person or entity other than in a
manner in compliance with, and which does not require registration under, the
Securities Act of 1933, as amended, or the rules and regulations thereunder or
the securities laws, rules and regulations of any state.
(f) The Owner Participant and each of the Loan
Participants agree that, at any time after the Depreciation Period, as long as
no Event of Default or a Default of the type referred to in Section 14(a) or
14(e) of the Lease shall have occurred and be continuing, Lessee may elect to
effect a change in registration of the Aircraft, at Lessee's cost and expense,
so long as (a) the country of registry of the Aircraft is a country listed on
Exhibit A hereto (or such other country as the Owner Participant approves) and
(b) the following conditions are met: (i) unless the country of registry is
Taiwan, the United States maintains normal diplomatic relations with the
country of registry of the Aircraft, and if the country of registry is Taiwan,
the United States maintains diplomatic relations at least as good as those in
effect on the Delivery Date; and (ii) the Owner Trustee and the Indenture
Trustee shall have received favorable opinions (subject to customary
exceptions) addressed to each such party, from counsel qualified in the laws of
the relevant jurisdiction and reasonably satisfactory to the Owner Participant,
to the effect that:
(A) the Owner Trustee's ownership interest in the
Aircraft shall be recognized under the laws of such jurisdiction, (B)
the obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under
the laws of such jurisdiction (or the laws of the jurisdiction to
which the laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's
right, title and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the
opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible preparations
to accomplish such filing,
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recording and other action shall have been done, and such filing,
recording and other action shall be accomplished and a supplemental
opinion to that effect shall be delivered to the Owner Trustee and the
Indenture Trustee on or prior to the effective date of such change in
registration), (D) none of the Owner Trustee, the Owner Participant or
the Indenture Trustee will be required to register to do business in
the country in which the Aircraft is to be registered as a result of
such reregistration, after (1) taking into account any other contacts
of the Owner Trustee and the Owner Participant with such jurisdiction
(provided, that upon request by Lessee (such request having been
acknowledged by the Owner Participant's general counsel), the Owner
Trustee and the Owner Participant must respond within fourteen (14)
Business Days after receipt of such request describing its contacts in
the jurisdiction of reregistration, or else such party shall be deemed
for purposes of this clause (D) to have no such contacts) and (2)
assuming that the Indenture Trustee has no other contacts with such
jurisdiction, (E) there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee
shall have agreed to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such change in
registration after giving effect to such change in registration and that the
new country of registry imposes aircraft maintenance standards not materially
different from those of the United States, France, Germany, Japan, the
Netherlands or the United Kingdom and (b) the Owner Participant shall have
received assurances satisfactory to it that (i) the original indemnities in
favor of it under this Agreement afford it substantially the same protection as
provided prior to such change in registry, and (ii) such change will not result
in the risk of, or the imposition of, or increase the amount of, any Tax for
which Lessee is not required to indemnify under the Operative Documents, or is
not then willing to enter into a binding agreement to indemnify in a manner
satisfactory in form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant; provided, however, that
if (A) Lessee (or, so long as the Guarantee remains in full force and effect,
the Guarantor) has outstanding publicly issued or privately placed unsecured
indebtedness (excluding any short-term commercial paper) with a rating of "BBB"
or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides
the Owner Participant with cash collateral or a letter of credit reasonably
satisfactory in form and substance to Lessor, the amount of which is sufficient
(as determined by the Owner Participant in its reasonable judgment) to cover
any anticipated adverse tax consequences for which the Owner Participant has
been indemnified by Lessee under the Operative Documents in addition to any
additional
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adverse tax consequences resulting from such reregistration or (C) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to
Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of organization, and has the corporate power and
authority to carry on its business as now conducted, to own or hold
under lease its properties and to enter into and perform its
obligations under the Owner Participant Documents;
(ii) the Owner Participant Documents have been duly
authorized by all necessary corporate action on the part of the Owner
Participant, do not require any approval not already obtained of
stockholders of the Owner Participant or any approval or consent not
already obtained of any trustee or holders of any indebtedness or
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and, subject to and in reliance
upon the representations made by the Loan Participants and Lessee in
Section 8(q) hereof, neither the execution and delivery thereof, nor
the consummation of the transactions contemplated thereby, nor
compliance by the Owner Participant with any of the terms and
provisions thereof will contravene any United States Federal or state
law, judgment, governmental rule, regulation or order applicable to or
binding on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter,
by-law or other agreement or instrument to which the Owner Participant
is a party or by which it or its properties may be bound or affected
provided, that no representation or warranty as to ERISA (as
hereinafter defined) is made by the Owner Participant except as set
forth in Section 8(q)(A);
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
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in accordance with the terms thereof (subject to the qualifications
set forth in clause (2) of the opinion of counsel to the Owner
Participant in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the
Owner Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the ability of the Owner Participant to perform its obligations under
the Owner Participant Documents;
(v) upon the execution and delivery of the Trust
Indenture, the Trust Indenture Estate will be free and clear of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant;
(vi) neither the execution and delivery of the Owner
Participant Documents nor the performance by the Owner Participant of
its obligations thereunder require the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action in respect of any Federal, state or foreign government
authority or agency except for those exceptions referred to in Section
7(a)(iii) which may be applicable to the Owner Participant and the
Owner Participant Documents (it being understood that no
representation or warranty is made with respect to the laws, rules or
regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to the citizenship requirements of the Owner Participant
under applicable aviation law); and
(vii) the Owner Participant is not an "investment company"
or a company "controlled by an investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants
and agrees that it shall not cause or permit to exist a Lessor Lien
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate. Each of First Security Bank of Utah, National Association, in
its individual capacity, and the Owner Participant agrees that it will
promptly, at its own expense, take such action as may be necessary duly to
discharge such Lessor Lien attributable to it. Each of First Security Bank of
Utah, National Association, in its individual capacity, and the Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
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(i) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Lien, arising as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitutes gross negligence or willful misconduct,
(C) claims against the Indenture Trustee relating to Taxes or Expenses which
are excluded from the indemnification provided by Section 7 pursuant to said
Section 7, or (D) claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its interest in the
Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative
Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19
of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant
to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the
Lease while an Event of Default is continuing and prior to the time that the
Indenture Trustee has received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants
and agrees as to itself: (i) that this Agreement has been duly authorized,
executed and delivered by such Loan Participant and this Agreement constitutes
a legal, valid and binding obligation of such Loan Participant enforceable
against such Loan Participant in accordance with its terms except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that
such Loan Participant is duly organized and validly existing under the laws of
its jurisdiction of organization; and (iii) that such Loan Participant has
full power, authority and legal right to execute, deliver and carry out the
terms of this Agreement.
(k) Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the Trust Indenture is
being acquired by it for investment and not with a view to resale or
distribution (it being understood that such Loan Participant may pledge or
assign as security its interest in each Secured Certificate issued to it),
provided that the disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may sell, transfer or
otherwise dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement and subject
to the provisions hereof.
(l) The Indenture Trustee, and by acceptance of the
Secured Certificates the Certificate Holders, hereby (i) agree that for
purposes of the application of Section 1111(b) of Title 11 of the United States
Code or any successor provision or any comparable provisions that the "debtor"
in any bankruptcy proceeding involving the assets held or administered pursuant
to the Trust Agreement shall be strictly limited to the Trust Estate (excluding
the Excluded Payments) and (ii) make (and hereby agree to make), with respect
to the Trust Indenture Estate, the election provided for in Section 1111(b)(2)
of Title 11 of the United
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States Code. It is hereby agreed by the Indenture Trustee, and by the
acceptance of the Secured Certificates the Certificate Holders hereby agree,
that if (i) all or any part of the Trust Estate becomes the property of, or the
Owner Participant becomes, a debtor subject to the reorganization provisions of
the Bankruptcy Reform Act of 1978 or any successor provision or any comparable
proceeding, (ii) pursuant to such reorganization provisions the Owner Trustee
(in its individual capacity) or the Owner Participant is required, by reason of
the Owner Trustee (in its individual capacity) or the Owner Participant being
held to have recourse liability to the holder(s) of the Secured Certificates or
to the Indenture Trustee, directly or indirectly (other than the recourse
liability of the Owner Participant under this Participation Agreement), to make
payment on account of any amount payable as principal or interest on the
Secured Certificates and (iii) any holder(s) of the Secured Certificates or the
Indenture Trustee actually receives any Excess Payment (as hereinafter defined)
which reflects any payment by the Owner Trustee (in its individual capacity) or
the Owner Participant on account of (ii) above, then such holder(s) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(l), "EXCESS PAYMENT" means the
amount by which such payment exceeds the amount which would have been received
by the holder(s) of the Secured Certificates or the Indenture Trustee if the
Owner Trustee (in its individual capacity) or the Owner Participant had not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 8(l) shall prevent the holder of a Secured
Certificate or the Indenture Trustee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of the Owner Trustee (in its
individual capacity) under this Agreement or the Trust Indenture (and any
exhibits or annexes thereto) or the Owner Participant under this Agreement.
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making
use of any voting trust, voting powers trust agreement or other
similar arrangement, will notify promptly all parties to this
Agreement if in its reasonable opinion its status as a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement, is likely to change and
that it will resign as Indenture Trustee as provided in Section 8.02
of the Trust Indenture if it should cease to be a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate power
and authority to enter into and perform its obligations under the
Trust Indenture and this Agreement and to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the
authentication of the Secured Certificates to be delivered on the
Delivery Date have been duly authorized by all
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<PAGE> 40
necessary corporate action on its part, and neither the execution and
delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or state law or
governmental rule or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any
default under its charter or By-Laws or the provisions of any
indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and
binding obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be,
enforceable against State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, in
accordance with its terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors'
rights.
(n) So long as the Aircraft shall be subject to the Lease
and at all times prior to the release of the Lien of the Trust Indenture, the
Owner Participant will not, directly or indirectly, sell, assign, convey or
otherwise transfer any of its right, title or interest in and to the Aircraft,
this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust
Agreement or any proceeds therefrom to any person or entity, unless the
proposed transferee is a "Transferee" (as defined below), and such sale,
assignment, conveyance or transfer is with respect to all, but not less than
all, of such Transferee's right, title and interest to a single entity (except
that the Owner Participant may transfer to one or more Transferees all or any
portion of its interest, if any, in the residual value of the Aircraft (which
interest shall not include any of the Owner Participant's right, title or
interest in any of the Operative Documents); provided that such transfer of
residual value shall result in no increase, decrease or change in any of
Lessee's, any Loan Participant's, or the Indenture Trustee's obligations,
rights or responsibilities under the Operative Documents and that such
Transferee or Transferees of residual value shall have no right to consent or
object to any matter or decision under, or relating to, the Aircraft or any of
the Operative Documents and provided, further, that no Lien shall result from
such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial
institution or insurance company with a combined capital, surplus and undivided
profits of at least $50,000,000 or a corporation whose tangible net worth is at
least $50,000,000, exclusive of goodwill, in either case as of the proposed
date of such transfer, as determined in accordance with generally accepted
accounting principles, or (B) any subsidiary of such a bank, financial
institution, insurance company, or corporation, provided that such bank,
financial institution, insurance company, or corporation furnishes to the Owner
Trustee, the Loan Participants, the Indenture Trustee and Lessee a guaranty
with respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Loan Participants,
the Indenture Trustee and Lessee, the Owner Participant's obligations
hereunder, including but not limited to, under Section 8(c) and Section 8(h)
hereof, in the form attached as Exhibit D hereto; provided, however, that any
Transferee shall not be
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<PAGE> 41
(i) an airline, a commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or (ii) other similar person
or a corporation or other entity controlling, controlled by or under common
control with such an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or
other similar person (unless such entity is General Electric Company,
International Lease Finance Corporation, any similar entity or any of their
respective Affiliates, provided, that (I) such entity is not included within
the immediately preceding clause (i) of this subsection (n) and (II) no such
entity has, through ownership of common or preferred stock, effective voting
control of an entity described in such immediately preceding clause (I)). Each
such transfer to a Transferee shall be subject to the conditions that (M) upon
giving effect to such transfer, the Transferee is a Citizen of the United
States (or has effected a voting trust agreement, voting powers agreement or
other similar arrangement so as not to affect the then continued (if
applicable) United States registration of the Aircraft), and has full power and
authority to enter into the transactions contemplated hereby, (N) the
Transferee has the requisite power and authority to enter into and carry out
the transactions contemplated hereby and such Transferee shall have delivered
to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants
an opinion of counsel in the form attached as Exhibit E hereto, (O) the
Transferee enters into (i) an agreement in the form attached as Exhibit B
hereto or (ii) such other form approved by Lessee and the Indenture Trustee
whereby the Transferee confirms that it shall be deemed a party to this
Agreement and a party to the Trust Agreement and each other Operative Document
to which the Owner Participant is a party and agrees to be bound by all the
terms of, and to undertake all of the obligations of the transferor Owner
Participant contained in, the Owner Participant Documents and makes the
representations and warranties comparable to those made by the Owner
Participant thereunder provided that with respect to ERISA, the Transferee
makes the representations and warranties contained in Section 7(h) of the
agreement in the form attached as Exhibit B hereto, (P) such transfer does not
affect registration of the Aircraft under the Federal Aviation Act, or any
rules or regulations promulgated thereunder or create a relationship which
would be in violation thereof or violate any provision of the Securities Act of
1933, as amended, or any other applicable Federal or state law (provided that
the term "applicable Federal law" shall not include ERISA), (Q) the transferor
Owner Participant assumes the risk of any loss of Interest Deductions,
Amortization Deductions and MACRS Deductions and the risk of any Inclusion
Event (each as defined in the Tax Indemnity Agreement) resulting from such
transfer, (R) the transferor Owner Participant pays all of the costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
in connection with such transfer, including the costs and expenses of the Owner
Trustee, the Indenture Trustee, Lessee and the Loan Participants in connection
therewith unless such transfer is effected in connection with the exercise of
remedies as a result of and during the continuance of an Event of Default in
which case any expenses incurred by Lessee in connection with such transfer
shall not be reimbursed, and (S) the terms of the Operative Documents and the
Overall Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations
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of the transferor Owner Participant under the Owner Participant Documents
arising after the date of such transfer except to the extent fully attributable
to or arising out of acts or events occurring prior thereto and not assumed by
the Transferee (in each case, to the extent of the participation so
transferred). If the Owner Participant intends to transfer any of its
interests hereunder, it shall give 20 days' prior written notice thereof to the
Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee.
Upon any such transfer, Lessee shall, at the Transferee's
expense, use its reasonable efforts promptly to cause to be obtained new
insurance certificates (consistent with the provisions of Section 11 of the
Lease) that reflect the interest of the Transferee in the Aircraft.
(o) Notwithstanding the provisions of Section 8(x)
hereof, unless waived by the Loan Participants, Lessee shall not be entitled to
assume the Secured Certificates on the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease if on such date an Event of Default
shall have occurred and be continuing or any condition or event shall exist
which, with the passage of time or giving of notice or both, would become such
an Event of Default.
(p) First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its individual capacity,
agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code or of any entity the assets of which constitute "plan" assets under
ERISA. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section
2.14 of the Trust Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer as set forth in
the preceding sentence and a covenant as set forth in this sentence.
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement and the other Operative Documents,
(ii) the initial purchase by the Loan Participants of the Secured Certificates,
and (iii) the initial acquisition by the Owner Participant of its beneficial
interest in the Trust Estate will involve any non-exempt prohibited transaction
within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through
(D) of the Code (such representation being made in reliance upon and subject to
the accuracy of the representations contained in subparagraph (A) of this
Section 8(q)).
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<PAGE> 43
(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, or (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to the Owner Trustee under the
Purchase Agreement Assignment and not specifically reserved to Lessee under
Section 1 thereof, to bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant
severally, not jointly, represent and warrant that none of the funds made
available by the Loan Participants pursuant to Section 1 hereof will be used
for the purpose of purchasing or carrying any "margin security" as defined in
Regulation G of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning of Regulation X of the Board of Governors of the
Federal Reserve System, assuming that the proceeds were and are applied as
contemplated by the provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it
shall not cause or permit to exist a Loan Participant Lien attributable to it
with respect to the Aircraft or any other portion of the Trust Estate. Each
Loan Participant agrees that it will promptly, at its own expense, take such
other action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificates of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the
date of payment of such principal amount plus all other amounts owed to such
affected Certificate Holder under the Operative Documents (including any
Funding Loss Amount payable as a result of the applicable purchase occurring on
a day other than the last day of an Interest Period). For purposes of this
Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder
which has asserted claims
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against the Owner Trustee or Lessee under or sought rights or remedies provided
by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture.
(u) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Indenture Trustee's Liens with respect to the Trust Indenture Estate
or the Trust Estate. State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense, take such action as
may be necessary duly to discharge such Indenture Trustee's Liens. State
Street Bank and Trust Company, in its individual capacity, agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Indenture Estate or the Trust Estate resulting from such Indenture
Trustee's Liens.
(v) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, each of the other Owner Trustee Documents has been duly
executed and delivered by one of its officers who is duly authorized
to execute and deliver such instruments on behalf of First Security
Bank of Utah, National Association or the Owner Trustee, as the case
may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First
Security Bank of Utah, National Association, in its individual
capacity, arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the Operative
Documents, including any such Lien resulting from the nonpayment by
First Security Bank of Utah, National Association, in its individual
capacity, of any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes
(or to the best of its knowledge would, with the passage of time or
the giving of notice or both, constitute) an Event of Default as
defined in the Trust Indenture which has been caused by or relates to
First Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof
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nor its performance of any of the terms and provisions thereof will
violate any Federal law governing the banking and trust powers of
First Security Bank of Utah, National Association, or Utah law or
regulation or contravene or result in any breach of the provisions of
its articles of association or By-Laws or any indenture, mortgage,
contract or other agreement to which it is a party or by which it or
its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with its respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association for services rendered in connection with the
transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if
(i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate
the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the
Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease,
given to Lessee written notice of Lessor's election to retain title to the
Aircraft and (iii) the Owner Trustee has failed to make, on or before the
Termination Date, any payment required to be made by the Owner Trustee pursuant
to Section 9(c) in connection with its retention of title to the Aircraft, the
Owner Participant will indemnify Lessee for any losses, damages, costs or
expenses of any kind (including any additional rents paid by Lessee and any
fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by the Owner Trustee. The Owner Participant
further covenants and agrees to pay those costs and expenses specified to be
paid by the Owner Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to
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purchase the Aircraft pursuant to Section 19(b) of the Lease or (b) to
terminate the Lease and purchase the Aircraft pursuant to Section 19(d) of the
Lease, then each of the parties will execute and deliver appropriate
documentation transferring all right, title and interest in the Aircraft to
Lessee (including, without limitation, such bills of sale and other instruments
and documents as Lessee shall reasonably request to evidence (on the public
record or otherwise) such transfer and the vesting of all right, title and
interest in and to the Aircraft in Lessee), and if Lessee, in connection with
such purchase, elects to assume the obligations of the Owner Trustee pursuant
to the Trust Indenture and the Secured Certificates each of the parties will
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing the Owner
Participant and the Owner Trustee from all future obligations in respect of the
Secured Certificates, the Trust Indenture and all other Operative Documents and
all such other actions as are reasonably necessary to permit such assumption by
Lessee.
(y) (A) Lessee will not consolidate with or merge into
any other corporation or convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
reasonably satisfactory to such Participant containing an assumption
by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction,
no Default or Event of Default under the Lease shall have occurred and
be continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned
in clause (ii) above comply with this subparagraph (A) of Section 8(y)
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and
(v) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee, shall
make such filings and recordings with the FAA pursuant
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to the Federal Aviation Act, as shall be necessary or desirable to
evidence such consolidation, merger, conveyance, transfer or lease
with or to such entity.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Lessee under
this Agreement with the same effect as if such successor corporation or Person
had been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its
corporate existence except as permitted by subparagraph (A) of this Section
8(y).
(z) Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing, re-recording and
refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture, the Trust Supplement and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the interest of the Owner Trustee in the Aircraft or
will furnish to the Owner Trustee and the Indenture Trustee timely notice of
the necessity of such action, together with such instruments, in execution
form, and such other information as may be required to enable them to take such
action. Lessee will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief executive office
(as such term is used in Article 9 of the Uniform Commercial Code) promptly
after making such change or in any event within the period of time necessary
under applicable law to prevent the lapse of perfection (absent refiling) of
financing statements filed under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations
of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and
the Owner Participant hereby agrees to make such recalculations as and when
contemplated by the Lease and subject to all the terms and conditions of the
Lease and promptly to take such further actions as may be necessary or
desirable to give effect to and to cause the Owner Trustee to give effect to
the provisions of Section 3 of the Lease.
(bb) To the extent that any Excess Amount is due on the
Commencement Date, the Owner Participant shall have the right to prepay to the
Indenture Trustee all or a portion of such Excess Amount on the last Business
Day occurring in 1996, and the Indenture Trustee agrees that it shall invest
such amount in accordance with the terms set forth in the
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Trust Indenture. The Owner Participant hereby agrees with Lessee, and only
with Lessee, and not for the benefit of any other party to this Participation
Agreement, that it will pay in full to Lessee upon termination of the Lease the
Reimbursement Amount for which Lessee has not previously received an offset
pursuant to Section 3(g) of the Lease.
(cc) The Owner Participant hereby agrees to notify Lessee
or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York
time on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) [_____________] agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the
Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the
actual interest expected to accrue on the Secured Certificates during each
Interest Period promptly after the commencement of such Interest Period and
after the occurrence of any event that would cause such actual interest
expected to accrue during such Interest Period to change from the amount
previously notified. The Administrative Agent further agrees to perform all of
the functions that are required to be performed by the Administrative Agent
pursuant to the terms of the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that
it will pay, or cause to be paid, all costs and expenses that are for the
account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease.
The Owner Participant further agrees with Lessee that it will provide the
information contemplated to be provided by it pursuant to clause (VI) of
Section 7(b)(x) of the Lease within the time period contemplated therein.
(ff) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate
unless and until the transferee agrees in writing (copies of which shall be
provided by the Indenture Trustee to Lessee, the Owner Trustee and the Owner
Participant) to make the representations contemplated to be made by a Loan
Participant in this Agreement and to be bound by the terms of this Agreement
and the Trust Indenture (including, without limitation, the representations and
covenants set forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t)
hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust
Indenture).
(gg) [______________] agrees to act as Documentation
Agent hereunder and to perform all of the functions that are required to be
performed by the Documentation Agent hereunder.
(hh) [______________], [_________________] and
[_____________] each agrees to furnish to the Administrative Agent timely
information for the purpose of determining each Eurodollar Rate (as defined in
the Trust Indenture).
(ii) Lessee agrees and covenants that it shall not
purchase or guarantee or acquire any interest in any Secured Certificate or any
other certificate for which a Secured Certificate is security except as
provided in Section 8(x).
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SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN
PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of
an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner
Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized representative of the Owner Participant (the
"REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of
debt amortization and Basic Rent, Excess Amounts, Special Purchase Price,
Stipulated Loss Value and Termination Value percentages. Within forty-five
days of its receipt of the Reoptimization Certificate, Lessee may demand a
verification, pursuant to Exhibit E of the Lease, of the information set forth
in the Reoptimization Certificate. Upon the acceptance by Lessee of the
accuracy of the information set forth in the Reoptimization Certificate or the
determination pursuant to such verification procedures of such information, the
Owner Participant will cause the Owner Trustee (M) to execute a Lease
Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special
Purchase Price, Stipulated Loss Value and Termination Value percentages, and
(N) to exchange new Secured Certificates containing reoptimized amortization
schedules for the Secured Certificates outstanding immediately prior to such
reoptimization.
(b) In connection with reoptimization adjustments of
Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to
this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will
agree to changes in the amortization schedule of the Secured Certificates, and
(N) each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided that such changes do
not (X) change the final maturity of any Secured Certificates to beyond twenty
years from the Delivery Date or (Y) increase the weighted average lives of the
Secured Certificates as of the Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner
Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan
Participants and the Indenture Trustee not to amend, supplement or otherwise
modify any provision of the Trust Agreement in a manner adversely affecting
such party without the prior written consent of such party; and (B) agrees with
Lessee and the Loan Participants not to revoke the Trust Agreement without the
prior written consent of Lessee and the Loan Participants so long as the Lease
or the Lien of the Trust Indenture remain in effect. Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture Trustee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (i) amend or modify Article III or IX of the
Trust Indenture, (ii) make any amendment which will affect the stated principal
amount or interest on the Secured Certificates or (iii) amend or modify the
provisions of Sections 2.05 or 10.05 of the Trust Indenture. The Indenture
Trustee and the Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative Documents
to which Lessee is not a party. Notwithstanding anything to the contrary
contained herein, in the Trust Agreement or in any
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other Operative Document, the Owner Participant will not consent to or direct a
change in the situs of the Trust Estate without the prior written consent of
Lessee. Each Loan Participant agrees that it will not take any action in
respect of the Trust Indenture Estate except through the Indenture Trustee
pursuant to the Trust Indenture or as otherwise permitted by the Trust
Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee
covenants and agrees with each of the Loan Participants, the Owner Participant,
the Indenture Trustee and the Owner Trustee, in its capacity as such and in its
individual capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as
the Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements,
all amendments to the Lease, the Trust Indenture, all supplements and
amendments to the Trust Indenture and this Agreement 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. Upon the execution
and delivery of the FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Bill of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached, and third, the Trust Indenture, with the Trust Supplement attached.
(c) Lessee agrees that it will consummate, with Owner
Participant, on terms substantially identical to those set forth in the
Operative Documents, leveraged lease transactions in respect of the first three
Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to
the date of this Agreement.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee
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will be the lessee thereof, and each party hereto agrees to characterize the
Lease as a lease for Federal income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set
forth in the Trust Indenture. Unless the context otherwise requires, any
reference herein to any of the Operative Documents refers to such document as
it may be amended from time to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier (only if such communication is also given or made by an additional
method herein permitted), or by prepaid courier service, and shall be deemed to
be given for purposes of this Agreement on the day that such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 13(b). Unless otherwise specified in a notice sent
or delivered in accordance with the foregoing provisions of this Section 13(b),
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 telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Administrative Agent, the
Documentation Agent, the Indenture Trustee or the Owner Participant, to the
respective addresses set forth below the signatures of such parties at the foot
of this Agreement, or (B) if to a subsequent Owner Participant, addressed to
such subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of
any thereof or any of the transactions contemplated hereby or thereby may not
be enforced in or by such courts. Lessee hereby generally consents to service
of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New
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York 10038, Attention: Managing Attorney, or such office of Lessee in New York
City as from time to time may be designated by Lessee in writing to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if,
as a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is then
located, the situs of the trust may be moved with the written consent of the
Owner Participant (which consent shall not be unreasonably withheld) and the
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification as the Owner Participant and the Loan Participants may
reasonably request in form and substance satisfactory to such parties, (B) the
rights and obligations under the Operative Documents of the Owner Participant
and the Loan Participants shall not be altered as a result of the taking of
such action, (C) the lien of the Trust Indenture on the Trust Indenture Estate
shall not be adversely affected by such action, and (D) the Owner Participant
and the Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner
Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to the Loan Participants and to the Owner
Participant covering the matters described in Section 4(a)(xiii) hereof and
such other matters as the Loan Participants and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner
Participant, the Indenture Trustee and the Loan Participants on an After-Tax
Basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred by the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Loan Participants in connection with such change of
situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan
Participants and the Owner Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner
Trustee, as Lessor, or the Indenture Trustee under the
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terms of the Lease which by its terms is not to be unreasonably withheld by the
Owner Trustee, as Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's,
the Documentation Agent's and the Owner Participant's obligations under any and
all thereof, shall survive the making available of the respective Commitments
by the Loan Participants and the Owner Participant, the delivery or return of
the Aircraft, the transfer of any interest of the Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Loan Participant in any Secured Certificate or the Trust Indenture Estate
and the expiration or other termination of this Agreement or any other
Operative Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, and shall be enforceable by, Lessee
and its successors and assigns, each Loan Participant and its successors and
assigns, the Owner Participant and its successors and assigns, each Certificate
Holder and its successors and registered assigns, the Indenture Trustee and its
successors as Indenture Trustee under the Trust Indenture, the Owner Trustee
and its successors as Owner Trustee under the Trust Agreement, the
Administrative Agent and the Documentation Agent. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or
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any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Agreement or such
other agreements of rights and remedies against the Trust Estate. The
foregoing provisions of this Section 15(d) shall survive the termination of
this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the
Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as
assignee of such Owner Trustee's rights under the Lease pursuant to the Trust
Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the
event of any reorganization of Lessee under such Section.
SECTION 16. EXPENSES. Each of the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Loan Participants
shall promptly submit to the Owner Trustee and Lessee for their review copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than July 15, 1996). The Owner Participant agrees to transfer to the
Owner Trustee promptly but in any event no later than August 15, 1996 such
amount as shall be necessary in order to enable the Owner Trustee to pay
Transaction Expenses. To the extent of funds received by it, the Owner Trustee
agrees to pay all invoices of Transaction Expenses that have been approved by
it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to
the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its
sole option shall have the right to pay directly its special counsel fees and
the fee and reasonable disbursements of Babcock and Brown Financial
Corporation.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and
be continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates with Dollar denominated debt no more than
three times by giving written notice to the Owner Participant and the Owner
Trustee that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refinancing (including the terms of any debt to be issued in
connection with such refinancing); provided that no such refinancing shall
subject the Owner Participant to any adverse, or the risk of any adverse, tax
consequence unless Lessee agrees to indemnify the Owner Participant for such
unindemnified adverse tax consequence (any such indemnity to be satisfactory in
form and substance, which may include consideration of the creditworthiness of
Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so
long as the Guarantee remains in full force and effect, the Guarantor) has
outstanding publicly issued or privately placed unsecured indebtedness
(excluding any short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner
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Participant with cash collateral or a letter of credit reasonably satisfactory
in form and substance to Lessor, the amount of which is sufficient (as
determined by the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner Participant has been
indemnified by Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such refinancing or (3) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee); provided further that (x) the Owner Participant
agrees that it will not be entitled to any indemnity from Lessee for any
failure of the debt in such refinancing to constitute "qualified nonrecourse
indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b)
with respect to the first refinancing described in the next paragraph, provided
it is satisfactory to, or has no adverse tax consequences for, the Owner
Participant and (y) no offering material related to any public refinancing
shall disclose the identity of the Owner Participant.
The Owner Participant has been informed by Lessee that the
debt to be issued in connection with such refinancing may be issued in several
classes, each of which may have a different interest rate, final maturity date
and priority of payment. The Owner Participant acknowledges that it has been
informed that one or more of such classes may be entitled to the benefit of a
liquidity facility which shall not be provided by Lessee or a Person who is an
Affiliate of Lessee, and which will entitle the Indenture Trustee (or a
collateral agent therefor) to make drawings thereunder to pay interest on a
current basis on the enhanced classes of debt for up to three semi-annual
interest payments following a payment default with respect to such enhanced
classes. The Owner Participant acknowledges being informed that under such a
structure drawings of the entire amount available under the liquidity facility
for any class (and the deposit of the proceeds thereof into a cash collateral
account) will be required in the event of a ratings decline with respect to the
related liquidity provider or in the event that the liquidity facility is not
extended or replaced prior to its scheduled expiration and that amounts owed to
the liquidity facility provider for both drawings and interest thereon will
generally be senior to all Loan Participant claims. The Owner Participant
agrees that in any refinancing operation it will consider in good faith these
and any other conditions which do not impair the customary rights of an owner
participant in a leveraged lease transaction.
In the event that any such agreement is concluded:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on
the proposed date on which the outstanding Secured Certificates will be
redeemed (such date, the "REFINANCING DATE"), (C) the amount, if any, by which
the Owner Participant's aggregate investment in the beneficial interest in the
Aircraft is to be increased or decreased and (D) the proposed revised
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schedules of Basic Rent percentages, debt amortization, Stipulated Loss Value
percentages and Termination Value percentages. The Refinancing Certificate
shall not provide for a debt/equity ratio of more than 4:1. Within fourteen
days of its receipt of the Refinancing Certificate, Lessee may demand a
verification pursuant to Exhibit E to the Lease of the information set forth in
the Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of
the information set forth in the Refinancing Certificate (or the determination
pursuant to such verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised Basic Rent percentages, debt amortization, Stipulated Loss
Value percentages and Termination Value percentages (such information, whether
as set forth or as so determined, the "REFINANCING INFORMATION") the
appropriate parties will take the actions specified in paragraphs (2) through
(5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale with the institution or institutions to be named therein providing
for (i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information (such debt
securities, the "NEW DEBT") except that the principal amount of New Debt may
exceed by no more than 105% the principal amount of all outstanding Secured
Certificates in connection with the first refinancing under this Section 17,
(ii) the application of the proceeds of the sale of the New Debt to the
redemption of all such Secured Certificates on the Refinancing Date and (iii)
the payment of the excess, if any, of such proceeds over the amounts necessary
to effect such redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to
provide for the securing thereunder of the New Debt in like manner as the
Secured Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses
of the first refinancing (including, but not limited to, the fees, expenses and
disbursements of counsel and any placement or underwriting fees) and such
expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the
-56-
<PAGE> 57
assumptions and constraints referred to in the definition of "Net Economic
Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions
and constraints are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A). All adjustments to Basic
Rent shall also be in compliance with the tests of Section Section 4.02(5),
4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc.
75-28 Section 4.08(1) shall be applied on a prospective basis from the date of
such adjustment) and Section 467 of the Code as then in effect as long as the
Schedule of Basic Rent was in compliance with Section 467 of the Code as in
effect on the Closing Date, it being understood that, to the extent that any
grandfather, effective date, or similar provisions in any regulations under
Section 467 or other administrative pronouncement interpreting Section 467
promulgated or issued after the Closing Date causes such regulations or
pronouncement not to be applicable to the Schedule of Basic Rent in effect on
the Closing Date, such Schedule shall be deemed to be in compliance with
Section 467 as in effect on the Closing Date.
(b) The final maturity and weighted average life of the
New Debt on an aggregate basis shall not exceed by more than six months those
of the Secured Certificates.
(c) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
(d) The Owner Participant, at the time of the closing of
the second or third refinancing pursuant to this Section 17, if any, shall be
paid a fee of $25,000 in respect of each such refinancing provided, that in the
event that a similar refinancing is concurrently being effected on identical
terms under any of the other transactions entered into in 1996 by the Owner
Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to
which a fee is payable pursuant to the corresponding provisions of the
applicable participation agreement, Lessee shall not be required to pay a
separate fee of $25,000 for each such refinancing, it being the intent of the
parties that a total fee of $50,000 shall be paid by Lessee for all such
concurrent refinancings on identical terms for which a fee is otherwise payable
pursuant to the corresponding provisions of the applicable participation
agreement.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes
each of the Administrative Agent and the Documentation Agent (each, an "AGENT")
to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Operative Documents as are
delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. Each Agent shall
have no duties or responsibilities except those expressly set forth in the
Operative Documents. As to any matters not expressly provided for hereby or by
the Trust Indenture, each Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining
-57-
<PAGE> 58
from acting) upon the instructions of the Majority in Interest of Certificate
Holders (as defined in the Trust Indenture), and such instructions shall be
binding upon all Loan Participants and all Certificate Holders; provided,
however, that such Agent shall not be required to take any action that exposes
such Agent to personal liability or that is contrary to the Operative Documents
or applicable law. Each Agent agrees to give to each Loan Participant prompt
notice of each notice given to it by the Owner Trustee pursuant to the terms of
the Operative Documents with respect to which such Loan Participant has not
otherwise received such notice.
(b) No Agent nor such Agent's directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the Trust Indenture,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (i) may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Loan Participant and
shall not be responsible to any Loan Participant for any statements, warranties
or representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Operative Documents on the part of any party thereto or to
inspect the property (including the books and records) of any such party; (iv)
shall not be responsible to any Loan Participant for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, the Operative Documents or
any other instrument or document furnished pursuant thereto; and (v) shall
incur no liability under or in respect of the Operative Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
(c) With respect to their Loans and any Secured
Certificates issued to them, [ ] and [ ] shall have the same
rights and powers under the Operative Documents as any other Loan Participant
and may exercise the same as though they were not Agents and the term "Loan
Participant" or "Certificate Holder" shall, unless otherwise expressly
indicated, include [ ] and [ ] in their individual capacity. [ ] and its
Affiliates and [ ] and its Affiliates may accept deposits from, lend money
to, act as trustee under indentures of, accept investment banking engagements
from and generally engage in any kind of business with, the Owner Trustee, the
Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may
do business with or own securities of any of such Persons, all as if [ ] and
[ ] were not Agents and without any duty to account therefor to the Loan
Participants.
(d) Each Loan Participant acknowledges that it has,
independently and without reliance upon the Agents or any other Loan
Participant and based on the financial statements referred to in Section
7(a)(ix) of this Agreement and such other documents and
-58-
<PAGE> 59
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Loan Participant also acknowledges
that it will, independently and without reliance upon the Agents or any other
Loan Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a
successor agent as provided below, any Agent may resign at any time by giving
written notice thereof to the Loan Participants, the Owner Trustee and Lessee
and may be removed at any time with or without cause by the Majority in
Interest of Certificate Holders (as defined in the Trust Indenture). Upon any
such resignation or removal, the Majority in Interest of Certificate Holders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority in Interest of Certificate Holders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Trust Indenture. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 18 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the Trust Indenture.
Notwithstanding anything contrary herein, the Administrative Agent and the
Documentation Agent hereunder and under the Trust Indenture shall be the same
institution, respectively, as the Administrative Agent and the Documentation
Agent under (and as defined in) the Credit Agreement.
-59-
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------
Title: Sr. Vice President-Finance and
Treasurer
Address: U.S. Mail
5101 Northwest Drive (A4010)
St.Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[ ]
Owner Participant
By:
-----------------------------------
Title:
Address:
Attn:
Telecopy No.:
-Signature Page-
<PAGE> 61
State Street Bank and
Trust Company,
Indenture Trustee
By:
-----------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
-----------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
-Signture Page-
<PAGE> 62
[Bridge Lenders]
By:
------------------------------------
Title:
By:
------------------------------------
Title:
Address:
Attn:
Telecopy No.:
<PAGE> 63
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant: Payments made to the Owner Participant
as provided in Section 3.06 of the
Trust Indenture shall be made to:
<PAGE> 64
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and
Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 D
Owner Trustee: First Security Bank of Utah,
National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as
provided in Section 3(f) of the Lease
shall be made to:
First Security Bank of Utah, National
Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 D
SCHEDULE I- PAGE 2
<PAGE> 65
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ----------------- -------------
<S> <C>
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ----------------- -------------
<S> <C>
Owner Participant:
- -----------------
--------------
Total Commitments: 100%
</TABLE>
SCHEDULE II-PAGE 2
<PAGE> 67
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1996 D]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
<TABLE>
<S> <C>
Argentina Japan
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Brazil Netherlands
Canada New Zealand
Chile Norway
Denmark People's Republic of China
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Hungary South Korea
Iceland Spain
India Sweden
Indonesia Switzerland
Ireland Thailand
Italy United Kingdom
</TABLE>
<PAGE> 68
EXHIBIT B
TO PARTICIPATION
AGREEMENT
[NW 1996 D]
ASSIGNMENT AND ASSUMPTION AGREEMENT
[NW 1996 D]
ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 D], dated as of
__________, ____, between ____________________________________, a _____________
corporation (the "ASSIGNOR"), and __________________________, a __________
corporation (the "ASSIGNEE").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect (a) the transfer by the
Assignor to the Assignee of all of the right, title and interest of the
Assignor (except as reserved below) in, under and with respect to, among other
things, (i) the Participation Agreement [NW 1996 D], dated as of April 29,
1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named
therein, First Security Bank of Utah, National Association, and State Street
Bank and Trust Company (as amended, modified or supplemented from time to time,
the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity
payments payable to the Assignee directly or indirectly thereunder, (ii) the
Trust Agreement identified in the Participation Agreement (the "TRUST
AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv)
the Tax Indemnity Agreement identified in the Participation Agreement, and (v)
the proceeds therefrom and (b) the assumption by the Assignee of the
obligations of the Assignor accruing from and after the Effective Time; and
WHEREAS, such documents permit such transfer upon satisfaction of
certain conditions heretofore or concurrently herewith being complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Participation Agreement):
1. ASSIGNMENT. The Assignor has sold, assigned, conveyed,
transferred and set over, and does hereby sell, assign, convey, transfer and
set over, unto the Assignee as of the date hereof all of its present and future
right, title and interest in, under and with respect to the Trust Estate, the
Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity
Agreement and all other Operative Documents to which the Assignor is a party or
any other contract, agreement, document or instrument relating to the Trust
Estate by which the Assignor is bound, and any proceeds therefrom, together
with all other documents and
<PAGE> 69
instruments evidencing any of such right, title and interest, except such
rights of the Assignor as have accrued to the Assignor prior to the Effective
Time (as subsequently defined) (including specifically, but without limitation,
the right to receive any amounts due or accrued to the Assignor under the Trust
Agreement prior to the Effective Time and the right to receive any indemnity
payment pursuant to the Participation Agreement or the Tax Indemnity Agreement
with respect to events occurring prior to the Effective Time).
2. ASSUMPTION. The Assignee hereby undertakes all of the duties
and obligations of the "Owner Participant" accruing on or subsequent for the
Effective Time (for the avoidance of doubt, excluding any duties, obligations
and liabilities of the Assignor required to be performed by it on or prior to
the date hereof under the Participation Agreement, the Trust Agreement, any of
the other Operative Documents to which the Assignor is a party or by which it
is bound or any other contract, agreement, document or other instrument
relating to the Trust Estate to which the Assignor is a party or by which the
Assignor is bound), pursuant to the Participation Agreement, the Trust
Agreement, and each other Operative Document to which the Assignor is a party,
each contract, agreement, document or instrument hereby assigned and each other
contract, agreement, document or instrument relating to the Trust Estate by
which the Assignor is bound, and hereby confirms that it shall be deemed a
party to the Participation Agreement, the Trust Agreement and each other
Operative Document to which the Assignor is a party or by which it is bound and
each such other contract, agreement, document and instrument, and shall be
bound by all the terms thereof (including the agreements and obligations of the
Assignor set forth therein) as if therein named as the Owner Participant. The
assignment and assumption contemplated hereby shall not release the Assignor
from its obligations under the Participation Agreement or the Trust Agreement
except to the extent expressly assumed by the Assignee pursuant to this Section
2, provided, that Assignor's rights under Section 7 of the Participation
Agreement and under the Tax Indemnity Agreement to the extent relating to acts,
conditions or events occurring or existing prior to the date hereof shall be
retained in full by Assignor.
3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within
assignment, the Assignor hereby constitutes and appoints the Assignee, and its
successors and assigns, the true and lawful attorneys of the Assignor, with
full power of substitution, in the name of the Assignee or in the name of the
Assignor but on behalf of and for the benefit of and at the expense of the
Assignee, to collect for the account of the Assignee all items sold,
transferred or assigned to the Assignee pursuant hereto; to institute and
prosecute, in the name of the Assignor or otherwise, but at the expense of the
Assignee, all proceedings that the Assignee may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
items sold, transferred or assigned; to defend and compromise at the expense of
the Assignee any and all actions, suits or proceedings as to title to or
interest in any of the property acquired by the Assignee; and to do all such
acts and things in relation thereto at the expense of the Assignee as the
Assignee shall reasonably deem advisable. The Assignor hereby acknowledges
that this appointment is coupled with an interest and is irrevocable by the
Assignor in any manner or for any reason or by virtue of any dissolution of the
Assignor.
EXHIBIT B - PAGE 2
<PAGE> 70
4. PAYMENTS. The Assignor hereby covenants and agrees to pay
over to the Assignee, if and when received following the date hereof, any
amounts (including any sums payable as interest in respect thereof) paid to or
for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee, and the Assignee hereby covenants and agrees to pay over to the
Assignor, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignee that, under Section 1 hereof, belong to the Assignor.
5. FURTHER ASSURANCES. Each party hereto shall, at any time and
from time to time, upon the request of any other party hereto, promptly and
duly execute and deliver any and all such further instruments and documents and
take such further action as the other party may reasonably request to obtain
the full benefits of this Assignment and of the right and powers herein
granted.
6. INVESTMENT PURPOSE. The Assignee hereby represents that it is
acquiring the trust and other interests hereby assigned to it for its own
account for the purpose of investment and not with a view to the distribution
or resale of either thereof.
7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and
warrants that:
(a) it is duly organized and validly existing in good
standing under the laws of its jurisdiction of organization, and has
the power and authority to carry on its business as now conducted,
to own or hold under lease its properties and to enter into and
perform its obligations and the obligations of the Owner Participant
under the Operative Documents to which it is or will be a party;
(b) this Assignment and Assumption Agreement has been duly
authorized by all necessary action on its part, does not require any
approval not already obtained of its stockholders or any approval or
consent not already obtained of any trustee or holders of any of its
indebtedness or obligations, and has been duly executed and
delivered by the Assignee, and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated
hereby, nor compliance by the Assignee with any of the terms and
provisions hereof or of any of the Operative Documents to which it
will become a party or by which it will be bound, will contravene
any United States Federal or state law, judgment, governmental rule,
regulation or order applicable to or binding on the Assignee (it
being understood that no representation or warranty is made with
respect to laws, rules or regulations relating to ERISA (except as
set forth in subsection 7(h) below) or aviation or to the nature of
the equipment to be owned by the Owner Trustee, other than such
laws, rules, or regulations relating to lease transactions generally
or to the citizenship requirements of the Assignee under the Federal
Aviation Act) or contravene or result in any breach of or constitute
any default under, or result in the creation of any Lien (other
EXHIBIT B - PAGE 3
<PAGE> 71
than Liens provided for in the Operative Documents) upon any
property of the Assignee or, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement, corporate charter, by-law or other agreement or
instrument to which the Assignee is a party or by which it or its
properties may be bound or affected;
(c) each of the Operative Documents to which it will become
a party, assuming such document is the legal, valid and binding
obligation of each other party thereto, will constitute the legal,
valid and binding obligation of the Assignee, enforceable in
accordance with its terms;
(d) there are no pending or, to the knowledge of the
Assignee, threatened actions or proceedings against the Assignee
before any court or administrative agency which, if determined
adversely to the Assignee, would materially adversely affect the
ability of the Assignee to perform its obligations under any
Operative Document to which it will become a party;
(e) upon the execution and delivery of this Assignment and
Assumption Agreement, the Trust Estate and the Trust Indenture
Estate will be free and clear of Lessor Liens (including for the
this purpose Liens that would be Lessor Liens but for the proviso in
the definition of Lessor Liens) attributable to the Assignee;
(f) neither the execution and delivery by the Assignee of
this Assignment and Assumption Agreement, nor the consummation by it
of any of the transactions contemplated hereby, requires the consent
or approval of, the giving of notice to, the registration with, the
recording or filing of any document with, or the taking of any other
action in respect of, any Federal or other governmental authority or
agency (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation
or to the nature of the equipment owned by the Owner Trustee, other
than such laws, rules or regulations relating to lease transactions
generally or to the citizenship requirements of the Assignee under
applicable aviation law);
(g) the Assignee is not an "investment company" or a company
controlled by an "investment company" required to register as such
under the Investment Company Act of 1940, as amended;
(h) either (x) no part of the funds to be used by it to
acquire any right, title or interest in the Trust Estate, or in this
Agreement, the Trust Agreement, the Tax Indemnity Agreement or any
other of the Operative Documents to which the Assignee is a party or
by which the Owner Participant is bound, directly or indirectly
constitutes, or may be deemed under the Code, ERISA or any
applicable state law or any rulings or regulations thereunder to be,
the assets of any "employee benefit plan" as defined in Section 3(3)
of
EXHIBIT B - PAGE 4
<PAGE> 72
ERISA or of any "plan" within the meaning of Section 4975(e)(1) of
the Code or of any entity the assets of which constitute "plan"
assets under ERISA, or
(y) the transfer to and ownership of such right, title and
interest by the Assignee is and will continue to be covered by
Prohibited Transaction Class Exemption 91-38 or 95-60.
(i) on the date hereof [it is a Citizen of the United States
(without use of a voting trust agreement or voting powers
agreement)] [it has entered into a voting powers or voting trust
agreement which has been approved by the FAA (to the extent required
by the Federal Aviation Act or the FAA)];
(j) the transfer to it of all of the Assignor's right, title
and interest as Owner Participant will not adversely affect the
continued registration of the Aircraft in the name of the Owner
Trustee or violate any provision of the Federal Aviation Act or any
rules or regulations promulgated thereunder, or violate any
provisions of the Securities Act of 1933, as amended, or any other
applicable Federal or state law (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to ERISA (except as set forth in subsection
7(h) above)); and
(k) [it is a "Transferee" satisfying the conditions set
forth in Section 8(n) of the Participation Agreement]
[alternatively, guaranty meeting the requirements of Section 8(n) of
the Participation Agreement to be provided]; and
(l) such Transferee is not (i) an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the business
of parcel transport by air or (ii) other similar person or a
corporation or other entity controlling, controlled by or under
common control with such an airline, a commercial air carrier, an
air freight forwarder, an entity engaged in the business of parcel
transport by air or other similar person (unless such entity is
General Electric Company, International Lease Finance Corporation,
any similar entity or any of their respective Affiliates, provided,
that (I) such entity is not included within the immediately
preceding clause (i) of this subsection (l) and (II) no such entity
has, through ownership of common or preferred stock, effective
voting control of an entity described in such immediately preceding
clause (i).
8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor
represents and warrants that:
(a) it is a corporation duly organized and validly existing
in good standing under the laws of the State of ____________ and has
the requisite power, authority and legal right to enter into and
carry out the transactions contemplated hereby;
EXHIBIT B - PAGE 5
<PAGE> 73
(b) this Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding
obligation of Assignor, enforceable against it in accordance with
its terms;
(c) no action or proceeding is pending, has been instituted
or, to the knowledge of Assignor, is threatened, before any court or
governmental agency, nor has any order, judgment or decree been
issued or, to the knowledge of Assignor, is threatened, by any court
or governmental agency which would materially adversely affect the
ability of Assignor to complete and consummate its obligations
contemplated hereby;
(d) the Trust Estate is free of Lessor Liens (including for
this purpose Liens that would be Lessor Liens but for the proviso in
the definition of Lessor Liens) attributable to it;
(e) it has fully performed all of its obligations under the
Participation Agreement and under each other Operative Document to
which it is a party or by which it is bound, which obligations by
their terms are required to be satisfied or performed prior to the
Effective Time or prior to the consummation of the transactions
contemplated hereby;
(f) neither the execution, delivery and performance by it of
this Agreement, nor compliance by it with any of the provisions
thereof requires or will require any approval of its stockholders,
or approval or consent of any trustees or holders of any
indebtedness obligations of it or contravenes or will contravene any
law or any order of any court or governmental authority of agency
applicable to or binding on it (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to ERISA) or contravenes or will contravene the
provisions of, or constitute a default under, its [Certificate of
Incorporation] or [By-Laws] or any indenture, mortgage, contract or
any agreement or instrument to which it is a party or by which it or
any of its property may be bound or affected;
(g) the transfer to Assignee of all of the Assignor's right,
title and interest as Owner Participant will not violate, or affect
registration of the Aircraft under, any provision of the Federal
Aviation Act (or any rules or regulations promulgated thereunder),
violate the Securities Act of 1933, as amended (and no registration
pursuant to such Act or the rules and regulations thereunder shall
be required in connection with such transfer), or violate any other
applicable Federal or state law (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to ERISA); and
(h) Assignor has assumed the risk of any loss of Interest
Deductions, Amortization Deductions and MACRS Deductions and the
risk of any Inclusion
EXHIBIT B - PAGE 6
<PAGE> 74
Event (each as defined in the Tax Indemnity Agreement) resulting
from the transfer to Assignee pursuant to the Assignment.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER STATE.
10. COUNTERPARTS. This Assignment may be executed in any number
of counterparts, all of which together shall constitute a single instrument.
It shall not be necessary that any counterpart be signed by both parties so
long as each party shall sign at least one counterpart.
11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the
benefit of the Owner Trustee, each Loan Participant, each Certificate Holder,
the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the
representations, warranties and covenants of such party contained herein are
also intended to be for the benefit of each Beneficiary, and each Beneficiary
shall be deemed to be an express third party beneficiary with respect thereto,
entitled to enforce directly and in its own name any rights or claims it may
have against such party as such beneficiary.
12. EFFECTIVENESS. This Agreement shall be effective upon its
execution and delivery by each of Assignor and Assignee, the exact time of
occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed
by Assignor and Assignee addressed to Lessee, the Owner Trustee and the
Indenture Trustee.
EXHIBIT B - PAGE 7
<PAGE> 75
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment as of
the day and year first above written.
[ASSIGNOR]
By
------------------------------------
Title
[ASSIGNEE]
By
------------------------------------
Title
EXHIBIT B - PAGE 8
<PAGE> 76
EXHIBIT C
TO
PARTICIPATION
AGREEMENT
[NW 1996 D]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
<TABLE>
<S> <C> <C> <C>
** Argentina * Japan
* Australia * Luxembourg
* Austria ** Malaysia
* Belgium ** Mexico
** Brazil * Netherlands
* Canada * New Zealand
** Chile * Norway
* Denmark ** People's Republic of China
* Finland Portugal
* France ** Republic of China (Taiwan)***
* Germany Singapore
** Greece ** South Africa
** Hungary South Korea
* Iceland Spain
** India * Sweden
** Indonesia * Switzerland
* Ireland ** Thailand
* Italy * United Kingdom
</TABLE>
* Designates "Specified Country".
** Designates "Restricted Country".
*** So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those in
effect on the Delivery Date.
EXHIBIT C - PAGE 1
<PAGE> 77
EXHIBIT D TO
PARTICIPATION
AGREEMENT
FORM OF GUARANTY
[LETTERHEAD OF GUARANTOR]
PARENT GUARANTY
Dated as of ____________ ____, ______
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
One Boeing Model 757-251 Aircraft
Manufacturer's Serial Number [ ]
Ladies and Gentlemen:
Reference is hereby made to the Participation Agreement [NW 1996 D] (as
from time to time amended or supplemented, the "Participation Agreement"), dated
as of April 29, 1996, among Northwest Airlines, Inc. ("Lessee"), [ ]
(the "Owner Participant"), First Security Bank of Utah, National Association,
not in its individual capacity, except as expressly provided therein, but solely
as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated
as of April 29_, 1996, between the Trustee and the Owner Participant (the "Trust
Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and
the Loan Participants listed on Schedule I thereto. Capitalized terms used
herein without definition have the respective meanings ascribed thereto in the
Participation Agreement.
Pursuant to Section 8 of the Participation Agreement and in
connection with the transfer of the Interest (as defined in the Assignment and
Assumption Agreement dated as of the date hereof between [Transferor], a
____________ corporation ("Transferor") and [Transferee], a ____________
corporation ("Transferee") (the "Assumption Agreement'')) to be consummated as
of the date hereof from Transferor to Transferee, the wholly-owned subsidiary
of _________________________ ("Guarantor"), and the execution by Guarantor of
the guaranty of Transferee's obligations as contemplated by the Assumption
Agreement (this "Guaranty"), Guarantor represents and warrants to, and
covenants with, Lessee, First Security Bank of Utah, National Association, in
its individual capacity ("Trust Company"), Indenture Trustee and Loan
Participants, as follows:
EXHIBIT D - PAGE 1
<PAGE> 78
1. Ownership of Transferee. Guarantor directly or indirectly
owns and holds all of the issued and outstanding shares of capital stock of
Transferee.
2. Additional Representations and Warranties.
(i) Guarantor is a corporation duly organized and validly existing
pursuant to the laws of ___________________, and has the corporate power and
authority to enter into and perform this Guaranty.
(ii) The execution, delivery and performance by Guarantor of this
Guaranty has been duly authorized by all necessary corporate action on the part
of Guarantor, does not require any stockholder approval, or approval or consent
of any trustee or holders of any indebtedness or obligations of Guarantor
except such as have been duly obtained, and this Guaranty will not contravene
any applicable law or corporate charter or by-law, or contravene the provisions
of, or constitute a default under, or result in the creation of any Lien upon
the property of Guarantor under, any indenture, mortgage, contract or other
agreement to which Guarantor is a party or by which it may be bound or
affected.
(iii) Neither the execution and delivery by Guarantor of this
Guaranty, nor the consummation of the transactions by Guarantor contemplated
hereby, nor the performance of the obligations hereunder or under any other
documents contemplated hereby or thereby by Guarantor requires the consent or
approval of, the giving of notice to, or the registration with, or the taking
of any other action in respect of, United States Federal, state, or foreign
governmental authority or agency.
(iv) This Guaranty has been duly executed and validly delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms except as the
enforcement of this Guaranty may be affected by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally.
(v) There are no pending or, to Guarantor's knowledge, threatened
actions or proceedings before any court or administrative agency which might
materially adversely affect the consolidated financial condition, business or
operations of Guarantor, or the ability of Guarantor to perform its obligations
under this Guaranty.
(vi) No broker's or finder's fees or commissions or advisory fees
are or may become payable in connection with this Guaranty or the Assumption
Agreement or, if any such fee is payable, such fee will be the responsibility
of Guarantor.
(vii) On the date hereof the Trust Estate will be free of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to Guarantor.
(viii) Guarantor is (A) a Citizen of the United States (or has
effected a voting trust agreement, voting powers agreement or other similar
arrangement) and (B) a bank,
EXHIBIT D - PAGE 2
<PAGE> 79
insurance company, financial institution or domestic corporation the net worth
of which is at least $50,000,000.
3. Guaranty. (a) Guarantor hereby unconditionally and
irrevocably guarantees, not merely as surety but as obligor:
(i) the due and punctual payment of any and all sums which
are payable by Transferee pursuant to any provision of the
Assumption Agreement (and in particular, Section 4 thereof) and the
Participation Agreement, the Tax Indemnity Agreement and any other
Operative Document assumed by Transferee pursuant to the Assumption
Agreement (collectively, the "Guaranteed Agreements"), and
(ii) the due and punctual performance of and compliance with
and observance of all other obligations, covenants, warranties and
undertakings of or conditions contained in or arising under the
Guaranteed Agreements binding upon or made by Transferor and assumed
by Transferee under the Assumption Agreement,
in each case, whether or not Guarantor shall have contributed funds to Lessor
or Transferee, as the case may be, for such payment or performance by Lessor or
Transferee (such payments and other obligations guaranteed hereunder
hereinafter referred to as the "Obligations").
(b) Guarantor agrees that this Guaranty is an unconditional and
absolute guaranty of payment and performance (not merely enforceability) and
that its undertakings hereunder are not contingent upon your bringing any
action against Transferee or resorting to any security and hereby expressly
waives any claim that its undertakings hereunder are so contingent.
(c) Guarantor hereby waives promptness, diligence, demand and all
notices whatsoever as to the obligations and covenants guaranteed hereby and
acceptance of this Guaranty, and waives any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the
undersigned, and agrees that it shall not be required to consent to, or receive
any notice of, any amendment or modification of, or waiver, consent or
extension with respect to, the Guaranteed Agreements that may be made or given
as provided therein.
(d) Guarantor agrees to pay any costs and expenses (including
reasonable fees and disbursements of counsel) that may be paid or incurred by
the beneficiaries hereof in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, Guarantor under this Guaranty.
(e) Guarantor understands and agrees that its obligations
hereunder shall be construed as continuing, absolute and unconditional without
regard to (i) the validity, regularity or enforceability of any Operative
Document, any of the Obligations or any collateral security therefor or
guaranty or right of offset with respect thereto at any time or
EXHIBIT D - PAGE 3
<PAGE> 80
from time to time held by any beneficiary hereof, (ii) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by Transferee against any beneficiary
hereof or (iii) any other circumstances whatsoever (with or without notice to
or knowledge of Transferee or Guarantor) that constitutes, or might be
construed to constitute, an equitable or legal discharge of Transferee for the
Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other
instance.
4. Quiet Enjoyment. So long as no Event of Default shall have
occurred and be continuing, Guarantor will not permit Transferee or Lessor to
take or cause to be taken any action contrary to Lessee's rights under the
Lease, including, without limitation, Lessee's rights to possession and use of
the Aircraft.
5. No Discharge. The obligations of Guarantor hereunder are
absolute, unconditional and irrevocable and will not be discharged by, and this
Guaranty shall remain in full force and effect notwithstanding: (a) the
assignment, conveyance or other transfer by Guarantor of any or all of its
interest in or capital stock of Transferee, unless such assignment, conveyance
or transfer of all of its interest is to a transferee meeting the requirements
set forth in Section 8(n) of the Participation Agreement and otherwise complies
with the requirements for a transfer as set forth in Section 8(n) of the
Participation Agreement, in which event Guarantor shall be discharged from any
and all liabilities arising hereunder (to the extent such liabilities arise
after such transfer); (b) the assignment, conveyance or other transfer by
Transferee of any or all of its interest in the Trust Estate (as defined in the
Trust Agreement), unless such assignment, conveyance or transfer of all of its
interest is to a transferee meeting the requirements set forth in Section 8(n)
of the Participation Agreement and otherwise complies with the requirements for
a transfer as set forth in Section 8(n) of the Participation Agreement, in
which event Guarantor shall be discharged from any and all liabilities arising
hereunder (to the extent such liabilities arise after such transfer) unless
Guarantor guarantees the obligations of the transferee under Section 8(n) of
the Participation Agreement; (c) the assignment, conveyance or other transfer
by Lessor of any or all of its interest in the Aircraft; (d) any extension or
renewal with respect to any obligation of Transferee or Lessor under the
Guaranteed Agreements; (e) any modification of, or amendment or supplement to,
any of the Guaranteed Agreements; (f) any furnishing or acceptance of
additional security or any release of any security; (g) any waiver, consent or
other action or inaction or any exercise or non-exercise of any right, remedy
or power with respect to Transferee or Lessor, or any change in the structure
of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization,
arrangement, composition, liquidation, dissolution, or similar proceedings with
respect to the Trustee or Transferee; or any other occurrence whatsoever,
except payment in full of all amounts payable by Transferee under the
Guaranteed Agreements and performance in full of all Obligations of Transferee
in accordance with the terms and conditions of the Guaranteed Agreements.
6. Reinstatement. Guarantor agrees that this Guaranty shall be
automatically reinstated with respect to any payment made prior to any
termination of the Guaranty by or on behalf of Transferee pursuant to the
Participation Agreement or the other
EXHIBIT D - PAGE 4
<PAGE> 81
Operative Documents to which Transferee is a party if and to the extent that
such payment is rescinded or must be otherwise restored, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.
7. No Subrogation. Notwithstanding any payment or payments made
by Guarantor hereunder or any set-off or application of funds of Guarantor by
any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any
of the rights of any beneficiary hereof against Transferee or any collateral,
security or guarantee or right of set-off held by any beneficiary hereof for
the payment of the Obligations, nor shall Guarantor seek or be entitled to seek
any reimbursement from Transferee in respect of payment made by Guarantor
hereunder, until all amounts and performance owing to the beneficiaries hereof
by Transferee on account of the Obligations are paid and performed in full.
8. Severability. Any provision of this Guaranty Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
9. Miscellaneous. This Guaranty shall: (a) be binding upon
Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan
Participants, and their respective successors and assigns and each other holder
from time to time of any interest in the Aircraft or the Operative Documents,
but shall not, and is not intended to, create rights in any other third
parties; (c) not be waived, amended or modified without the written consent of
Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; and (e) subject to Section 6 hereof, remain in full force and effect
until, and shall be terminated upon (1) the payment in full of all sums payable
by Transferee, as the case may be, under the Guaranteed Agreements, and by
Guarantor hereunder, and performance in full of Transferee, in accordance with
the terms and provisions of the Guaranteed Agreements and Guarantor in
accordance with the terms of this Guaranty or (2) the date on which Transferee
shall meet the requirements set forth in Section 8 of the Participation
Agreement without benefit of this Guaranty; provided that Guarantor hereby
covenants and agrees that if Transferee shall at any time thereafter (while
Transferee shall be Owner Participant under the Participation Agreement) fail
to meet such requirements, Guarantor shall immediately reinstate this Guaranty
or execute and deliver to the addressees of this Guaranty a guaranty
substantially identical hereto. All notices to, or requests of, demands on and
other communications with Guarantor shall be made as set forth in the
Participation Agreement.
[rest of page intentionally left blank]
EXHIBIT D - PAGE 5
<PAGE> 82
Very truly yours,
[GUARANTOR]
By:______________________________
Name:
Title:
[SIGNATURE PAGE]
EXHIBIT D - PAGE 6
<PAGE> 83
EXHIBIT E TO
PARTICIPATION
AGREEMENT
FORM OF OPINION OF TRANSFEREE COUNSEL
_____________ ___, _______
To Each of the Persons Named on
Schedule A Attached Hereto
Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and
Operative Documents related to Acquisition Thereof on
Ladies and Gentlemen:
We have acted as [special][internal] counsel to [Transferee], a
_____________ corporation (the "Transferee"), in connection with the transfer
by [Transferor], a __________________ corporation (the "Transferor") to
Transferee, of all of its right, title and interest in and to the Aircraft and
the Operative Documents to which the Transferor is a party or by which it is
bound (collectively, the "Transferee Documents") and the assumption by the
Transferee of the Transferor's obligations thereunder. The transfer is being
accomplished by an Assignment and Assumption Agreement, dated as of
____________ ____, _____ made by the Transferee and agreed to and acknowledged
by the Transferor (the "Assumption Agreement"). Capitalized terms used but not
otherwise defined herein are defined as set forth in or by reference in the
Participation Agreement referred to in the Assumption Agreement.
In connection with the opinions expressed herein, we have examined
executed counterparts of the Transferee Documents. We have also examined and
relied upon the accuracy of the originals or certified, conformed, photocopied
or telecopied copies of such corporate records, certificates, instruments and
other documents as we have deemed necessary or appropriate to enable us to
render the opinions expressed herein. In all such examinations, we have
assumed the genuineness of signatures (other than those of the Transferee) on
original documents and the conformity to such original documents of all copies
submitted to us as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by public
officials, we have assumed the same to have been properly given and to be
accurate. As to all matters of fact material to our opinions, we have, when
relevant facts were not independently established, relied upon representations
and warranties contained in the Operative Documents and upon the statements and
certificates furnished to us.
Based upon and subject to the foregoing and the matters hereinafter
set forth, we are of the opinion that:
EXHIBIT E - PAGE 1
<PAGE> 84
1. The Transferee is a corporation duly organized, validly
existing and in good standing under the laws of the State of ______________.
2. The Transferee has full corporate power, authority and legal
right to carry on its business as now conducted and is duly authorized and
empowered to [execute and deliver] the Transferee Documents and to perform its
obligations thereunder in accordance with the conditions and provisions
thereof.
3. The execution, delivery and performance by the Transferee of
the Transferee Documents have been duly authorized by the Transferee[, and each
of the Transferee Documents has been duly executed and delivered by it].
4. No filing with, notice to or authorization or approval from
any governmental or public body or authority of the United States of America or
the State of ____________ is required in connection with the execution,
delivery and performance by the Transferee of the Transferee Documents.
5. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Transferee) pending or, to our knowledge,
threatened against or affecting the Transferee or any property rights of the
Transferee at law or in equity or before any court, commission or other
administrative agency or instrumentality, which, either individually or in the
aggregate, if determined adversely would materially affect the condition,
financial or otherwise, of the Transferee or its ability to perform its
obligations under the Transferee Documents; and, to our knowledge, the
Transferee is not in default with respect to any order or decree of any court
or governmental commission, agency or instrumentality which would materially
affect the condition, financial or otherwise, of the Transferee or its ability
to perform its obligations under the Transferee Documents.
6. Neither the execution and delivery by the Transferee of the
Transferee Documents nor the consummation of the transactions therein
contemplated or the fulfillment of or compliance with, the terms and provisions
thereof will conflict with or result in a breach of, any of the terms,
conditions or provisions of (i) any law or regulation of the United States of
America or the State of ____________, or (ii) to the best of our knowledge, any
order, injunction or decree of any court or governmental instrumentality
binding upon the Transferee, or (iii) the Certificate of Incorporation or the
By-Laws of the Transferee or (iv) to the best of our knowledge, any bond,
debenture, note, mortgage, indenture, agreement or other instrument to which
the Transferee is now a party or by which it or its property may be bound, or
would constitute (with the giving of notice or the passage of time or both) a
default thereunder or result in the creation or imposition of any lien, charge,
security interest or other encumbrance (except as expressly contemplated by the
Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the
terms of any such agreement or instrument.
7. Each of the Transferee Documents constitutes a legal, valid
and binding obligation of the Transferee, enforceable against the Transferee in
accordance with the terms thereof, except as the enforceability thereof may be
limited by (a) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law),
EXHIBIT E - PAGE 2
<PAGE> 85
(b) applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
8. Neither the execution and delivery by the Transferee of the
Transferee Documents, nor the consummation by the Transferee of any of the
transactions contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration or filing with, or the taking of any
other action with respect to, any governmental authority or agency of the
United States of the State of _______________.
We express no opinion as to the laws of any jurisdiction other than
the laws of the State of ______________ and the federal laws of the United
States of America. We note that the Trust Agreement is governed by the laws of
the State of Utah. Insofar as the foregoing opinions relate to the legality,
validity, binding effect and enforceability of the Trust Agreement, we have
assumed for purposes of such opinions (notwithstanding the express provisions
of such agreements to the contrary) that such agreement is governed by the laws
of the State of ______________ and we express no opinion as to the
enforceability of the choice of law provisions in such agreement. In addition,
we express no opinion herein as to (i) any federal or state securities laws,
(ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or
regulations applicable to the particular nature of the equipment acquired by
the Owner Trustee pursuant to the Participation Agreement or the Purchase
Agreement Assignment and (v) ERISA or any other pension and employee benefit
laws, rules or regulations. In addition, we express no opinion as to title in
or to the Trust Estate on the part of any Person.
Insofar as our opinions expressed herein relate to the Tax Indemnity
Agreement, such opinions are addressed and are being rendered solely to Lessee.
In rendering the opinions expressed herein, we have assumed that (a)
each of the Transferee Documents has been duly authorized, executed and
delivered by the respective parties thereto (other than the Transferee) and
constitutes a legal, valid and binding obligation of each of such parties
(other than the Transferee) enforceable against each of such parties in
accordance with the terms thereof, (b) each of such parties (other than the
Transferee) has the requisite power, authority and legal right to enter into
and perform its respective obligations under the Transferee Documents and (c)
the transactions provided for in the Transferee Documents are not within the
prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended.
This opinion is furnished by us at the request of the Transferee,
with their consent for the sole benefit of the addressees hereof, each of whom
we understand and agree may rely upon the opinions set forth herein. No other
person or entity is entitled to rely on this opinion without our express
written consent. This opinion is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
Very truly yours,
EXHIBIT E - PAGE 3
<PAGE> 86
SCHEDULE A
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
SCHEDULE A - PAGE 1
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1996 D]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 D],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the
"OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as
defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate
Pass Through Trust Agreements (as defined below), (v) STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and
(vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as
Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the
Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[____________________________________________], as the loan participants
(collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee
entered into the Participation Agreement [NW 1996 D], dated as of April 29,
1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease
of one Boeing 757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 D], dated as of
April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 D], dated April 30, 1996
<PAGE> 2
(collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee
issued to the Original Loan Participants secured certificates substantially in
the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES")
as evidence of the loan then being made by the Original Loan Participants in
participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease
from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29,
1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1996 D] dated as of April 29, 1996 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant Guarantor entered into
the Owner Participant Guaranty [NW 1996 D] dated as of April 29, 1996 (the
"OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor
guaranteed certain obligations of the Owner Participant under the Operative
Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and the Owner Trustee pursuant to such Section 17 of
its desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1996 D], dated
as of June 3, 1996 (the "REFUNDING AGREEMENT");
-2-
<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 D], dated as of the date hereof (the "INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 D], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1996 D] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Participant and the Owner Trustee have entered into the
First Amendment to Trust Agreement [NW 1996 D] dated as of the date hereof (the
"TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by
the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT")
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as
defined in Section 1 of the Refunding Agreement), three separate grantor trusts
(collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH
TRUST") will be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale by each Pass
Through Trust of pass through certificates pursuant thereto (collectively, the
"CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing the
same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York
branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements
(each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of
Certificates of each Pass Through Trust, with the Subordination Agent, as agent
for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii)
the Pass Through Trustee, the Liquidity Provider and the
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<PAGE> 4
Subordination Agent entered into the Intercreditor Agreement, dated as of the
date hereof (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement
is hereby amended by (i) adding the words "or the Pass Through Certificates" (1)
before and after the clause "or transfer of the Secured Certificates" in clause
(E) thereof and (2) after the clause "the Secured Certificates" in clause (F)
thereof and (ii) adding the words and punctuation "(including any Make-Whole
Amount)" after the word "premium" in clause (F) thereof.
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4)
thereof in their entirety and substituting therefor "Intentionally Omitted",
(iii) deleting the words "a Loan Participant" from clause (9) thereof and
substituting therefor the words "the Indenture Trustee or the Trust Indenture
Estate", (iv) deleting the words "any Loan Participant or any Certificate
Holder" from clause (9) thereof and substituting therefor the words "the
Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in
clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in
clause (10) thereof and substituting therefor "(B)", and (vii) deleting the
parenthetical clause and the proviso from clause (12) thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes"
where such words first appear in the second sentence of the first paragraph
thereof and substituting therefor "any Income Tax imposed by the Unites States
Federal government required to be withheld from payments on the Secured
Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and
(ii) deleting the second sentence in the last paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement
is hereby amended by (i) deleting the third and fourth sentences thereof and
(ii) deleting the words "other than a Loan Participant" in the first sentence
thereof.
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<PAGE> 5
SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement
is hereby amended by (i) deleting the word "and" between the words "expenses"
and "Transaction Expenses" in the second parenthetical phrase of the first
paragraph thereof and substituting a comma therefor, (ii) inserting after the
phrase "to Section 16 hereof" in such second parenthetical phrase the words "and
Refinancing Expenses to the extent not required to be paid by the Owner Trustee
or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement",
(iii) adding the words and punctuation "and, only in the case of an Indemnitee
who is the Owner Participant and its Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents, the Intercreditor
Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and,
only in the case of an Indemnitee who is the Subordination Agent, the
Intercreditor Agreement and the Liquidity Facilities" after the words "respect
thereof" in the first clause (A) thereof, and (iv) adding the words and
punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass
Through Trust Agreements" after the words "Operative Documents" in the second
clause (A) thereof and in the second clause (B) thereof.
SECTION 7. [Reserved]
SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is
hereby amended by deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof.
SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", any Loan
Participant's," from the first sentence thereof, (ii) deleting the words and
punctuation "the Loan Participants," each time they appear in the second
sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and
"the Indenture Trustee" in clause (N) of the third sentence thereof and
substituting therefor "and", (iv) deleting the words "and the Loan Participants"
from clause (N) of the third sentence thereof, and (v) deleting the words and
punctuation "the Loan Participants," from the fifth sentence thereof.
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<PAGE> 6
SECTION 10. AMENDMENT OF SECTION 8(Q)(A) OF THE ORIGINAL PARTICIPATION
AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby
amended by (i) deleting the word "Each" in the first sentence thereof and
substituting therefor the words "The Owner" and (ii) adding a new sentence to
the end thereof to read as follows: "The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of
the initial supplement (other than the initial supplement related to the
Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust
Agreement without the prior written consent of the Owner Participant.".
SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is
hereby amended by deleting the fourth and fifth sentences thereof.
SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", each Loan
Participant" therefrom and (ii) adding a new second paragraph thereto at the end
thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to the
effect that (i) the Lien of the Trust Indenture continues to be
a valid and duly perfected first priority security interest in
and to the Aircraft and (ii) the Indenture Trustee should be
entitled to the benefits of 11 U.S.C. Section 1110; provided
that the opinion required by subclause (ii) need only be given
if immediately prior to such assumption the Owner Trustee
should have been entitled to the benefits of 11 U.S.C. Section
1110.
SECTION 13. AMENDMENT OF SECTION 8(Y)(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement
is hereby amended by (i) deleting the words "each" the first time it appears in
Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii)
deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and
substituting therefor the words "the Indenture Trustee and the Owner", (iii)
inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the
Indenture Trustee and the Owner Participant".
SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
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<PAGE> 7
SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
(ii) Lessee agrees and covenants that it shall not purchase,
guarantee or acquire any interest in (i) any Secured Certificate (except as
provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the
Liquidity Provider.
SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (A) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (B) thereof and substituting
therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05"
from clause (iii) of the second sentence thereof.
SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Loan Participants" each time they
appear in clauses (A), (B), and (D) thereof and substituting therefor the words
"Indenture Trustee", (ii) deleting the "," both times it appears between the
words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and
substituting therefor "and", and (iii) deleting the words "and the Loan
Participants" both times they appear in clause (E) thereof.
SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner Participant
covenants and agrees that it shall not unreasonably withhold
its consent
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<PAGE> 8
to any consent requested of the Owner Trustee, as Lessor, under
the terms of the Lease which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor.
SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is
hereby amended by adding the following new subclause (7) to clause (a) thereof:
(7) in connection with any proposed refinancing, if,
on the date which is two Business Days prior to the last date
on which notice of revocation of redemption may be given
pursuant to Section 2.12(b) of the Trust Indenture, the Owner
Participant is not satisfied in its sole discretion that such
refinancing will occur on the date specified for such
refinancing in the notice provided pursuant to Section 2.11 of
the Trust Indenture, then Lessee shall not effect such proposed
refinancing and shall provide notice to such effect to the
Indenture Trustee pursuant to Section 2.12(b) of the Trust
Indenture.
SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 25. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as amended
pursuant to this Amendment.
SECTION 26. MISCELLANEOUS. (a) Without in any way affecting the
provisions of the letter agreement dated April 30, 1996 between the Owner
Participant and Lessee (which letter agreement shall remain in full force and
effect) relating to future financings, each of the parties hereto agrees that
the transactions contemplated hereby shall constitute one of the three
refinancing operations permitted in Section 17 of the Participation Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease and
the other Operative Documents, and is entitled to the benefits of the covenants
and other provisions therein running in favor of the Loan Participants, and to
the security purported to be afforded by the Trust Indenture, but that (i) the
Purchaser has no liability arising out of any actions or inactions of the
Original Loan Participants or any prior Certificate Holder or any event or
condition which occurred or existed prior to the Closing, (ii) the Purchaser is
making no representations or warranties other than those set forth in the
Refunding Agreement, and (iii) the Purchaser has no liability or obligation
under any covenant in any of such agreements for any period prior to the
Closing.
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<PAGE> 9
(c) This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Amendment shall be binding upon, and
inure to the benefit of, Lessee and its successors and assigns, each Loan
Participant and its successors and assigns, the Owner Participant and its
successors and assigns, each Certificate Holder and its successors and
registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-------------------------------
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By:
-------------------------------
Name:
Title:
[ ],
as Owner Participant
By:
-------------------------------
Name:
Title:
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<PAGE> 11
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY,
in its individual capacity and as
Indenture Trustee
By:
-------------------------------
Name:
Title
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<PAGE> 12
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
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<PAGE> 1
REFUNDING AGREEMENT
[NW 1996 D]
This REFUNDING AGREEMENT [NW 1996 D], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[___________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (the "OWNER
TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK
AND TRUST COMPANY, not in its individual capacity except as otherwise expressly
provided herein, but solely as trustee (in such capacity, the "PASS THROUGH
TRUSTEE") under each of the three separate Pass Through Trust Agreements (as
defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT")
under the Intercreditor Agreement (as defined below), and (vii) STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture
Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture
(as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
[Insert Bridge Lenders], as the loan participants (collectively, the "ORIGINAL
LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
<PAGE> 2
Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, as
supplemented by Trust Agreement and Indenture Supplement [NW 1996 D], dated
April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the
Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996, as
supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL
TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996 (the
"ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 D]
dated as of April 29, 1996 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1996 D], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into the First Amendment to Trust Agreement [NW 1996 D], dated as of
the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust
Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST
AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1996 D], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1996 D] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, three separate
grantor trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a
"PASS THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
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<PAGE> 4
WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Owner Participant
shall pay to the Owner Trustee an amount equal to the unpaid interest
on the Original Secured Certificates accrued up to but not including
the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders by the Owner Trustee under the Original Indenture and the
Original Participation Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture;
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the
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<PAGE> 5
maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust; and
(viii) the Owner Trustee shall disburse to the Owner Participant
the excess of the amounts received by it pursuant to clauses (i) and
(ii) above over the amount paid by it pursuant to clause (iii) above.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
or the Indenture Trustee any amount in respect of the prepayment of the Original
Secured Certificates, the Original Secured Certificates shall remain outstanding
and in full force and effect, and the actions contemplated by Sections 1(a), 5,
6 and 7 hereof shall not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated the
date hereof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such
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<PAGE> 6
Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates
in the aggregate shall be in the principal amounts set forth on Schedule II
hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of
the other Operative Documents, all such Refinancing Secured Certificates shall
be dated and authenticated as of the Refinancing Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. L;
(5) the Trust Agreement Amendment No. 1;
(6) each of the Pass Through Trust Agreements;
(7) the Intercreditor Agreement; and
(8) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts.
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<PAGE> 7
(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1 and any other documents to be
executed on behalf of the Lessee or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Original Trust
Agreement
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<PAGE> 8
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d)) relate solely to an earlier date (in
which case such representations and warranties were correct on and
as of such earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
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<PAGE> 9
(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any
other documents to be executed on behalf of the Owner Trustee in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an
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<PAGE> 10
opinion addressed to it from the Lessee's legal department, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Dewey Ballantine, special counsel for
the Owner Participant, and an opinion addressed to it from corporate counsel to
the Owner Participant, in each case in form and substance satisfactory to each
of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in-house German counsel
for the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section l(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
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<PAGE> 11
(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to
the receipt by the Lessee and the Guarantor of (i) each opinion referred to in
subsections (j) through (n) of Section 3, addressed to the Lessee and the
Guarantor or accompanied by a letter from counsel rendering such opinion
authorizing the Lessee and the Guarantor to rely on such opinion as if it were
addressed to the Lessee and the Guarantor, (ii) each certificate referred to in
subsections (e) through (g) of Section 3, (iii) executed counterparts or
conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment
No. 1 and (iv) such other documents and evidence with respect to each other
party hereto as the Lessee, the Guarantor or their counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement, the taking of all necessary corporate action in
connection therewith and compliance with the conditions herein set forth.
(b) The respective obligation of each of the Lessee, the Guarantor, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate in
the transactions contemplated hereby is subject to the receipt by each of them
of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Refinancing Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are correct as though
made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The
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<PAGE> 12
Lessee and the Guarantor, by execution and delivery hereof, consent to such
execution and delivery of the Indenture. The Indenture shall be effective as of
the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1,
and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to
execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall
be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the
Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree
to execute and deliver the PA Amendment No. 1. Upon the execution and delivery
of the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
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<PAGE> 13
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all necessary corporate action on the part of the
Lessee or the Guarantor, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material
indebtedness or material obligations of the Lessee or the Guarantor,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation or
order binding on the Lessee or the Guarantor (as the case may be) or
the certificate of incorporation or by-laws of the Lessee or the
Guarantor (as the case may be), or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of the Lessee or the
Guarantor (as the case may be) under, any indenture, mortgage, contract
or other agreement to which the Lessee or the Guarantor (as the case
may be) is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate, would
be reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the Guarantor and
its subsidiaries considered as one enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign
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<PAGE> 14
governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of
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<PAGE> 15
the Original Lease and the Lease Amendment No. 1 (to the extent the
Lease constitutes chattel paper) and the filing of continuation
statements at periodic intervals with respect to the Uniform Commercial
Code financing statements in effect on the Refinancing Date covering
the security interests created by the Original Indenture or describing
the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
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(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Original Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has, or had on the respective dates of execution thereof
(assuming the authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and to the
extent expressly provided herein or therein, in its individual
capacity, the corporate
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power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1
and each other Operative Document (other than the Trust Agreement) to
which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, the Lease, when the
Lease Amendment No. 1 shall have been entered into, and the Trust
Agreement, when the Trust Agreement Amendment No. 1 shall have been
entered into, will constitute, a legal, valid and binding obligation of
the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, enforceable against it in its individual capacity or
as Owner Trustee, as the case may be, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Original Trust Agreement, the Trust Agreement Amendment No.
1, the Original Indenture, the Indenture, the Original Lease, the Lease
Amendment No. 1, the Refinancing Secured Certificates or any other
Operative Document to which it is a party, nor the consummation by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or thereby,
nor the compliance by the Owner Trustee, in its individual capacity or
as Owner Trustee, as the case may be, 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 it, or (B) violates or
will violate its articles of association or by-laws, or contravenes or
will contravene any provision of, or
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<PAGE> 18
constitutes or will constitute a default under, or results or will
result in any breach of, or results or will result in the creation of
any Lien (other than as permitted under the Operative Documents) upon
its property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement,
license or other agreement or instrument to which it is a party or by
which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the
State of Utah governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of, or the carrying out by, the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or by the
Trust Agreement, the Participation Agreement, the Indenture, the Lease,
the Refinancing Secured Certificates, or any other Operative Document
to which it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere
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<PAGE> 19
in any way with the use or operation of the Aircraft by the Lessee (or
any Sublessee), (C) the existence of which does not affect the priority
or perfection of, or otherwise jeopardize, the Lien of the Indenture,
(D) which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest
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for sale to, or to solicit any offer to acquire any of the same from,
any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) The Owner Participant is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
[_________] and has the corporate power and authority to carry on its
present business and operations and to own or lease its properties,
has, or had on the respective dates of execution thereof, as the case
may be, the corporate power and authority to enter into and to perform
its obligations under this Agreement, the Original Participation
Agreement, the Original Trust Agreement, the Tax Indemnity Agreement,
the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1
and the Trust Agreement Amendment No. 1; this Agreement has been duly
authorized, executed and delivered by the Owner Participant; and this
Agreement constitutes, and the Participation Agreement when the PA
Amendment No. 1 shall have been entered into, the Tax Indemnity
Agreement when the TIA Amendment No. 1 shall have been entered into,
and the Trust Agreement when the Trust Agreement Amendment No. 1 shall
have been entered into, will constitute, the legal, valid and binding
obligations of the Owner Participant enforceable against it in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at law
or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1, the Trust Agreement Amendment No. 1 or any other
Operative Document to which it is a party nor (B) compliance by the
Owner Participant with all of the provisions hereof or thereof, (x)
will contravene any law or order of any court or governmental authority
or agency applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect to
laws, rules or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws, rules or
regulations relating to the citizenship requirements of the Owner
Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
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<PAGE> 21
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by the Owner Participant of this
Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the
Trust Agreement Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person; the Owner Participant's interest in the
Trust Estate and the Trust Agreement was acquired for its own account
and was purchased for investment and not with a view to any resale or
distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings and (E)
the existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for the benefit
of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts,
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and has the full corporate power, authority and legal right under the
laws of the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Pass Through Trust Agreements,
the Intercreditor Agreement and the Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
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<PAGE> 23
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under subpart E,
Part I of Subchapter J of the Code, such trusts will not be subject to
any Taxes imposed by the Commonwealth of Massachusetts or any political
subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
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<PAGE> 24
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement will constitute, the legal, valid and binding obligations of
the Subordination Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the
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<PAGE> 25
registration with, or the taking of any other action with respect to,
any Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States
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mail, with proper postage for first-class registered or certified mail prepaid,
or when delivered personally or, if promptly confirmed by mail as provided
above, when dispatched by facsimile or other written telecommunication,
addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture
Trustee, at their respective addresses or facsimile numbers set forth below the
signatures of such parties at the foot of this Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for
the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special
counsel for the Original Loan Participants;
(2) the fees, expenses and disbursements of Dewey Ballantine,
special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section
11 and the agreements referred to herein are not consummated, the Lessee shall
bear and pay all costs, expenses and fees referred to in this Section 11 at no
after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant;
provided that if the transactions fail to be consummated
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as a result of the failure of the Owner Participant to act in good faith in
consummating the transactions, or to otherwise comply with the terms hereof, the
Owner Participant shall bear and pay its own fees, costs and expenses
(including, without limitation, the fees and expenses of its special counsel)
and the Lessee shall pay all other reasonable fees, costs and expenses as
aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
-28-
<PAGE> 28
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
-29-
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
-30-
<PAGE> 30
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: _____________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
-31-
<PAGE> 31
[_______________]
Owner Participant
By: _______________________________________
Title:
Address:
Attn:
Telecopy No.:
-32-
<PAGE> 32
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Pass Through Trustee,
Pass Through Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-33-
<PAGE> 33
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By: ___________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-34-
<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Indenture Trustee
Indenture Trustee
By: ____________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
-35-
<PAGE> 35
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By: ___________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
-36-
<PAGE> 36
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C dated as of the Closing Date.
<PAGE> 37
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- -------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1C [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 E]
This TRUST AGREEMENT [NW 1996 E] dated as of April 29, 1996
between [ ], a [ ] corporation (the "ORIGINAL OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSBU") and otherwise
not in its individual capacity but solely as trustee hereunder (herein in such
capacity with its permitted successors and assigns called the "OWNER TRUSTEE");
W I T N E S S E T H :
DEFINITIONS AND TERMS
CERTAIN DEFINITIONS. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms
used herein shall have the respective meanings assigned thereto in the Lease
(as hereinafter defined) for all purposes hereof. All definitions contained in
this Section 1.01 shall be equally applicable to both the singular and plural
forms of the terms defined. For all purposes of this Trust Agreement the
following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in
the Trust Indenture.
"Indenture Event of Default" has the meaning which the term
"Event of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 E], to be
dated as of the date hereof, and to be entered into by the Owner Trustee and
Lessee concurrently with the execution and delivery of this Trust Agreement, as
said Lease Agreement may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Trust Agreement. The term "Lease" shall also include
each Lease Supplement from time to time entered into pursuant to the terms of
the Lease.
"Lease Event of Default" has the meaning which the term "Event
of Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota
corporation, and its permitted successors and assigns.
"Owner Participant" means the Original Owner Participant and
each
1
<PAGE> 2
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner
Participant, the percentage of its undivided beneficial interest in the Trust
Estate created by this Trust Agreement.
"Participation Agreement" has the meaning ascribed to such
term in the Lease.
"Replacement Airframe" has the meaning ascribed to such term
in the Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in
the Trust Indenture.
"Subsequent Owner Participant" means any Person to which the
Original Owner Participant or any transferee from the Original Owner
Participant or any Subsequent Owner Participant shall have transferred at any
time after the Delivery Date its undivided right, title and interest originally
held by the Original Owner Participant in this Trust Agreement, the Trust
Estate and the Participation Agreement, to the extent permitted by Section 8.1
of this Trust Agreement and Section 8 of the Participation Agreement; provided
that in the event of any such transfer so long as the Lease shall be in effect
or any Secured Certificates remain unpaid, such transferee and its transferor
shall have complied with all of the terms of Section 8(n) of the Participation
Agreement.
"Trust Estate" means all estate, right, title and interest of
the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in
its individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term
in the Trust Indenture.
"Trust Office" shall mean the principal corporate trust office
of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture
and to this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement
2
<PAGE> 3
Engine included in the property of the Owner Trustee covered by this Trust
Agreement.
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and the Owner
Trustee agrees for the benefit of the Owner Participant that it will on or
before the Delivery Date, execute and deliver the Operative Documents and any
other agreements, instruments or documents to which the Owner Trustee is a
party in the respective forms thereof in which delivered from time to time by
the Owner Participant to the Owner Trustee for execution and delivery and,
subject to the terms hereof, to perform its duties and, upon instructions from
the Owner Participant, exercise its rights under said Operative Documents in
accordance with the terms thereof.
DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Estate upon the trusts hereinafter set forth for
the use and benefit of the Owner Participant, subject, however, to the
provisions of and the Lien created by the Trust Indenture and to the provisions
of the Lease and the Participation Agreement.
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
ACCEPTANCE OF AIRCRAFT. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee
agrees for the benefit of the Owner Participant that it will, on the Delivery
Date, subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale
and the FAA Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the
Lease, and in furtherance thereof execute and deliver
a Lease Supplement covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates
in the amounts and otherwise as provided in Section
1(a) of the Participation Agreement;
3
<PAGE> 4
(f) execute and deliver the financing statements referred
to in Section 4(a)(vi) of the Participation
Agreement, together with all other agreements,
documents and instruments referred to in Section 4 of
the Participation Agreement to which the Owner
Trustee is a party;
(g) effect the registration of the Aircraft in the name
of the Owner Trustee by filing or causing to be filed
with the FAA: (i) the FAA Bill of Sale; (ii) an
application for registration of the Aircraft in the
name of the Owner Trustee (including without
limitation an affidavit from the Owner Trustee in
compliance with the provisions of 14 C.F.R. Section
47.7(c)(2)(ii) (1979)); and (iii) this Trust
Agreement; and
(h) execute and deliver all such other instruments,
documents or certificates and take all such other
actions in accordance with the directions of the
Owner Participant, as the Owner Participant may deem
necessary or advisable in connection with the
transactions contemplated hereby.
CONDITIONS PRECEDENT. The right and obligation of the Owner
Trustee to take the action required by Section 3.01 hereof with respect to the
Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the
full amount of its Commitment set forth in Schedule
II of the Participation Agreement available to the
Owner Trustee, in immediately available funds, in
accordance with Section 1 of the Participation
Agreement; and
(b) the Owner Participant shall have notified the Owner
Trustee that the terms and conditions of Section 4 of
the Participation Agreement, insofar as they relate
to the Aircraft, shall have been complied with in a
manner satisfactory to the Original Owner
Participant.
AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND
ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified
to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease
and upon Lessee's assuming the indebtedness evidenced by the Secured
Certificates in accordance with the provisions of such Section 8(x) provided
Lessee shall have paid all amounts required by such Section 19(d) and 8(x).
AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT
4
<PAGE> 5
ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee
to, and the Owner Trustee agrees for the benefit of the Owner Participant that
it will, in the event of a Replacement Airframe and Replacement Engines, if
any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement
Engine being substituted pursuant to Section 10(b) of the Lease, subject to due
compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case
may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or
representatives of the Owner Trustee (who shall be an
employee or employees of Lessee) to accept delivery
of the Replacement Airframe and Replacement Engines,
if any, or the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement
Airframe and Replacement Engines, if any, or the
Replacement Engine a bill of sale or bills of sale
(if tendered), and the invoice, if any, with respect
to the Replacement Airframe and Replacement Engines,
if any, or the Replacement Engine being furnished
pursuant to Section 10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make
application to the Federal Aviation Administration
for the registration in the name of the Owner Trustee
of the Aircraft of which such Replacement Airframe is
a part;
(d) execute and deliver a Lease Supplement and a Trust
Supplement covering (i) the Aircraft of which such
Replacement Airframe is part or (ii) such Replacement
Engine, as the case may be;
(e) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including
for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens)
the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to
release the Airframe and Engines or engines (if any)
or the Engine or engine being replaced from the lien
created under the Trust Indenture and release the
Purchase Agreement and the Purchase Agreement
Assignment (solely with respect to such replaced
Airframe and Engines, if any, or Engine) from the
assignment and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take
such further action as may be contemplated by clauses
(A) and (B) of the third
5
<PAGE> 6
paragraph of Section 10(a) of the Lease or clauses
(ii) and (iii) of Section 10(b) of the Lease, as the
case may be.
TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the
event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions
of this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine
were the same airframe or engine as the Airframe or Engine being replaced but
for the Event of Loss with respect to such Airframe or Engine.
AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to
such engine contemplated by such Section 5(b) (if
tendered);
(b) transfer its interest in (without recourse except as
to obligations in respect of Lessor Liens, including
for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens)
and to an Engine to Lessee as contemplated by such
Section 5(b); and
(c) request in writing that the Indenture Trustee execute
and deliver to Lessee appropriate instruments to
release the Engine being transferred to Lessee
pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement
and the Purchase Agreement Assignment (solely with
respect to such Engine) from the assignment and
pledge under the Trust Indenture.
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds
and requisition or other payments of any kind included in the Trust Estate
(other than Excluded Payments) payable to the Owner Trustee shall be payable
directly to the Indenture Trustee (and if any of the same are received by the
Owner Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with
6
<PAGE> 7
the provisions of Article III of the Trust Indenture.
(a) Payments to Owner Trustee; Other Parties. After the
Trust Indenture shall have been discharged pursuant to Section 10.01 thereof,
any payment of the type referred to in Section 4.01(a) hereof (other than
Excluded Payments) received by the Owner Trustee, any payments received from
the Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the
balance, if any, shall be paid to the Owner Participant.
(b) Certain Distributions to Owner Participant. All
amounts from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the Trust Indenture shall, if paid to the Owner
Trustee, be distributed by the Owner Trustee to the Owner Participant in
accordance with the provisions of Article III of the Trust Indenture.
(c) Excluded Payments. Any Excluded Payments received
by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom
such Excluded Payments are payable under the provisions of the Participation
Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents
on the day received (or on the next succeeding Business Day if the funds to be
so distributed shall not have been received by the Owner Trustee by 12:00 noon,
New York City time).
(e) Multiple Owner Participants. If as a result of a
transfer by an Owner Participant under Section 8.01 of this Trust Agreement,
there is more than one Owner Participant hereunder, each such Owner Participant
shall hold in proportion to its respective beneficial interest in the Trust
Estate, an undivided beneficial interest in the entire Trust Estate and is
entitled to receive ratably with any other Owner Participant payments
distributable by the Owner Trustee hereunder. No Owner Participant shall have
legal title to the Aircraft or any other portion of the Trust Estate.
METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds on the day received (or the next succeeding Business Day if the
funds to be so distributed shall not have been received by the Owner Trustee by
12:00 noon, New York time, the amount to be distributed to such account or
accounts of the Owner Participant as the Owner Participant
7
<PAGE> 8
may designate from time to time in writing to the Owner Trustee.
Notwithstanding the foregoing, the Owner Trustee will, if so requested by the
Owner Participant in writing, pay any or all amounts payable to the Owner
Participant pursuant to this Article IV either (i) by crediting such amount or
amounts to an account or accounts maintained by the Owner Participant with the
Owner Trustee in its individual capacity in immediately available funds, (ii)
by payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to the Owner Participant at such address as the Owner
Participant shall have designated in writing to the Owner Trustee.
DUTIES OF THE OWNER TRUSTEE
NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have
knowledge of a Lease Event of Default or Indenture Event of Default (or an
event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the Owner Participant prompt telephonic or telecopy
notice thereof followed by prompt confirmation thereof by certified mail,
postage prepaid, provided that (i) in the case of an event which with the
passage of time would constitute an Indenture Event of Default referred to in
paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no
event be furnished later than ten (10) days after the Owner Trustee shall first
have knowledge of such event and (ii) in the case of a misrepresentation by the
Owner Trustee which with the passage of time would constitute an Indenture
Event of Default referred to in paragraph (d) of Section 4.02 of the Trust
Indenture, such notice shall in no event be furnished later than ten (10) days
after the Owner Trustee shall first have knowledge of such event. The notice
shall set forth in reasonable detail the facts and circumstances known to it
with respect to such Lease Event of Default or Indenture Event of Default.
Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such
action or shall refrain from taking such action, not inconsistent with the
provisions of the Trust Indenture, with respect to such Lease Event of Default,
Indenture Event of Default or other event as the Owner Trustee shall be
directed in writing by the Owner Participant. If the Owner Trustee shall not
have received instructions as above provided within thirty (30) days after the
mailing of such notice to the Owner Participant, the Owner Trustee until
instructed otherwise in accordance with the preceding sentence may, but shall
be under no duty to, take or refrain from taking such action with respect to
such Lease Event of Default, Indenture Event of Default or other event, not
inconsistent with the provisions of the Trust Indenture, as it shall deem
advisable in the best interests of the Owner Participant. For all purposes of
this Trust Agreement, the Lease and the other Operative Documents, in the
absence of actual knowledge by an officer of FSBU in the Corporate Trust
Department, the Owner Trustee shall not be deemed to have knowledge of a Lease
Event of Default, Indenture Event of Default or other event referred to in this
Section 5.01 unless notified in writing by the Indenture Trustee, the Owner
Participant or Lessee. V.11.
ACTION UPON INSTRUCTIONS. Subject to the terms of Sections
5.01 and
8
<PAGE> 9
5.03 hereof, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take such of the following
actions, not inconsistent with the provisions of the Trust Indenture, as may be
specified in such instructions:
(i) give such notice or direction or exercise such right,
remedy or power hereunder or under any of the
Operative Documents to which the Owner Trustee is a
party or in respect of all or any part of the Trust
Estate as shall be specified in such instructions;
(ii) take such action to preserve or protect the Trust
Estate (including the discharge of Liens) as may be
specified in such instructions;
(iii) approve as satisfactory to it all matters required by
the terms of the Lease or the other Operative
Documents to be satisfactory to the Owner Trustee, it
being understood that without written instructions of
the Owner Participant, the Owner Trustee shall not
approve any such matter as satisfactory to it (it
being understood that the provisions of Sections
3.03, 3.04 and 3.06 hereof do not constitute
instructions by the Owner Participant for the Owner
Trustee to approve of or consent to the matters to be
approved of or consented to by the Owner Trustee in
the sections of the Lease referred to in Sections
3.03, 3.04 or 3.06 hereof); and
(iv) subject to the rights of Lessee under the Operative
Documents, after the expiration or earlier
termination of the Lease, deliver the Aircraft to the
Owner Participant in accordance with such
instructions, convey all of the Owner Trustee's
right, title and interest in and to the Aircraft for
such amount, on such terms and to such purchaser or
purchasers as shall be designated in such
instructions, or net lease the Aircraft on such terms
and to such lessee or lessees as shall be designated
in such instructions.
INDEMNIFICATION. The Owner Trustee shall not be required to
take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless the Owner Trustee shall have been
indemnified by the Owner Participant, in manner and form satisfactory to the
Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
reasonable fees and disbursements of counsel or agents employed by the Owner
Trustee in connection
9
<PAGE> 10
therewith. The Owner Trustee shall not be required to take any action under
Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or
shall have been advised by counsel, that such action is contrary to the terms
of any of the Operative Documents to which the Owner Trustee is a party, or is
otherwise contrary to law.
NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in written instructions from the
Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and
no implied duties or obligations shall be read into this Trust Agreement
against the Owner Trustee. FSBU agrees that it will, in its individual
capacity and at its own cost or expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01 hereof) promptly take
such action as may be necessary to duly discharge and satisfy in full all
Lessor Liens attributable to it in its individual capacity which it is required
to discharge pursuant to Section 8(h) of the Participation Agreement and
otherwise comply with the terms of said Section binding on it.
SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to
the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the
Participation Agreement.
NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not have any power, right or authority to, and the
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of
or otherwise deal with the Aircraft or any other part of the Trust Estate
except (i) as expressly required by the terms of any of the Operative Documents
to which the Owner Trustee is a party, (ii) as expressly provided by the terms
hereof, or (iii) as expressly provided in written instructions from the Owner
Participant pursuant to Section 5.01 or 5.02 hereof.
THE OWNER TRUSTEE
ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts
hereby created and agrees to perform the same but only upon the terms hereof
applicable to it. The Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. FSBU shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of
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Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its
or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for
liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease
or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for
any Tax based on or measured by any fees, commissions or compensation received
by it for acting as trustee in connection with any of the transactions
contemplated by the Operative Documents.
ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Sections 3.01 and 5.04
hereof and the last sentence of Section 9.01(b) hereof, neither the Owner
Trustee nor FSBU shall have any duty (i) to see to any recording or filing of
any Operative Document or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the Federal Aviation Administration or other governmental agencies, except that
FSBU, in its individual capacity, shall comply with the reporting requirements
set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner
Trustee shall, to the extent that information for that purpose is supplied by
Lessee pursuant to any of the Operative Documents, complete and timely submit
(and furnish the Owner Participant with a copy of) any and all reports relating
to the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto,
other than to forward to the Owner Participant copies of all reports and other
written information which the Owner Trustee receives from Lessee pursuant to
Section 11(c) of the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 8 of the
Participation Agreement, or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture
Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee under the Lease
or any other Operative Document.
NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS.
NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A)
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH
RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity
warrants that on the Delivery Date the Owner Trustee shall have
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received whatever title was conveyed to it by Lessee and that the Aircraft
shall during the Term be free of Lessor Liens attributable to it, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any Operative Document to which the Owner Trustee is a
party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof except to the extent that any such statement
is expressly made herein or therein as a representation by FSBU in its
individual capacity or by the Owner Trustee and except that FSBU in its
individual capacity hereby represents and warrants that this Trust Agreement
has been, and (assuming due authorization, execution and delivery by the
Original Owner Participant of this Trust Agreement) the Operative Documents to
which it or the Owner Trustee is a party have been (or at the time of execution
and delivery of any such instrument by it or the Owner Trustee hereunder or
pursuant to the terms of the Participation Agreement that such an instrument
will be) duly executed and delivered by one of its officers who is or will be,
as the case may be, duly authorized to execute and deliver such instruments on
behalf of itself or the Owner Trustee, as the case may be and that this Trust
Agreement constitutes the legal, valid and binding obligation of FSBU or the
Owner Trustee, as the case may be, enforceable against FSBU or the Owner
Trustee, as the case may be, in accordance with its terms.
NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as
provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner
Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of the
Owner Participant or Lessee mentioned herein or in any of the Operative
Documents to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be the chairman of the
board, the president, any executive vice president, any senior vice president
or any vice president or a managing director and in the name of the Owner
Participant or Lessee, as the case may be. The Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the secretary or any assistant secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board or Committee and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is
not specifically described herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by a person purporting to be the chairman
of the board, the president, any executive vice president, any senior vice
president or any vice president or a managing director of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner
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Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. In the administration of trusts hereunder, the Owner Trustee
may execute any of the trusts or powers hereof and perform its powers and
duties hereunder directly or through agents or attorneys and may, at the
expense of the Trust Estate, consult with counsel, accountants and other
skilled persons to be selected and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons and the Owner Trustee shall not be liable for the negligence of
any such agent, attorney, counsel, accountant or other skilled person appointed
by it with due care hereunder.
NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the
Owner Trustee acts solely as trustee and not in its individual capacity except
as otherwise expressly provided herein; and, subject to the terms of the
Participation Agreement and the Trust Indenture, all persons, other than the
Owner Participant, as provided herein, having any claim against the Owner
Trustee by reason of the transactions contemplated hereby shall look only to
the Trust Estate for payment or satisfaction thereof.
FEES; COMPENSATION. Except as provided in Section 5.03 or
7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not
paid by Lessee as contemplated by the last paragraph of Section 7(c) of the
Participation Agreement. Pursuant to Section 7(c) of the Participation
Agreement and subject to Section 16 thereof, Lessee shall be required to pay
the reasonable fees and expenses of the Owner Trustee comprising the
compensation and reimbursement of expenses to which the Owner Trustee is
entitled under this Section 6.07.
TAX RETURNS. The Owner Trustee shall be responsible for the
keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Participant shall be responsible for causing to
be prepared and filed all income tax returns required to be filed by the Owner
Participant. The Owner Trustee shall be responsible for causing to be
prepared, at the request and expense of the Owner Participant, all income tax
returns required to be filed with respect to the trust created hereby and shall
execute and file such returns. The Owner Participant or the Owner Trustee, as
the case may be, upon request, will furnish the Owner Trustee or the Owner
Participant, as the case may be, with all such information as may be reasonably
required from the Owner Participant or the Owner Trustee, as the case may be,
in connection with the preparation of such income tax returns. The Owner
Trustee will give to the Owner Participant, upon request, such periodic
information concerning receipts and disbursements by it with respect to the
Trust Estate as would be helpful to the Owner Participant in preparing its tax
returns.
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<PAGE> 14
FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to
the contrary, the Owner Trustee shall not be authorized and shall have no power
to "vary the investment" of the Owner Participant within the meaning of
Treasury Regulations Section 301.7701-4(c)(1).
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner
Participant hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless FSBU in its individual capacity and its
successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by FSBU in its individual capacity on or measured
by any compensation received by FSBU in its individual capacity for its
services hereunder or in connection with the transactions contemplated by the
Operative Documents or otherwise excluded in subclause (e) below), claims,
actions, suits, costs, expenses or disbursements (including, without
limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees
and expenses, and including, without limitation, any liability of an owner, any
strict liability and any liability without fault) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against FSBU in its
individual capacity (whether or not also indemnified against by Lessee under
the Lease or under the Participation Agreement or also indemnified against by
any other person but only to the extent not otherwise paid or reimbursed by
Lessee or such other person) in any way relating to or arising out of this
Trust Agreement or any of the Operative Documents or the enforcement of any of
the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark or
copyright infringement), or in any way relating to or arising out of the
administration of the Trust Estate or the action or inaction of the Owner
Trustee or FSBU in its individual capacity hereunder, except (a) in the case of
willful misconduct or gross negligence on the part of the Owner Trustee or FSBU
in its individual capacity in the performance or non-performance of its duties
hereunder or under any of the other Operative Documents to which the Owner
Trustee is a party or (b) those resulting from the inaccuracy of any
representation or warranty of FSBU in its individual capacity (or from the
failure of FSBU in its individual capacity to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to
representations or warranties of FSBU in its individual capacity only, in
Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the
Participation Agreement or in any of the other Operative Documents or (c) as
may result from a breach by FSBU in its individual capacity of its covenants in
the last sentence of Section 5.04 hereof or (d) in the case of the failure to
use ordinary care on the part of the Owner Trustee or FSBU in its individual
capacity in the disbursement of funds or (e) those claims arising under any
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<PAGE> 15
circumstances or upon any terms where Lessee would not have been required to
indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b)
or 7(c) of the Participation Agreement (disregarding, for this purpose,
Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein
results from the Owner Trustee acting in accordance with written instructions
of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from
the willful misconduct or gross negligence of the Owner Participant to the
extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that
such failure referred to therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7 (c)(D) (to
the extent such disposition therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant),
7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and
disregarding, for this purpose, those claims arising or resulting from any
action taken by or inaction of the Owner Trustee in accordance with written
instructions of the Owner Participant). The indemnities contained in this
Section 7.01 extend to FSBU only in its individual capacity and shall not be
construed as indemnities of the Trust Indenture Estate or the Trust Estate
(except to the extent, if any, that FSBU in its individual capacity has been
reimbursed by the Trust Indenture Estate or the Trust Estate for amounts
covered by the indemnities contained in this Section 7.01). The indemnities
contained in this Section 7.01 shall survive the termination of this Trust
Agreement. In addition, if necessary, FSBU in its individual capacity shall be
entitled to indemnification from the Trust Estate, subject to the Lien of the
Trust Indenture, for any liability, obligation, loss, damage, penalty, tax,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.01 to the extent not reimbursed by Lessee, the Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same FSBU in its individual
capacity shall have a Lien on the Trust Estate, subject to the Lien of the
Trust Indenture, which shall be prior to any interest therein of the Owner
Participant. The payor of any indemnity under this Article VII shall be
subrogated to any right of the person indemnified in respect of the matter as
to which such indemnity was paid.
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
TRANSFER OF INTERESTS. All provisions of Section 8(n) of
the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement. If there is more than one Owner Participant, no
assignment, conveyance or other transfer by an Owner Participant of any of its
right, title or interest in and to this Trust Agreement or the Trust Estate
shall be valid unless each other Owner Participant's prior written consent
(which consent may be withheld in the sole discretion of such other Owner
Participants) is given to such assignment, conveyance or other transfer.
ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to
the
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termination of this Trust Agreement there is more than one Owner Participant,
then during such time, if any action is required to be taken by all Owner
Participants and whenever any direction, authorization, approval, consent,
instruction, or other action is permitted to be given or taken by the Owner
Participant it shall be given or taken only upon unanimous agreement of all
Owner Participants; provided, however, that the termination of this Trust
Agreement pursuant to Section 11.01 hereof may be effected upon the election of
any Owner Participant.
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) Resignation or Removal. The Owner Trustee or any
successor Owner Trustee (i) shall resign if required to do so pursuant to
Section 8(c) of the Participation Agreement and (ii) may resign at any time
without cause by giving at least sixty (60) days' prior written notice to the
Owner Participant, the Indenture Trustee (so long as the Lien of the Trust
Indenture has not been fully discharged) and Lessee (so long as the Lease is in
effect), such resignation to be effective upon the acceptance of appointment by
the successor Owner Trustee under Section 9.01(b) hereof. In addition, the
Owner Participant may at any time remove the Owner Trustee without cause by a
notice in writing delivered to the Owner Trustee, the Indenture Trustee (so
long as the Lien of the Trust Indenture has not been fully discharged) and
Lessee (so long as the Lease is in effect), such removal to be effective upon
the acceptance of appointment by the successor Owner Trustee under Section
9.01(b) hereof. In the case of the resignation or removal of the Owner
Trustee, the Owner Participant may appoint a successor Owner Trustee by an
instrument signed by the Owner Participant. If a successor Owner Trustee shall
not have been appointed within thirty (30) days after such notice of
resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the
Indenture Trustee may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor shall
have been appointed as above provided. Any successor Owner Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee and the Owner Participant an instrument accepting
such appointment, and thereupon such successor Owner Trustee, without further
act, shall become vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Owner Trustee in the trusts hereunder with
like effect as if originally named the Owner Trustee herein; but nevertheless,
upon the written request of such successor Owner Trustee, such predecessor
Owner Trustee shall execute and deliver an instrument transferring to such
successor Owner Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of such predecessor Owner Trustee, and
such predecessor Owner Trustee shall duly assign, transfer, deliver and pay
over to such successor Owner Trustee
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all monies or other property then held by such predecessor Owner Trustee upon
the trusts herein expressed. Upon the appointment of any successor Owner
Trustee hereunder, the predecessor Owner Trustee will execute such documents as
are provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are
reasonably required to cause registration of the Aircraft included in the Trust
Estate to be transferred upon the records of the Federal Aviation
Administration, or other governmental authority having jurisdiction, into the
name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee,
however appointed, shall be a Citizen of the United States without making use
of a voting trust, voting powers agreement or similar arrangement and shall
also be a bank or trust company organized under the laws of the United States
or any state thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Owner Trustee hereunder upon reasonable
or customary terms.
(d) Merger, etc. Any corporation into which the Owner
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder
without further act.
CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall
be necessary or prudent in order to conform to any law of any jurisdiction in
which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee and the Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or
proper to constitute another bank or trust company or one or more persons (any
and all of which shall be a Citizen of the United States without making use of
a voting trust, voting powers agreement or similar arrangement) approved by the
Owner Trustee and the Owner Participant, either to act as co-trustee, jointly
with the Owner Trustee, or to act as separate trustee hereunder (any such
co-trustee or separate trustee being herein sometimes referred to as an
"ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising
from a Lease Event of Default shall occur and be continuing, the Owner Trustee
may act under the foregoing provisions of this Section 9.02 without the
concurrence of the Owner Participant; and the Owner Participant hereby appoints
the Owner Trustee its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its
successors shall act, subject to the
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following provisions and conditions:
(A) all powers, duties, obligations and rights conferred
upon the Owner Trustee in respect of the custody,
control and management of monies, the Aircraft or
documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised
solely by the Owner Trustee;
all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred or imposed upon and exercised or performed
by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of
any jurisdiction in which any particular act or acts
are to be performed (including the holding of title
to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may
be exercised by, any such additional trustee shall be
exercised hereunder by such additional trustee,
except jointly with, or with the consent in writing
of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee
hereunder;
(E) the Owner Participant, at any time, by an instrument
in writing may remove any such additional trustee
unless such additional trustee was appointed by the
Owner Trustee without the concurrence of the Owner
Participant during the occurrence of an Indenture
Event of Default not arising from a Lease Event of
Default, in which case the Owner Trustee shall have
the power to remove any such additional trustee
without the concurrence of the Owner Participant; and
the Owner Participant hereby appoints the Owner
Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional
trustee will relieve the Owner Trustee of any of its
obligations under, or otherwise affect any of the
terms of, the Trust Indenture or affect the interests
of the Indenture Trustee or the holders of the
Secured Certificates in the Trust Indenture Estate.
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<PAGE> 19
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SUPPLEMENTS AND AMENDMENTS.
(a) Supplements and Amendments. This Trust Agreement
may not be amended, supplemented or otherwise modified except by an instrument
in writing signed by the Owner Trustee and the Owner Participant. Subject to
Section 10.02 hereof and the first sentence of Section 10 of the Participation
Agreement, the Owner Trustee will execute any amendment, supplement or other
modification of this Trust Agreement or of any other Operative Document to
which the Owner Trustee is a party which it is requested to execute by the
Owner Participant, except that the Owner Trustee shall not execute any such
amendment, supplement or other modification which, by the express provisions of
any of the above documents, requires the consent of any other party unless such
consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain
Parties. A signed copy of each amendment or supplement referred to in Section
10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture
Trustee and each holder of a Secured Certificate.
DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing
any document required to be executed by it pursuant to the terms of Section
10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its
counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such
document.
ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant
to such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
DISTRIBUTION OF DOCUMENTS. Promptly after the execution by
the Owner Trustee of any document entered into pursuant to Section 10.01
hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST
SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement
covering the Aircraft with Lessee pursuant to the terms of the Lease and
Section 3.01 hereof and the Trust Supplement
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<PAGE> 20
pursuant to the terms of the Trust Indenture and Section 3.01 hereof.
MISCELLANEOUS
TERMINATION OF TRUST AGREEMENT. This Trust Agreement and
the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest execution
of this Trust Agreement by any party hereto, but if this Trust Agreement and
the trusts created hereby shall be or become authorized under applicable law to
be valid for a period commencing on the 21st anniversary of the death of such
last survivor (or, without limiting the generality of the foregoing, if
legislation shall become effective providing for the validity of this Trust
Agreement and the trusts created hereby for a period in gross exceeding the
period for which this Trust Agreement and the trusts created hereby are
hereinabove stated to extend and be valid), then this Trust Agreement and the
trust created hereby shall not terminate under this subsection (b) but shall
extend to and continue in effect, but only if such nontermination and extension
shall then be valid under applicable law, until the day preceding such date as
the same shall, under applicable law, cease to be valid; otherwise this Trust
Agreement and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof, subject to the Owner Participant's right
to revoke such trusts and cause the Trust Estate (subject to the Lien of the
Trust Indenture) to be distributed.
OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The
Owner Participant shall not have legal title to any part of the Trust Estate.
[No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate] this Trust Agreement or the trusts hereunder or entitle
any successors or transferees of the Owner Participant to an accounting or to
the transfer of legal title to any part of the Trust Estate.
ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale,
transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Owner
Trustee.
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TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except
for the terms of Section 8(n) of the Participation Agreement incorporated in
Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing herein, whether expressed or implied, shall be construed to
give any Person other than the Owner Trustee and the Owner Participant any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustee and the Owner Participant.
NOTICES; CONSENT TO JURISDICTION. (a) 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 telecopier, or by prepaid courier service, and shall be deemed to be
given for purposes of this Agreement on the day that such writing is delivered
or sent to the intended recipient thereof in accordance with the provisions of
this Section 11.05(a). Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 11.05(a),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures
of such parties on the signature page of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such Subsequent Owner
Participant at such address as such Subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Certificate Holder, addressed to such Certificate Holder at its address set
forth in the secured certificate register maintained pursuant to Section 2.07
of the Trust Indenture.
(a) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Trust Agreement, the Participation Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document, the subject matter of any thereof or
any of the transactions contemplated hereby or thereby brought by any party or
parties thereto, or their successors or assigns, and (B) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, to the extent permitted by applicable law, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper, or that the Participation
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or by such courts.
SEVERABILITY. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and
21
<PAGE> 22
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
WAIVERS, ETC. No term or provision hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
entered into in compliance with the terms of Article X hereof; and any waiver
of the terms hereof shall be effective only in the specific instance and for
the specific purpose given.
COUNTERPARTS. This Trust 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.
BINDING EFFECT, ETC. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Owner Trustee
and its successors and assigns, and the Owner Participant, its successors and,
to the extent permitted by Article VIII hereof, its assigns. Any request,
notice, direction, consent, waiver or other instrument or action by the Owner
Participant shall bind its successors and assigns. Any Owner Participant which
shall cease to have any Ownership Interest shall thereupon cease to be a party
hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
o HEADINGS; REFERENCES. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
o GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
o PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of
the Owner Trustee in its individual capacity or as Owner Trustee hereunder or
under any other Operative Document or other document contemplated herein, may
be performed by the Owner Participant and any such performance shall not be
construed as a revocation of the trust created hereby.
22
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[ ]
Owner Participant
By___________________________________
Title:_______________________________
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By__________________________________
Title:______________________________
23
<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1996 E]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 E], dated as of
June 12, 1996, between [___________], a [__________] corporation (the "OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "FSBU") and otherwise not in
its individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
Except as otherwise defined in this Amendment, the terms used herein
in capitalized form shall have the meanings attributed thereto in the Trust
Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner
Participant, the Owner Trustee, [_______________________], as the loan
participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street
Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered
into the Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the
"ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one
Boeing 757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30, 1996
(the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to
<PAGE> 2
Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft
commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 E], dated as of
April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 E], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant
to which the Owner Trustee issued to the Original Loan Participants secured
certificates substantially in the form set forth in Article II thereof (the
"ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the
Original Loan Participants in participating in the payment of Lessor's Cost;
WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the
Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the
Owner Participant, the Indenture Trustee and State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent, have entered into
the Refunding Agreement [NW 1996 E], dated as of June 3, 1996 (the "REFUNDING
AGREEMENT"), providing for a refinancing operation as contemplated by Section 17
of the Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 E], dated as of the date hereof (the " INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 E], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE"); and
WHEREAS, the Owner Participant and the Owner Trustee wish to amend
the Original Trust Agreement as set forth herein to give effect to the
transactions contemplated by the Refunding Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree that the Original Trust Agreement is amended as
follows:
SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST
AGREEMENT . Section 11.01 of the Original Trust Agreement is hereby amended by
adding the following clause to the end thereof after the word "distributed":
"provided, however, such right is subject to the provisions of Section 10 of the
Participation Agreement."
SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by
deleting
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<PAGE> 3
the word "Participation" in clause (A) of the second sentence thereof and
substituting therefor the word "Refunding".
SECTION 3. DIRECTION. Pursuant to and in conformity with Section
10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner
Trustee to execute this Amendment.
SECTION 4. RATIFICATION. Except as hereby modified, the Original
Trust Agreement shall continue in full force and effect as originally executed.
From and after the date of this Amendment, each and every reference in the Trust
Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar
words or phrases referring to the Trust Agreement or any word or phrase
referring to a section or provision of the Trust Agreement is deemed for all
purposes to be a reference to the Trust Agreement or such section or provision
as amended pursuant to this Amendment.
SECTION 5. MISCELLANEOUS. This Amendment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
[Owner Participant]
By: ________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
By: ________________________
Name:
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 E]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW
1996 E], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY
BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER Trustee"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have entered
into the Trust Agreement whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner Participant
subject, however, to the Trust Indenture Estate created pursuant hereto for the
use and benefit of, and with the priority of payment to, the holders of Secured
Certificates issued hereunder, and (ii) the Owner Trustee has been authorized
and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [NW 1996 E] dated as of April
29, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the
Trust Agreement and Indenture Supplement [NW 1996 E] (the "SUPPLEMENT") dated
April 30, 1996 to the Original Indenture, (iii) the Original Indenture and the
Supplement were recorded by the Federal Aviation Administration on May 3, 1996
and were assigned Conveyance No. E21280 and (iv) the Lease Agreement [NW 1996 E]
dated as of even date with the Original Indenture between the Owner Trustee and
Lessee and the Lease Supplement No. 1 [NW 1996 E] were recorded by the Federal
Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21279
and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Loan Participants Secured Certificates (as defined in the Original
Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participants pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor to which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the Consent and
Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding all Excluded Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the Owner
Trustee has delivered to the Indenture Trustee the original executed counterpart
of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper
receipt is attached), and executed copies of the Participation Agreement, and
the Purchase Agreement Assignment with the Consent and Agreement attached
thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto
the Indenture Trustee, and its successors and assigns, in trust for the benefit
and security of the Loan Participants and the Certificate Holders, except as
provided in Section 2.15 and Article III hereof without any preference,
distinction or priority of any one Secured Certificate over any other by reason
of priority of time of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and purposes and in all
cases and as to all property specified in paragraphs (1) through (8) inclusive
above, subject to the terms and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Agreements to perform all of the obligations assumed by it thereunder,
except to the extent prohibited or excluded from doing so pursuant to the terms
and provisions thereof, and the Indenture Trustee and the Certificate Holders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Indenture Trustee
or the Certificate Holders be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Subject to the terms hereof, the Owner Trustee does hereby
constitute the Indenture Trustee the true and lawful attorney of the Owner
Trustee, irrevocably, granted for good and valuable consideration and coupled
with an interest and with full power of substitution, and with full power (in
the name of the Owner Trustee or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or arising out of
the Indenture Agreements, and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or
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<PAGE> 5
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents (other than Excluded Payments) and other
sums and the security intended to be afforded hereby; provided, however, that no
action of the Indenture Trustee pursuant to this paragraph shall increase the
obligations or liabilities of the Owner Trustee to any Person beyond those
obligations and liabilities specifically set forth in this Trust Indenture and
in the other Operative Documents. Under the Lease, Lessee is directed, so long
as this Trust Indenture shall not have been fully discharged, to make all
payments of Rent (other than Excluded Payments) and all other amounts which are
required to be paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by, the Indenture
Trustee at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Trust Indenture. The Owner Trustee agrees that
promptly upon receipt thereof, it will transfer to the Indenture Trustee any and
all monies from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Indenture Trustee pursuant to this
Trust Indenture, except that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee, and that it will not, except as otherwise provided in this Trust
Indenture and except with respect to Excluded Payments, (i) accept any payment
from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) except as set forth in Section 8(bb) of the Participation
Agreement, collect or agree to the receipt or collection of
any payment of Rent, including Interim Rent, Basic Rent,
Stipulated Loss Value, Termination Value or any other payment
to be made pursuant to Section 9 or 10 of the Lease but
excluding any Excluded Payment prior to the due date for the
payment thereof provided for by the Lease or assign, transfer
or hypothecate (other than to the Indenture Trustee
hereunder) any payment of Rent, including Interim Rent, Basic
Rent, Stipulated Loss Value, Termination Value or any other
payment to be made pursuant to Section 9 or 10 of the Lease
but excluding any Excluded Payment, then due or to accrue in
the future under the Lease in respect of the Airframe and
Engines; or
(b) except as contemplated by the Trust Agreement in connection
with the appointment of a successor owner trustee, sell,
mortgage, transfer, assign or hypothecate (other than to the
Indenture Trustee hereunder) its interest in the Airframe and
Engines or any part
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<PAGE> 6
thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for
the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
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<PAGE> 7
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee and each Certificate Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i)(A) indemnity payments paid
or payable by Lessee to or in respect of the Owner Participant or the Owner
Trustee in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b) and 7(c) of
the Participation Agreement and (B) any other payment to the Owner Participant
pursuant to any provision of any Operative Document, (ii) proceeds of public
liability insurance (or proceeds of governmental indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims made, or losses
suffered, by the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by any of the Owner Indemnitees, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) and permitted under Section
11(e) of the Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee and all payments of Supplemental Rent by Lessee in
respect of any amounts payable under the Tax Indemnity Agreement, (v) all
Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the
Indenture Trustee pursuant to the last sentence of Section 7(c) of the
Participation Agreement, (vii) provided that the Secured Certificates shall have
been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable
to the Owner Trustee pursuant to the third sentence of Section 19(d) of the
Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest
accrued on any of the above, and (x) any right to enforce the payment of any
amount described in clauses (i) through (ix) above.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
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<PAGE> 8
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 E], dated
as of April 29, 1996, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery of the Original Trust Indenture, as said Lease
Agreement has been, or may from time to time be, supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Indenture. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Default" shall mean any event or condition that with the
giving of notice or the lapse of time or both would become a Lease Event of
Default.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any Affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield (plus, in the case of Series C
Secured Certificates, 75 basis points) exceeds (b) the outstanding principal
amount of such Secured Certificate plus accrued interest. For purposes of
determining the Make-Whole Amount, "TREASURY YIELD" at the time of determination
with respect to any Secured Certificate means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Secured Certificate and
trading in the public securities market either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Secured Certificate and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Secured Certificate,
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<PAGE> 9
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ], so long as
such party shall have any interest in the Trust Estate, and transferees thereof
as permitted by Section 8 of the Participation Agreement.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1996 E], dated as of April 29, 1996, among the Owner Trustee, the
Indenture Trustee, Lessee and the Participants, as the same may from time to
time be supplemented or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
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<PAGE> 10
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement
to the Trust Agreement and to this Indenture, in substantially the form of
Exhibit A hereto, which shall particularly describe the Aircraft, and any
Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture", and "the Indenture" shall mean this Amended and
Restated Trust Indenture and Security Agreement [NW 1996 E] as it may from time
to time be supplemented or amended as herein provided, including supplementing
by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of
this Trust Indenture the terms used but not defined herein are used as defined
in the Lease.
ARTICLE II
THE SECURED CERTIFICATE
SECTION 2.01. FORM OF SECURED CERTIFICATES.
The Secured Certificates shall be substantially in the form set
forth below:
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<PAGE> 11
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 E] DATED AS OF APRIL 29, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N541US.
No.____ Date: [______,__]
$_________________
INTEREST RATE MATURITY DATE
[________] [________,_______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 E], dated as of
April 29, 1996, between the Owner Participant named therein and the Owner
Trustee (herein as such Trust Agreement may be supplemented or amended from time
to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or
the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of
June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company
(the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time
to time. All other capitalized terms used in this Secured Certificate and not
defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if
any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement
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<PAGE> 12
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Trust Indenture and each holder hereof, by its acceptance of
this Secured Certificate, agrees that (A) it will look solely to the income and
proceeds from the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided, (B) neither the Owner
Trustee nor the Indenture Trustee is personally liable or liable in any manner
to the holder hereof for any amounts payable or any liability under this Secured
Certificate or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust Indenture or the
Participation Agreement, and (C) the Owner Participant is not personally liable
or liable in any manner to the holder hereof for any amounts payable or any
liability under this Secured Certificate or, except as provided in the
Participation Agreement, for any liability under the Participation Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
the right of the Indenture Trustee, subject always to the terms and provisions
of the Trust Indenture, to accelerate the maturity of this Secured Certificate
upon occurrence of an Event of Default under the Trust Indenture in accordance
with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
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<PAGE> 13
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1)[Series A and Series B Secured Certificates](2), and this
Secured Certificate is issued subject to such provisions. The Certificate Holder
of this Secured Certificate, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Trust Indenture and (c) appoints the
Indenture Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed
by or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- -----------------------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By _____________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By _____________________________________
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATE AMORTIZATION
<TABLE>
<CAPTION>
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
<S> <C>
</TABLE>
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series A, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Certificate Holders
under this Trust Indenture, each Certificate Holder, by its acceptance of a
Secured Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the Participation Agreement
or any of the other Operative Documents or under the Secured Certificates except
as expressly provided herein or in the Participation Agreement; provided,
however, that nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms of this Trust
Indenture or such other agreements of rights and remedies against the Trust
Estate. These provisions are not intended as any release or discharge of the
indebtedness represented by the Secured Certificates and the Trust Indenture,
but are intended only as a covenant not to sue the Owner Trustee or the
Indenture Trustee in their individual capacities, except as expressly provided
herein or in the Participation Agreement, or the Owner Participant, except as
expressly provided in the Participation Agreement, for a deficiency with respect
to such indebtedness, the indebtedness represented by this Trust Indenture and
the Secured Certificates to remain in full force and effect as fully as though
these provisions were not contained in this Trust Indenture. The Owner Trustee
hereby acknowledges that the Certificate Holders have expressly reserved all
their rights and remedies against the Trust Indenture Estate, including the
right, in the event of a default in the payment of all or part of the Principal
Amount of, interest on, Make-Whole Amount, if any, or any other amount due with
respect to any Secured Certificate within the periods provided for in Section
4.02(b) hereof, or upon the occurrence and continuation of any other Event of
Default under this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate and otherwise to
enforce any other right under this Trust Indenture. Nothing in this Section
2.03(a) shall (x) release the Owner Participant from personal liability, or
constitute a covenant not to sue the Owner Participant, for any breach by it of
any of its covenants, representations or warranties contained in the
Participation Agreement for the benefit of the Indenture Trustee or the
Certificate Holders or for any of the payments it has agreed to make to the
Indemnitee Trustee or the Certificate Holders pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders or (z) release the
Owner Trustee in its individual capacity from personal liability, or constitute
a covenant not to sue the Owner Trustee in its individual capacity for any
breach by it of any representations, warranties or covenants of the Owner
Trustee made in its individual capacity in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant
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to such reorganization provisions, including Section 1111(b) of the Bankruptcy
Code, the Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to any Certificate
Holder or the Indenture Trustee, directly or indirectly (other than the recourse
liability of (x) the Owner Trustee (in its individual capacity) under the
Participation Agreement or this Trust Indenture or by separate agreement or (y)
the recourse liability of the Owner Participant under the Participation
Agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Secured
Certificates, (iii) the Certificate Holders shall have or shall have been
permitted to foreclose the Lien of this Trust Indenture, and (iv) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount,
if any, and other amounts due under each Secured Certificate or hereunder will
be payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a
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registered Certificate Holder, all payments to it shall be made to the account
of such Certificate Holder specified in Schedule I thereto and otherwise in the
manner provided in or pursuant to the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement) unless it
shall have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificate Holders, that it will file any necessary United States withholding
tax returns or statements when due, and that as promptly as possible after the
payment thereof it will deliver to each Certificate Holder (with a copy to the
Owner Trustee and Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such Certificate
Holder may reasonably request from time to time. The Indenture Trustee and each
Certificate Holder agree that (i) no such withholding or action with respect
thereto shall constitute or give rise to any Event of Default and (ii) in the
event of the failure of the Indenture Trustee to withhold and pay over any such
taxes to the appropriate taxing authority, no indemnity will be sought from the
Owner Trustee, the Owner Participant or the Trust Estate.
If a Certificate Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law. The Indenture Trustee and each Certificate Holder agree that (i)
no such withholding or action with respect thereto shall constitute or give rise
to any Event of Default and (ii) in the event of the failure of the Indenture
Trustee to withhold and pay over any such taxes to the appropriate taxing
authority, no indemnity will be sought from the Owner Trustee, the Owner
Participant or the Trust Estate.
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SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment
of the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied
to the installments of Principal Amount of such Secured Certificate in the
inverse order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture,
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as the Secured Certificates surrendered upon such registration of transfer or
exchange. Every Secured Certificate presented or surrendered for registration of
transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee and Lessee of each registration
of a transfer of a Secured Certificate. Any such transferee of a Secured
Certificate, by its acceptance of a Secured Certificate, agrees to the
provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t),
8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have
represented and warranted (except as provided above), and covenanted, to the
parties to the Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participants in the Participation Agreement.
Subject to compliance by the Certificate Holder and its transferee (if any) of
the requirements set forth in this Section 2.07, the Indenture Trustee and the
Owner Trustee shall use all reasonable efforts to issue new Secured Certificates
upon transfer or exchange within 10 Business Days of the date a Secured
Certificate is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the holder of
such Secured Certificate, execute and the Indenture Trustee shall authenticate
and deliver in replacement thereof a new Secured Certificate, payable in the
same Principal Amount dated the same date and captioned as issued in connection
with the Aircraft. The Indenture Trustee shall authenticate each replacement
Secured Certificate on request by the Owner Trustee and shall make a notation on
each replacement Secured Certificate of the aggregate amount of all payments of
Principal Amount previously made on the mutilated, destroyed, lost or stolen
Secured Certificate with respect to which the replacement Secured Certificate is
issued and the date to which interest on such mutilated, destroyed, lost or
stolen Secured Certificate has been paid. If the Secured Certificate being
replaced has become mutilated, such Secured Certificate shall be surrendered to
the Indenture Trustee and a photocopy thereof shall be furnished to the Owner
Trustee. If the Secured Certificate being replaced has been destroyed, lost or
stolen, the holder of such Secured Certificate shall furnish to the Owner
Trustee and the Indenture Trustee such security or indemnity as may be required
by them to save the Owner Trustee and the Indenture Trustee harmless and
evidence satisfactory to the Owner Trustee and the Indenture Trustee of the
destruction, loss or theft of such Secured Certificate and of the ownership
thereof. If a "qualified institutional buyer" of the type referred to in
paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a
"QIB") is the holder of any such destroyed, lost or stolen Secured Certificate,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory to Lessee, the
Owner Trustee and the Indenture Trustee shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall be required as
a condition to the execution and delivery of such new Secured Certificate.
Subject to compliance by the Certificate Holder of the requirements set forth in
this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
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SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder
for any registration of transfer or exchange of Secured Certificates, but the
Indenture Trustee, as Secured Certificate Registrar, may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear any such costs of registration, transfer or exchange
including, without limitation, in connection with the consummation of the
Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured
Certificates surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to
Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect
to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the
date the Lease is so terminated all the Secured Certificates shall be redeemed
in whole at a redemption price equal to 100% of the unpaid Principal Amount
thereof, together with accrued interest thereon to the date of redemption and
all other amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
All of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and
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payable upon each such Secured Certificate, and that, if any such Secured
Certificates are then outstanding, interest on such Secured Certificates shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Secured Certificates are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Secured Certificates to be redeemed or purchased
on the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Secured
Certificates then outstanding shall cease to bear interest. Upon surrender of
any such Secured Certificate for redemption or purchase in accordance with said
notice, such Secured Certificate shall be redeemed at the redemption price. If
any Secured Certificate called for redemption or purchase shall not be so paid
upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable redemption date at the
interest rate in effect for such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation Agreement,
and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
The Owner Trustee and the Owner Participant may, upon the events
and subject to the terms and conditions and for the price set forth in this
Section 2.14, purchase all but not less than all of the Secured Certificates
outstanding hereunder, and each Certificate Holder agrees that it will, upon
such events and subject to such terms and conditions and upon receipt of such
price, sell, assign, transfer and convey to such purchaser or its nominee
(without recourse or warranty of any kind other than (i) of title to the Secured
Certificates so conveyed and (ii) against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Secured Certificates held by it, and
such purchaser or its nominee shall assume all of such holder's obligations
under the Participation Agreement and hereunder.
Such option to purchase the Secured Certificates may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there
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shall have occurred and be continuing a Lease Event of Default, provided that if
such option is exercised pursuant to this clause (ii) at a time when there shall
have occurred and be continuing for less than 120 days a Lease Event of Default,
the purchase price thereof shall equal the price provided in the preceding
sentence plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Trustee or the Owner Participant of such option to purchase becomes
irrevocable until the date on which such purchase is required to occur pursuant
to the terms of the preceding sentence. Such election to purchase the Secured
Certificates shall become irrevocable upon the sixteenth day preceding the date
specified in the written notice described in the first sentence of this
paragraph.
If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Certificate Holders will comply with all
the provisions of Section 2.07 to enable new Secured Certificates to be issued
to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured
Certificates of any Series, each Certificate Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any
Series (other than Series A), each Certificate Holder of such Series agrees that
in the event that such Certificate Holder, in its capacity as a Certificate
Holder, shall receive any payment or distribution on any Secured Obligations in
respect of such Series which it is not entitled to receive under this Section
2.15 or Article III hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER"
shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
SECTION 2.16. DEFEASANCE.
(a) The Owner Trustee will be deemed to have paid and will be
discharged from any and all obligations in respect of the Secured Certificates
on the 90th day (or such other period as may be specified in the relevant
provision of the United States Bankruptcy Code) (such period being the
"Preference Period") after the date of the deposit referred to in clause (i) of
this Section 2.16(a) if:
(i) with reference to this Section 2.16(a), the Owner Trustee has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee (or another trustee satisfying the requirements of
Section 8.02) and conveyed all right, title and interest for the
benefit of the Certificate Holders, under the terms of an irrevocable
trust agreement in form and substance satisfactory to the Indenture
Trustee, which provides irrevocable instructions therein to apply such
money or the proceeds of
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such U.S. Government Obligations to the payment of such principal and
interest with respect to the Secured Certificates, as trust funds in
trust, specifically entrusted to the Indenture Trustee for the benefit
of the Certificate Holders for payment of the principal of and
interest, if any, on the Secured Certificates, and dedicated solely to,
the benefit of the Certificate Holders, in and to (A) money in an
amount, (B) U.S. Government Obligations that, through the payment of
interest, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Indenture Trustee,
to pay and discharge, without consideration of the reinvestment of such
interest and after payment of all federal, state and local withholding
taxes or other similar charges and assessments in respect thereof
payable by the Indenture Trustee with respect to the amounts deposited
pursuant to clause (A), (B) or (C), the principal of and accrued
interest on the outstanding Secured Certificates at the maturity of
such principal or interest;
(ii) the Owner Trustee shall have delivered to the Indenture
Trustee (A) either (1) a ruling directed to the Indenture Trustee
received from the Internal Revenue Service to the effect that the
Certificate Holders will not recognize income, gain or loss for federal
income tax purposes as a result of the Owner Trustee's exercise of its
option under this Section 2.16(a) and will be subject to federal income
tax on that same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised or (2)
an Opinion of Counsel to the same effect as the ruling described in
clause (1) above accompanied by a ruling to that effect published by
the Internal Revenue Service, unless there has been a change in the
applicable federal income tax law since the date of this Indenture such
that a ruling from the Internal Revenue Service is no longer required
and (B) an Opinion of Counsel to the effect that (1) the creation of
the defeasance trust does not violate the Investment Company Act of
1940 and (2) after the passage of the Preference Period, the trust
funds will not be subject to the effect of Section 547 of the United
States Bankruptcy Code (or any successor or replacement provision) in a
case commenced by or against the Owner Trustee or Lessee under either
such statute, and either (I) the trust funds will no longer remain the
property of the Owner Trustee or Lessee (and therefore will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally)
or (II) if a court were to rule under any such law in any case or
proceeding that the trust funds remained the property of the Owner
Trustee or Lessee (y) assuming such funds remained in the possession of
the Indenture Trustee prior to such court ruling to the extent not paid
to the Certificate Holders, the Indenture Trustee will hold, for the
benefit of the Certificate Holders, a valid and perfected security
interest in such trust funds that is not avoidable in bankruptcy or
otherwise except for the effect of Section 552(b) of the United States
Bankruptcy Code (or any successor or replacement provision) on interest
on the trust funds accruing after the commencement of a case under such
statute and (z) the Certificate Holders will be entitled to receive
adequate protection of their interests in such trust funds if such
trust funds are used in such case or proceeding; and
(iii) the Owner Trustee shall have made arrangements reasonably
satisfactory to the Indenture Trustee for payment or satisfaction of
all amounts due under the third paragraph of Section 2.02.
After any such irrevocable deposit and satisfaction of the
condition precedent provided in clause (ii) of this Section 2.16(a), the
Indenture Trustee upon request shall execute and deliver appropriate instruments
to release the Lien of this Trust Indenture in accordance with Section 10.01 and
shall acknowledge in writing the discharge of the Owner Trustee's obligations
under the Secured Certificates and this Trust Indenture except for those
surviving obligations in the immediately succeeding paragraph.
Notwithstanding the foregoing, prior to the end of the Preference
Period, none of the Owner Trustee's obligations under this Trust Indenture shall
be discharged. Subsequent to the end of the Preference Period, the Owner
Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured
Certificates are no longer outstanding.
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(b) In lieu of satisfying its obligations set forth in Section
2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the
conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard
to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of
satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an
Opinion of Counsel to the effect that the Certificate Holders will not recognize
income, gain or loss for federal income tax purposes as a result of the Owner
Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit had not been made. If
the Owner Trustee elects such option, then the Indenture Trustee upon request
shall execute and deliver appropriate instruments to release the Lien of this
Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be
released from its obligations set forth in Section 4.01 (other than Section
4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in
full force and effect. For the avoidance of doubt, the effect of the Owner
Trustee's exercise of its option set forth in this subsection (b) shall be to
create an economic defeasance rather than the legal defeasance that would result
if the option set forth in subsection (a) above were to be exercised.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be required
to pay in full the aggregate amount of the payment or
payments of Principal Amount and interest and other amounts
(as well as any interest on any overdue Principal Amount
and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due
under all Series A Secured Certificates shall be distributed
to the Certificate Holders of Series A ratably, without
priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
Series A Secured Certificate bears to the aggregate amount
of the payments then due under all Series A Secured
Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the Certificate
Holders of Series B ratably, without priority of one over
the other, in the proportion that the amount of such payment
or payments then due under each Series B Secured Certificate
bears to the aggregate amount of the payments then due under
all Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the Certificate
Holders of Series C ratably,
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without priority of one over the other, in the proportion
that the amount of such payment or payments then due under
each Series C Secured Certificate bears to the aggregate
amount of the payments then due under all Series C Secured
Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall have
occurred and be continuing, then such balance shall not be
distributed as provided in this clause "Second" but shall be
held by the Indenture Trustee as part of the Trust Indenture
Estate and invested in accordance with Section 5.09 hereof
until whichever of the following shall first occur: (i) all
Events of Default shall have been cured or waived, in which
event such balance shall be distributed as provided in this
clause "Second", (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be distributed
in accordance with the provisions of such Section 3.03, or
(iii) the 120th day after the receipt of such payment in
which case such payment shall be distributed as provided in
this clause "Second".
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in connection
with such redemption for which they are entitled to reimbursement,
or indemnity by Lessee, under the Operative Documents and then (b)
to pay any other amounts then due to the Indenture Trustee and the
Certificate Holders under this Trust Indenture, the Participation
Agreement or the Secured Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if
any, then due and payable in respect of the Series A Secured
Certificates;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series B Secured Certificates;
and
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series C Secured Certificates;
and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and
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such investment earnings) shall be released to Lessee at Lessee's written
request upon the release of such damaged Airframe or Engine and the replacement
thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after an Event of
Default shall have occurred and be continuing and after the occurrence of an
Indenture Trustee Event, as well as all payments or amounts then held by the
Indenture Trustee as part of the Trust Indenture Estate, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the
"MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but
other than income tax on, or measured by, fees payable to the
Indenture Trustee in its individual capacity pursuant to the
Operative Documents to which it is a party incurred by the
Indenture Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, reasonable
attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the
Indenture Trustee or the Certificate Holders in the protection,
exercise or enforcement of any right, power or remedy or any
damages sustained by the Indenture Trustee or any Certificate
Holder, liquidated or otherwise, upon such Event of Default shall
be applied by the Indenture Trustee as between itself and the
Certificate Holders in reimbursement of such expenses and any other
expenses for which the Indenture Trustee or the Certificate Holders
are entitled to reimbursement under any Operative Document and in
the case the aggregate amount to be so distributed is insufficient
to pay as aforesaid, then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing
or prior Certificate Holders ratably, without priority of one over
the other, in accordance with the amount of the payment or payments
made by each such then existing or prior Certificate Holder
pursuant to said Section 5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series A Secured Certificates, and the accrued
but unpaid interest and other amounts due thereon (other
than Make-Whole Amount which shall not be due and payable)
and all other Secured Obligations in respect of the Series A
Secured Certificates (other than Make-Whole Amount) to the
date of distribution, shall be distributed to the
Certificate Holders of Series A, and in case the aggregate
amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one
over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series A Secured Certificates held
by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series
A Secured Certificates held by all such holders plus the
accrued but unpaid interest and other amounts due thereon
(other than Make-Whole Amount) to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series B
Secured Certificates, and the accrued but unpaid interest
and other amounts due thereon (other than Make-Whole Amount
which shall not be due and payable) and all other Secured
Obligations in respect of the Series B Secured Certificates
[(other than Make-Whole Amount)] to the date of
distribution, shall be distributed to the Certificate
Holders of Series B, and in case the aggregate amount so to
be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series
B Secured Certificates held by all such holders plus the
accrued but unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest
and other amounts due thereon (other than Make-Whole Amount
which shall not be due and payable) and all other Secured
Obligations in respect of the Series C Secured Certificates
(other than Make-Whole Amount) to the date of distribution,
shall be distributed to the Certificate Holders of Series C,
and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series C
Secured Certificates held by each holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if any) to the
date of distribution, bears to the aggregate unpaid
Principal Amount of all Series C Secured Certificates held
by all such holders plus the accrued but unpaid interest and
other amounts due thereon (other than the Make-Whole Amount)
to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the
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Intercreditor Agreement, and any payment received by the Indenture Trustee under
clause (c) of the third paragraph of Section 2.02 shall be distributed directly
to the Persons entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Trust Indenture, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is made
in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or
in any other Operative Document shall be distributed by the Indenture Trustee to
the extent received or realized at any time (i) prior to the payment in full of
all Secured Obligations due the Certificate Holders, in the order of priority
specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after
payment in full of all Secured Obligations due the Certificate Holders, in the
following order of priority:
FIRST, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of
Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03
and 3.04 hereof, all payments received and amounts realized by the
Indenture Trustee under the Lease or otherwise with respect to the
Aircraft (including, without limitation, all amounts realized upon
the sale or release of the Aircraft after the termination of the
Lease with respect thereto), to the extent received or realized at
any time after payment in full of all Secured Obligations due the
Certificate Holders, shall be distributed by the Indenture Trustee
in the order of priority specified in clause (ii) of the
immediately preceding sentence of this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to the
Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07. APPLICATION OF PAYMENTS UNDER GUARANTEE.
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All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT, REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Secured Certificates and hereunder in accordance with the
terms of the Secured Certificates and this Trust Indenture and all
amounts, if any, payable by it to the Certificate Holders under the
Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of
an Event of Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Event of Default or Event of Loss to the
Indenture Trustee, each Certificate Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Certificate Holders and
the Indenture Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates and
other instruments furnished to the Owner Trustee under the Lease,
including, without limitation, a copy of any Termination Notice and a
copy of each report or notice received pursuant to Section 9(a) and
11(c) of the Lease to the extent that the same shall not have been
furnished to the Certificate Holders or the Indenture Trustee pursuant
to the Lease;
(e) except with the consent of the Indenture Trustee (acting
pursuant to instructions given in accordance with Section 9.01 hereof),
the Owner Trustee will not contract for, create, incur, assume or
suffer to exist any Debt (other than the Secured Certificates), and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law
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or pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event
of Default caused solely by a failure of Lessee to pay to the Owner
Trustee or the Owner Participant when due any amount that is included
in the definition of Excluded Payments shall not constitute an Event of
Default unless notice is given by the Owner Trustee to the Indenture
Trustee that such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other
amount due and payable under any Secured Certificate or hereunder
(other than any such failure arising by virtue of a tax withheld
pursuant to Section 2.04(b) hereof or as a result of a Lease Event of
Default or a Lease Default) and such failure shall have continued
unremedied for ten Business Days in the case of any payment of
Principal Amount or interest or Make-Whole Amount, if any, thereon and,
in the case of any other amount, for ten Business Days after the Owner
Trustee or the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the
Participation Agreement, or by the Owner Participant pursuant to
Section 8(h) of the Participation Agreement shall remain undischarged
for a period of 30 days after the Owner Trustee or the Owner
Participant, as the case may be, shall have received written notice
from the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or
the Owner Trustee herein, in the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement)
or in any certificate furnished by the Owner Participant or the Owner
Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any failure
by the Owner Trustee or Owner Participant to observe or perform in any
material respect any other covenant or obligation of the Owner Trustee
or Owner Participant, as the case may be, for the benefit of the
Indenture Trustee or the Certificate Holders contained in the
Participation Agreement, Section 4.01(a) of the Trust Agreement, the
Secured Certificates or this Trust Indenture which is not remedied
within a period of 60 days after notice thereof has been given to the
Owner Trustee and the Owner Participant (or, if such failure cannot be
remedied during such 60-day period and the Owner Trustee and/or the
Owner Participant have been and are diligently proceeding to remedy
such failure, such additional period not in excess of 120 days, if such
failure is capable of being remedied during such additional period, as
may be necessary to remedy such failure); or
(f) if at any time when the Aircraft is registered under the laws
of the United States, the Owner Participant shall not be a Citizen of
the United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f)
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unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary case
or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
(A) a final non-appealable order, judgment or decree shall be entered
in such case or proceeding by a court or a trustee, custodian, receiver
or liquidator, or (B) an opinion of counsel, reasonably satisfactory to
the Indenture Trustee, shall be provided by the Owner Participant, in
each case to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g); provided
further that an event referred to in this Section 4.02(f) with respect
to the Owner Participant shall not constitute an Event of Default if,
not later than 90 days following such event, the Owner Participant has
been replaced with an entity eligible to act as Owner Participant in
accordance with Section 8(n) of the Participation Agreement.
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the Owner
Trustee and the Owner Participant prompt written notice of any Event of Default
of which the Indenture Trustee has Actual Knowledge and, if any such Event of
Default results from a Lease Event of Default that can be cured by the payment
of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied), shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days' prior written notice of the date
(the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect
of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease,
the Indenture Trustee shall have insufficient funds to make any payment of
Principal Amount and interest on any Secured Certificate on the day it becomes
due and payable, the Owner Trustee may, without the consent or concurrence of
any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee
prior to the Enforcement Date, in the manner provided in Section 2.04 hereof,
for application in accordance with Section 3.01 hereof, an amount equal to the
portion of the Principal Amount and interest (including interest, if any, on any
overdue payments of such portion of Principal Amount and interest) then due and
payable on the Secured Certificates, and, unless the Owner Trustee has cured
Events of Default in respect of
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payments of Basic Rent on each of the three immediately preceding Basic Rent
payment dates, or the Owner Trustee has cured six previous Events of Default in
respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would otherwise have arisen on account of the nonpayment
by Lessee of such installment of Interim Rent or Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money
(it being understood that defaults requiring action such as the obtaining of
insurance and the procuring of maintenance services can be so remedied) has
occurred, the Owner Trustee may, without the consent or concurrence of any
Certificate Holder, but shall not be obligated to, cure such Event of Default by
making such payment prior to the Enforcement Date as is necessary to accomplish
the observance or performance of the defaulted covenant, condition or agreement
to the party entitled to the same.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the
first or second preceding paragraphs of this Section 4.03, the Owner Trustee
shall be subrogated to the rights of the Indenture Trustee and the Certificate
Holders in respect of the Interim Rent or Basic Rent which was overdue at the
time of such payment and interest payable by Lessee on account of its being
overdue and any Supplemental Rent in respect of the reimbursement of amounts
paid by Owner Trustee pursuant to the immediately preceding paragraph (but in
either case shall have no rights as a secured party hereunder), and thereafter,
the Owner Trustee shall be entitled to receive such overdue Interim Rent or
Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Indenture Trustee; provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Interim Rent, Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not be
entitled to seek to recover any such payment (or any payment in lieu thereof)
except pursuant to the foregoing right of subrogation until payment of the
Principal Amount and interest that has become due in accordance with Section
4.04(b) hereof.
SECTION 4.04. REMEDIES.
(a) If an Event of Default shall have occurred and be continuing
and so long as the same shall continue unremedied, then and in every such case
the Indenture Trustee may, subject to the second paragraph of this Section
4.04(a), exercise any or all of the rights and powers and pursue any and all of
the remedies pursuant to this Article IV and shall have and may exercise all of
the rights and remedies of a secured party under the Uniform Commercial Code
and, in the event such Event of Default is also a Lease Event of Default, any
and all of the remedies pursuant to Section 15 of the Lease and may take
possession of all or any part of the properties covered or intended to be
covered by the Lien created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee and Lessee and all persons claiming under any of
them wholly or partly therefrom, provided, that the Indenture Trustee shall give
the Owner Trustee and the Owner Participant twenty days' prior written notice of
its intention to sell the Aircraft or foreclose the Lien of this Trust
Indenture. Unless an Event of Default not resulting from or relating to a Lease
Event of Default has occurred and is continuing, the Owner Participant may bid
at any public sale and become the purchaser. Without limiting any of the
foregoing but subject to the immediately succeeding paragraph, it is understood
and agreed that the Indenture Trustee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder as
a result of an Event of Default which arises solely by reason of one
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or more events or circumstances which constitute a Lease Event of Default unless
the Indenture Trustee as security assignee of the Owner Trustee shall have
exercised or concurrently be exercising one or more of the remedies provided for
in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is
not subsequently re-leased to Lessee or an Affiliate thereof) or take possession
and/or sell the Aircraft with respect to the Aircraft; provided, however, that
such requirement to exercise one or more of such remedies under the Lease shall
not apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under the Lease (a
"CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to
exercise one or more of such remedies under the Lease shall nonetheless be
applicable during a Continuous Stay Period subsequent to the expiration of the
Section 1110 Period to the extent that the continuation of such Continuous Stay
Period subsequent to the expiration of the Section 1110 Period (A) results from
an agreement by the trustee or the debtor-in-possession in such proceeding
during the Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy
Code and continues to perform as required by Section 1110(a)(1)(A-B) of the
Bankruptcy Code or (B) is an extension of the Section 1110 Period with the
consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy
Code or (C) results from Lessee's assumption during the Section 1110 Period with
the approval of the relevant court of the Lease pursuant to Section 365 of the
Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure
to give any requisite notice to any person. In the event that the applicability
of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by
Lessee in judicial proceedings, so long as the Indenture Trustee fails to
participate in such proceedings, the Owner Trustee shall have the right (without
affecting in any way any rights or remedy of the Indenture Trustee hereunder) to
participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid interest thereon (without Make-Whole Amount) and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if
at any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) The Certificate Holders shall be entitled, at any sale pursuant
to Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
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(d) In the event of any sale of the Trust Indenture Estate, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon (without Make-Whole Amount), and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Certificate Holder, the Indenture Trustee will not be authorized or empowered to
acquire title to any Mortgaged Property or take any action with respect to any
Mortgaged Property so acquired by it if such acquisition or action would cause
any Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing
and the Indenture Trustee shall have foreclosed, or shall concurrently be
foreclosing, the Lien of this Trust Indenture and shall be taking steps for the
sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the
request of the Indenture Trustee, the Owner Trustee shall promptly execute and
deliver to the Indenture Trustee such instruments of title and other documents
as the Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Mortgaged Property included in the
Trust Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee
may, from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
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SECTION 4.06. REMEDIES CUMULATIVE.
Subject to the other provisions of Article IV hereof, each and
every right, power and remedy given to the Indenture Trustee specifically or
otherwise in this Trust Indenture shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any proceeding
to enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Owner
Participant, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Owner Participant, the Indenture
Trustee or Lessee shall continue as if no such proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default or Event of Default
hereunder and its consequences and upon any such waiver such Default or Event of
Default shall cease to exist and any Event of Default arising from any such
Default shall be deemed to have been cured for every purpose of this Trust
Indenture, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon; provided, that in the
absence of written instructions from all the Certificate Holders, the Indenture
Trustee shall not waive any Default or Event of Default (i) in the payment of
the Principal Amount, Make-Whole Amount, if any, and interest and other amounts
due under any Secured Certificate then outstanding, or (ii) in respect of a
covenant or provision hereof which, under Article IX hereof, cannot be modified
or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee the
true and lawful attorney-in-fact of the Owner Trustee in its name and stead and
on its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
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and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture, the
right of any Certificate Holder to receive payment of principal of, and premium,
if any, and interest on a Secured Certificate on or after the respective due
dates expressed in such Secured Certificate, or to bring suit for the
enforcement of any such payment on or after such respective dates in accordance
with the terms hereof, shall not be impaired or affected without the consent of
such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay Rent, the Indenture
Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner
Participant, Lessee, and each Certificate Holder. Subject to the terms of
Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such
action, or refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Event of Default to
the Certificate Holders, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 5.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the
Certificate Holders. If the Indenture Trustee shall at any time declare the
Lease to be in default pursuant to Section 15 thereof or shall elect to
foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall
forthwith notify the Owner Participant, the Certificate Holders, the Owner
Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of
Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the
Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner
Participant, as the case may be, shall not be deemed to have knowledge of a
Default or an Event of Default (except, in the case of the Indenture Trustee,
the failure of Lessee to pay any installment of Interim Rent or Basic Rent
within one Business Day after the same shall become due, if any portion of such
installment was then required to be paid to the Indenture Trustee, which failure
shall constitute knowledge of a Default) unless notified in writing by Lessee,
the Owner Trustee, the Owner Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Certificate Holders, the Indenture Trustee
shall, subject to the terms of this Section 5.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided,
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that anything contained in this Trust Indenture, the Lease or the other
Operative Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, at all times
without the consent of the Indenture Trustee, (A) to the exclusion of
the Indenture Trustee demand, collect, sue for or otherwise obtain all
amounts included in Excluded Payments from Lessee, (B) unless the Lien
of this Trust Indenture shall have been foreclosed upon, grant or
withhold its consent to amendments or supplements to Indenture
Agreements required in accordance with Article IX hereof and (C) seek
legal or equitable remedies to require Lessee to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the
rights referred to in this clause (1) shall not be deemed to include
the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at
law or in equity, to enforce payment by Lessee of such amounts included
in Excluded Payments or performance by Lessee of such insurance
covenant or to recover damages for the breach thereof;
(2) at all times prior to the foreclosure of the Lien of this Trust
Indenture, the Indenture Trustee shall not, without the consent of the
Owner Trustee, which consent shall not be unreasonably withheld if no
right or interest of the Owner Trustee or the Owner Participant shall
be diminished or impaired thereby, (i) enter into, execute and deliver
amendments, modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, each of the Owner Trustee,
the Owner Participant and, except with respect to clauses (iii) and
(iv), the Indenture Trustee shall have the right (i) to receive from
Lessee all notices, certificates, reports, filings, opinions of counsel
and other documents and all information which any thereof is permitted
or required to give or furnish to the Owner Trustee or Lessor pursuant
to any Operative Document (including pursuant to Section 7(b) of the
Participation Agreement), (ii) to exercise inspection rights pursuant
to Section 12 of the Lease, (iii) to retain all rights with respect to
insurance maintained for its own account which Section 11(e) of the
Lease specifically confers on Lessor, and (iv) to exercise, to the
extent necessary to enable it to exercise its rights under Section 4.03
hereof, the rights of Lessor under Section 21 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall at
all times, to the exclusion of the Indenture Trustee, have the right to
adjust Rent, Stipulated Loss Values and Termination Values as provided
in Section 3(d) of the Lease;
(5) unless an Indenture Trustee Event shall have occurred, to
exercise all of the rights of Lessor under Section 7(b) of the Lease;
(6) whether or not a Default or Event of Default shall have
occurred and is continuing, the Owner Trustee may, without the consent
of the Indenture Trustee, (i) solicit and make bids with respect to the
Aircraft under Section 9 of the Lease in respect of a termination of
the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair
market sales value" and "fair market rental value" under Section 19 of
the Lease for all purposes except following an Event of Default
pursuant to Section 15 of the Lease, and (iii) make an election
pursuant to and in accordance with the provisions of Section 9(c) of
the Lease; and
(7) so long as no Event of Default shall have occurred and be
continuing, all other rights of the "Lessor" under the Lease shall be
exercised by the Owner Trustee to the exclusion of the Indenture
Trustee including, without limitation, the right to (i) exercise all
rights with respect to Lessee's use and
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operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease and (iii)
request further assurances pursuant to Section 16 of the Lease;
provided that the foregoing shall not limit (A) any rights separately
granted to the Indenture Trustee under the Operative Agreements or (B)
the right of the Indenture Trustee to receive any funds to be delivered
to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein
(including this Section 5.02), the Indenture Trustee shall have the right, to
the exclusion of the Owner Trustee and the Owner Participant (other than with
respect to Excluded Payments), to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file
or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture or any other Operative Document and nothing
herein or therein shall require the Indenture Trustee to expend or risk its own
funds or otherwise incur the risk of any financial liability in the performance
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it (the written indemnity of any
Certificate Holder who is a QIB, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to Indenture Trustee
shall be accepted as reasonable assurance of adequate indemnity). The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
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written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they will
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Aircraft or any other part of the Trust Indenture Estate except
(i) as required by the terms of the Lease or (ii) in accordance with the powers
granted to, or the authority conferred upon, the Owner Trustee and the Indenture
Trustee pursuant to this Trust Indenture and in accordance with the express
terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
A. With respect to any Replacement Airframe:
(i) a description of the Airframe which shall be identified
by manufacturer, model, FAA registration number (or
other applicable registration information) and
manufacturer's serial number;
(ii) a description of the Replacement Airframe to be
received (including the manufacturer, model, FAA
registration number (or other applicable registration
information) and manufacturer's serial number) as
consideration for the Airframe to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Airframe the
Owner Trustee will be the legal owner of such
Replacement Airframe free and clear of all Liens except
as are permitted by Section 6 of the Lease, that such
Replacement Airframe will on such date be in good
working order and condition, and that such Replacement
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Airframe has been or, substantially concurrently with
such withdrawal, will be duly registered in the name of
the Owner Trustee under the Federal Aviation Act or
under the law then applicable to the registration of
the Airframe and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or
such other applicable law) with respect to such
Replacement Airframe, and that such registration and
certificate is in full force and effect, and that
Lessee will have the full right and authority to use
such Replacement Airframe;
(iv) the existence of the insurance required by Section 11
of the Lease with respect to such Replacement Airframe
and the payment of all premiums then due thereon;
(v) that the Replacement Airframe is of the same or an
improved model as the Airframe requested to be released
from this Indenture;
(vi) the fair market value of the Replacement Airframe as of
the date of such certificate (which in the judgment of
Lessee shall be not less than the then fair market
value of the Airframe requested to be released
(assuming such Airframe was in the condition and repair
required to be maintained under the Lease));
(vii) the fair market value of the Airframe immediately prior
to the date the Airframe suffered an Event of Loss
(assuming that such Airframe was in the condition and
repair required under the Lease);
(viii) that no Lease Event of Default and no event which, with
lapse of time or notice, or both, would become a Lease
Event of Default, has occurred which has not been
remedied or waived, and that Lessee will not be in
default, by the making and granting of the request for
release and the addition of a Replacement Airframe, in
the performance of any of the terms and covenants of
the Lease; and
(ix) that the release of the Airframe so to be released will
not be in contravention of any of the provisions of
this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified
by manufacturer's serial number;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) as consideration
for the Engine to be released;
(iii) that on the date of the Trust Agreement and Indenture
Supplement relating to the Replacement Engine the Owner
Trustee will be the legal owner of such Replacement
Engine free and clear of all Liens except as are
permitted by Section 6 of the Lease, that such
Replacement Engine will on such date be in good working
order and condition and that such Replacement Engine is
substantially the same as the Engine to be released (or
as improved model);
(iv) the fair market value of the Replacement Engine as of
the date of such certificate (which value shall not be
less than the then fair market value of the Engine to
be released (assuming such Engine was in the condition
and repair required to be maintained under the Lease));
(v) the fair market value of the Engine to be released
(immediately prior to any Event of Loss suffered by
such Engine and assuming that such Engine was in the
condition and repair required under the Lease);
(vi) that each of the conditions specified in Section 10(b)
of the Lease with respect to such Replacement Engine
have been satisfied and that Lessee will not be in
default, by the making and granting of the request for
release and the addition of the Replacement Engine, in
the performance of any of the terms and covenants of
the Lease;
(vii) that, with respect to the replacement of an Engine
pursuant to Section 9(d) of the Lease, no Lease Event
of Default and no event which, with lapse of time or
notice, or both, would become a Lease Event of Default
has occurred which has not been remedied or waived; and
(viii) that the release of the Engine so to be released will
not be in contravention of any of the provisions of
this Indenture.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting
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such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture Trustee
to protect the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be an
employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to
and deposited with the Indenture Trustee conform to the
requirements of this Trust Indenture and the Lease and,
upon the basis of such application, the property so
sold or disposed of may be lawfully released from the
lien of this Trust Indenture and all conditions
precedent herein provided for relating to such release
have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the lien of this Indenture and
covered by the Lease, the instruments subjecting such
Replacement Airframe or Replacement Engine to the Lease
and to the Lien of this Trust Indenture, as the case
may be, have been duly filed for recordation pursuant
to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is
necessary or advisable in order to establish and
perfect the right, title, estate and interest of the
Owner Trustee to and the lien of this Trust Indenture
on such Replacement Aircraft or Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
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SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or
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inaction of the other or of the Owner Participant. The Owner Trustee shall not
be deemed to be a trustee for the Certificate Holders for any purpose.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with
written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY
NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE
TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN,
QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual capacity
warrants that (i) the Owner Trustee has received on the Delivery Date whatever
title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the Owner
Trustee in its individual capacity. Neither the Owner Trustee, in its individual
capacity or as Owner Trustee under the Trust Agreement, nor the Indenture
Trustee, in its individual or trust capacities, makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as
to the correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Indenture Trustee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement). The Loan Participants, the Certificate
Holders and the Owner Participant make no representation or warranty hereunder
whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee pursuant to
any provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest
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all monies held as directed by Lessee so long as no Lease Event of Default or
Lease Default has occurred and is continuing (or in the absence of such
direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein and in
the Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
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instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely as
Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder except only in the case of willful misconduct or gross negligence (or
negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in Section 8 of the Participation Agreement or Section 6.03 hereof, or as
provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof,
or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the
Participation Agreement from Lessee's indemnities under such Sections; provided
that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise
prohibited by law, shall not make any claim under this Section 7.01 for any
claim or expense without first making demand on Lessee for the payment on behalf
of Lessor of such claim or expense pursuant to the Lease or the Participation
Agreement, including, without limitation, Section 7(b) or 7(c) of the
Participation Agreement. In addition, if necessary, the Indenture Trustee shall
be entitled to indemnification from the Trust Indenture Estate for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign at
any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In
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addition, a Majority in Interest of Certificate Holders may at any time (but
only with the consent of Lessee, which consent shall not be unreasonably
withheld, except that such consent shall not be necessary if a Lease Event of
Default is continuing) remove the Indenture Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the Owner
Participant and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Certificate Holder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a Majority in
Interest of Certificate Holders may appoint a successor Indenture Trustee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Indenture Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the
Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate
Holder may apply to any court of competent jurisdiction to appoint a successor
Indenture Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
bank or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act, except that such Person shall give prompt subsequent notice of such
transaction to the Owner Trustee and the Owner Participant.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or
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one or more persons approved by the Indenture Trustee, either to act jointly
with the Indenture Trustee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Indenture
Trustee or a Majority in Interest of Certificate Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional and separate trustee,
subject in each case to the remaining provisions of this Section 8.03. If the
Owner Trustee shall not have taken any action requested of it under this Section
8.03(a) that is permitted or required by its terms within 15 days after the
receipt of a written request from the Indenture Trustee so to do, or if an Event
of Default shall have occurred and be continuing, the Indenture Trustee may act
under the foregoing provisions of this Section 8.03(a) without the concurrence
of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which
appointment is coupled with an interest) the Indenture Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute, deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee
appointed under this Section 8.03(a) shall die, become incapable of acting,
resign or be removed, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall revert to the
Indenture Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
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ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, the Owner Trustee
agrees it shall not enter into any amendment of or supplement to the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or execute and deliver any written waiver or modification of,
or consent under, the terms of the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Guarantee, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee and a Majority in Interest of Certificate
Holders. Anything to the contrary contained herein notwithstanding, without the
necessity of the consent of any of the Certificate Holders or the Indenture
Trustee, (i) any Excluded Payments payable to the Owner Participant may be
modified, amended, changed or waived in such manner as shall be agreed to by the
Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under
Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such
amendments, modifications and changes do not and would not affect the time of,
or reduce the amount of, Rent payments (other than Excluded Payments) until
after the payment in full of all Secured Obligations or otherwise adversely
affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof, the
Indenture Trustee agrees with the Certificate Holders that it shall not enter
into any amendment, waiver or modification of, supplement or consent to this
Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Guarantee or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Certificate Holders, or does not adversely
effect the Certificate Holders, but upon the written request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Manufacturer; provided, however, that, without the
consent of each holder of an affected Secured Certificate then outstanding, no
such amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Guarantee or the Participation Agreement or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or
Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add
an Event of Default) of the Lease, the definitions of "Event of Default",
"Default", "Lease Event of Default", "Lease Default", "Majority in Interest of
Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the
percentage of Certificate Holders required to take or approve any action
hereunder, (ii) reduce the amount, or change the time of payment or method of
calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or
interest with respect to any Secured Certificate, or alter or modify the
provisions of Article III hereof with respect to the order of priorities in
which distribution thereunder shall be made as among the Certificate Holders,
the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in
favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders
(except that the Owner Trustee (in its individual capacity) or the Indenture
Trustee, as the case may be, may consent to any waiver or reduction of an
indemnity payable to it), (iv) consent to any change in the Trust Indenture or
the Lease which would permit redemption of Secured Certificates earlier than
permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured
Certificates other than as permitted by Section 2.14 hereof, (v) except as
contemplated by the Lease or the Participation Agreement, reduce the amount or
extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value,
or Termination Value for the Aircraft in each case as set forth in the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the
Aircraft or altering the absolute and unconditional character of the obligations
of Lessee to pay Rent as set forth in Sections
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3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee under
the Trust Agreement or the institution acting as Indenture Trustee hereunder,
any document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale,
the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment
with the Consent and Agreement attached thereto from the assignment and pledge
thereof hereunder and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and give written notice thereof to Lessee; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Indenture Trustee of all property
constituting part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all monies or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Trust Indenture and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to any
part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or any
part thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
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addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-54-
<PAGE> 55
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a vote of
a Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture or
the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-55-
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee, as Owner Trustee
By: _____________________________________
Name: _____________________________________
Title:
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By: _____________________________________
Name: _____________________________________
Title:
-56-
<PAGE> 57
-----------------------------
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
-----------------------------
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 E]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 E], dated
_______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain
Trust Agreement [NW 1996 E] dated as of April 29, 1996 (the "TRUST AGREEMENT"),
between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 E], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft (such term and
other terms used but not defined herein having the respective meanings ascribed
thereto in the Trust Indenture), and shall specifically mortgage such Aircraft
to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
<PAGE> 58
AIRFRAME
One airframe identified as follows:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
<S> <C> <C> <C>
</TABLE>
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
<S> <C> <C>
</TABLE>
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above
subject, however, to all of the terms of the Trust Indenture including, without
limitation, the rights of the Owner Trustee and the Owner Participant under
Section 5.02 of the Trust Indenture.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto
the Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except
EXHIBIT A-2
<PAGE> 59
as provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 60
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee, Owner Trustee
By: _________________________________
Name:
Title:
EXHIBIT A-4
<PAGE> 61
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A $25,255,419 7.67%
Series B $ 8,282,397 8.07%
Series C $ 6,462,184 8.97%
</TABLE>
<PAGE> 62
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N541US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.61637786%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.04965912%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.04965912%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.04965912%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.04965912%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.04965912%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.04965912%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.04965912%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.04965912%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.04965912%
Jul 2, 2007 0.00000000%
Jan 2, 2008 2.04965912%
Jul 2, 2008 0.00000000%
Jan 2, 2009 2.04965912%
Jul 2, 2009 0.00000000%
Jan 2, 2010 11.69834482%
Jul 2, 2010 0.00000000%
Jan 2, 2011 12.72737942%
Jul 2, 2011 0.00000000%
Jan 2, 2012 13.70356992%
Jul 2, 2012 17.07826744%
Jan 2, 2013 15.79303040%
Jul 2, 2013 0.87716620%
Jan 2, 2014 3.95961358%
</TABLE>
<PAGE> 63
SERIES B
AIRCRAFT: N541US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.08333409%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.08333409%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.08333409%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.08333409%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.08333409%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.08333409%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.08333409%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.08333409%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.08333409%
Jul 2, 2007 0.00000000%
Jan 2, 2008 11.46938501%
Jul 2, 2008 0.00000000%
Jan 2, 2009 26.33173706%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.37180058%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 38.03291487%
Jul 2, 2014 4.77498241%
Jan 2, 2015 0.26917328%
</TABLE>
<PAGE> 64
SERIES C
AIRCRAFT: N541US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.55481738%
Jul 2, 1999 0.00000000%
Jan 2, 2000 3.61387110%
Jul 2, 2000 0.00000000%
Jan 2, 2001 4.76790819%
Jul 2, 2001 0.00000000%
Jan 2, 2002 6.02548612%
Jul 2, 2002 0.00000000%
Jan 2, 2003 7.39584326%
Jul 2, 2003 0.00000000%
Jan 2, 2004 8.88914646%
Jul 2, 2004 0.00000000%
Jan 2, 2005 10.51638270%
Jul 2, 2005 0.00000000%
Jan 2, 2006 5.39156731%
Jul 2, 2006 0.00000000%
Jan 2, 2007 11.71413565%
Jul 2, 2007 0.00000000%
Jan 2, 2008 12.33483912%
Jul 2, 2008 0.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 0.00000000%
Jul 2, 2014 0.00000000%
Jan 2, 2015 26.79600271%
</TABLE>
<PAGE> 65
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1A, dated as
of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1B, dated as
of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1996-1C, dated as
of June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 E]
This LEASE AGREEMENT [NW 1996 E], dated as of April 29, 1996,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (as defined in Section 1 hereof) (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. The following terms shall have
the following meanings for all purposes of this Lease Agreement [NW 1996 E] and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Administrative Agent" means [________________], a
[______] banking corporation, as administrative agent pursuant
to the Participation Agreement, and any successor acting as
administrative agent.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"After-Tax Basis" means an additional amount which
when added to the amount of payment otherwise required to be
made on an After-Tax Basis, after deduction of all Federal,
state, local and foreign taxes required to be paid by or on
behalf of a Person in respect of the receipt or realization of
any such amounts, results in a sum equal to the payment
required under the provisions of the Operative Documents to be
made on an After-Tax Basis. Any payment under the Operative
Documents which does not actually result in an increase (or a
decrease in a refund) of the Owner Participant's Federal,
state, local or foreign income tax liability for the year of
the accrual or receipt of such payment but which reduces any
net operating loss or business credit or foreign tax credit
carryover of the recipient shall be treated as giving rise to
an actual increase in (or a decrease in a refund of) tax
liability for the year in which such tax attribute if not
reduced thereby would have given rise to a reduction in such
recipient's tax liability (or such recipient's allowable
refund in respect of any
<PAGE> 2
such taxes). With respect to the Owner Participant, for
purposes of this definition, it shall be assumed that United
States federal, state, local and foreign income taxes are
payable at the Highest Marginal Rate (as defined in the Tax
Indemnity Agreement) then applicable to the Owner Participant.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the two Engines initially leased
hereunder (or any engine substituted for either of such
Engines pursuant to the terms hereof), whether or not any of
such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after
removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at
such time as an aircraft (except Engines or engines from time
to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but
- 2 -
<PAGE> 3
subject always to the provisions of Section 3(d)(v) hereof
and, for any Renewal Term, Basic Rent determined pursuant to
Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on January 2, 2019, or such
earlier date as this Lease may be terminated in accordance
with the provisions hereof.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Bill of Sale, free
and clear of all liens, encumbrances and rights of others
except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston,
Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota
and, in connection with any payment of Rent and so long as any
Secured Certificate is a Eurodollar Loan (as defined in the
Trust Indenture), such day is also a day for trading by and
between banks in the interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the
United States holding a carrier operating certificate issued
by the Secretary of Transportation pursuant to Chapter 447 of
Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo or
that otherwise is certified or registered to the extent
required to fall within the purview of 11 U.S.C. Section 1110
or any analogous successor provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning
specified in Section 40102(a)(15) of Title 49 of the United
States Code or any similar legislation of the United States of
America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil
Reserve Air Fleet Program currently administered by the United
States Air Force Air Mobility Command pursuant to Executive
Order No. 11490, as amended, or any substantially similar
program.
"Code" means the Internal Revenue Code of 1986, as
amended.
- 3 -
<PAGE> 4
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be,
to finance the Owner Trustee's payment of Lessor's Cost for
the Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1996 E], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated
as of November 2, 1995, among Lessee, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, [_____________], as documentation
agent, [________________], as administrative agent, and
[___________________], as syndication agent, as the same
may be amended, supplemented or otherwise modified from time
to time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default.
"Delivery Date" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 2003, provided,
however, that if the chief legal officer or chief tax officer
of Lessee has actual knowledge that the Depreciation Period is
other than the period specified in the Tax Assumptions as a
result of an "Operative Event" (as defined in the Tax
Indemnity Agreement), then ending on the last day of the Owner
Participant's taxable year in which a depreciation or cost
recovery deduction is allowed or allowable with respect to the
Aircraft.
"Documentation Agent" means [________________], a
bank organized under the laws of [_________________], as
documentation agent pursuant to the Participation Agreement,
and any successor acting as documentation agent.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the two Pratt & Whitney
Model PW2037 engines listed by manufacturer's serial number in
the initial Lease Supplement,
- 4 -
<PAGE> 5
whether or not from time to time thereafter installed on the
Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for either of such
two engines, together in each case with any and all Parts
incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine; provided, however,
that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term
"Engines" means, as of any date of determination, all Engines
then leased hereunder.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any agency
or instrumentality of any thereof whose obligations are backed
by the full faith and credit of such government) which in the
case of any event referred to in this clause (iii) (other than
a requisition of title) shall have resulted in the loss of
possession of such property by Lessee for a period in excess
of 180 consecutive days or, if earlier, until the end of the
Term or, in the case of a requisition of title by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and designated therein as a "Specified Country" or
any agency or instrumentality of any thereof whose obligations
are backed by the full faith and credit of such government, as
the case may be, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of
title or, if earlier, at the end of the Term (it being
understood that a requisition of title by any government other
than as expressly provided above shall constitute an immediate
Event of Loss); (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration
or other governmental body of the government of registry of
the Aircraft having jurisdiction, the use of such property in
the normal course of the business of air transportation shall
have been prohibited for a period of 180 consecutive days,
unless Lessee, prior to the
- 5 -
<PAGE> 6
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward in a manner that does not
discriminate against the Aircraft all steps which are
necessary or desirable to permit the normal use of such
property by Lessee, and, within one year of such prohibition,
Lessee shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of
the same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the
Aircraft by Lessee, provided, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss
if such use shall have been prohibited for a period of two
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any
instrumentality or agency of any thereof whose obligations are
backed by the full faith and credit of such government, which
shall have occurred during the Basic Term (or the Interim Term
or any Renewal Term) and shall have continued for thirty (30)
days beyond the Term, provided, however, that no Event of Loss
pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section
10(d) hereof; (vi) any divestiture of title to or interest in
an Engine treated as an Event of Loss pursuant to Section 7(b)
hereof; and (vii) the operation of or location of the
Aircraft, while under requisition for use by any government,
in an area excluded from coverage by any insurance policy in
effect with respect to the Aircraft required by this
Agreement, unless in the case of a requisition by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and is designated a "Specified Country" or any
agency or instrumentality of any thereof whose obligations are
backed by the full faith and credit of such government, Lessee
shall have obtained an indemnity in lieu thereof from such
government or such agency or instrumentality. 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
Airframe.
"Excess Amount" for the Transition Date means an
amount equal to the amount determined by multiplying Lessor's
Cost by the percentage set forth in Exhibit B hereto under the
heading "Excess Amount" opposite the Transition Date;
provided, however, that, to the extent that the aggregate
amount of interest due and payable on the Transition Date on
the Secured Certificates for the period from and including the
Delivery Date to but excluding the Transition Date is less
than the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the
Transition Date if such Secured Certificates had borne
interest at the Assumed Interest Rate for such period, the
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<PAGE> 7
corresponding percentage set forth in Exhibit B shall be
decreased by the amount which when multiplied by Lessor's Cost
will equal such differential.
"Expenses" has the meaning specified in Section 7(c)
of the Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the
United States Code comprising those provisions formerly
referred to as the Federal Aviation Act of 1958, as amended,
or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency
or instrumentality of the United States government succeeding
to their functions.
"Funding Loss Amount" has the meaning assigned to
that term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 E], dated as
of the date hereof, made by the Guarantor in favor of the
Parties, as such Guarantee may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of
their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the
Participation Agreement and the Trust Indenture.
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<PAGE> 8
"Indenture Trustee's Liens" means any Lien which
arises as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by,
or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 of the
Participation Agreement pursuant to said Section 7, or (D)
claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust
Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of
the Lease or Article IV or V of the Trust Indenture, or a
transfer of the Aircraft pursuant to Section 15 of the Lease
while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due
pursuant to the Trust Indenture.
"Interest Period" means Interest Period as defined in
the Trust Indenture.
"Interim Rent" means the rent payable for the
Aircraft for the Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1996 E] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date and each
succeeding period commencing on the date immediately following
the preceding Lease Period Date.
"Lease Period Date" means July 2, 1997 and each
succeeding January 2 and July 2, to and including the last
such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the
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<PAGE> 9
Delivery Date for the purpose of leasing the Aircraft under
and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with
the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it relates to the Aircraft),
the FAA Bill of Sale, the Bill of Sale, the Purchase Agreement
Assignment and the Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
First Security Bank of Utah, National Association, in its
individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii)
any act or omission of the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) claims
against the Owner Participant, Lessor, or First Security Bank
of Utah, National Association, in its individual capacity,
with respect to Taxes or Expenses against which Lessee is not
required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising
out of any transfer by Lessor or the Owner Participant of all
or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of
the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or pursuant to the
exercise of the remedies set forth in Section 15 hereof,
provided, however, that any Lien which is attributable solely
to First Security Bank of Utah, National Association or the
Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the
use, possession, operation, or quiet enjoyment of the Aircraft
by Lessee (or any Sublessee), (3) the existence of such Lien
does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First
Security Bank of Utah, National Association or the Owner
Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a
material risk of interference with the payment of Rent (other
than Excluded Payments in favor of First Security Bank of
Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
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<PAGE> 10
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub-sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in
Section 10(a) hereof.
"Majority in Interest of Certificate Holders" has the
meaning assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Economic Return" shall have the meaning ascribed
to such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net after-tax
present value, as of the Delivery Date, of Basic Rent set
forth in Exhibit B hereto through and including the date on
which the Special Purchase Price is payable pursuant to
Section 19(d) hereof, and the Special Purchase Price payable
as of such date, computed on the basis of the same
methodology, constraints and assumptions as were utilized in
determining Basic Rent, the Special Purchase Price, Stipulated
Loss Value and Termination Value percentages as of the
Delivery Date.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement
covering the Aircraft, the Secured Certificates, the Bill of
Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as
it relates to the Aircraft), the Guarantee, the Owner
Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
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<PAGE> 11
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
Person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust
Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement
and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
"Owner Participant Guarantor" means the entity
executing the Owner Participant Guaranty as guarantor
thereunder.
"Owner Participant Guaranty" means the Owner
Participant Guaranty [NW 1996 E], dated as of the date hereof,
made by the Owner Participant Guarantor in favor of Lessee,
Lessor, the Loan Participants and the Indenture Trustee, as
such Owner Participant Guaranty may be amended or supplemented
from time to time pursuant to the applicable provisions
thereof.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1996 E], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture
Trustee and the Participants.
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<PAGE> 12
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum (calculated based on the actual
number of days elapsed in a year consisting of 365 days or 366
days, as the case may be) equal to (x) 1% over the Base Rate
for the first 5 Business Days from the date such payment
became due, and (y) 3% over the Base Rate thereafter.
"Permitted Carrier" means an air carrier domiciled
and principally based in a country set forth on Exhibit C to
the Participation Agreement and designated therein as a
"Specified Country".
"Permitted Lien" means any Lien referred to in
clauses (i) through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in
a country listed in Exhibit C to the Participation Agreement.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section
3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1996 E], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
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<PAGE> 13
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Interim Rent, Basic Rent and
Supplemental Rent, collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Restricted Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Return Site" means a major airport on Lessee's route
system located within the forty-eight contiguous states of the
United States.
"S&P" means Standard & Poor's Corporation.
"Secured Certificates" has the meaning assigned to
that term in the Trust Indenture.
"Special Purchase Price" shall mean the amount
denominated as such in Exhibit B hereto.
"Specified Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost for
the Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease
Period in which such Stipulated Loss Value Date occurs up to
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential.
"Stipulated Loss Value" as of any date after January 2, 2019
shall be the amount determined as provided in Section 19(a)
hereof.
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<PAGE> 14
"Stipulated Loss Value Date" means the 2nd calendar
day of each calendar month during the Interim Term, Basic Term
and any Renewal Term.
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Interim Rent and Basic Rent) which
Lessee assumes or agrees to pay to Lessor or others hereunder,
under the Participation Agreement, under the Tax Indemnity
Agreement or under any of the other Operative Documents. The
parties acknowledge that Supplemental Rent is a general
category and, accordingly, agree that any provision of any
Operative Document which calls for the payment of Supplemental
Rent and also calls for the payment of specific items which
are includable in Supplemental Rent is not to be interpreted
as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
the Loan Participants and each other Certificate Holder, and
each of their respective Affiliates, successors and permitted
assigns.
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1996 E], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, receipts,
sales, rental, use, turnover, value added, property (tangible
and intangible), excise and stamp taxes), license, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a
"TAX").
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
"Termination Value" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of
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<PAGE> 15
Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D hereto opposite the Termination Date with respect to
which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof
and in Section 7 of the Tax Indemnity Agreement). In the
event that the Termination Date with respect to which
Termination Value is determined is a date on which Basic Rent
is payable in advance as indicated on Exhibit B, to the extent
that the actual amount of interest paid and to be paid on the
Secured Certificates during the Lease Period ending on such
Termination Date is greater or less than the amount included
in calculating the corresponding percentage set forth in
Exhibit D with respect to such Termination Date on account of
such interest, the corresponding percentage set forth in
Exhibit D shall be adjusted appropriately to compensate for
such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under
the Trust Agreement, such information to be furnished by the
Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees,
taxes and other charges payable in connection with the
recording or filing of instruments and financing statements
(but excluding any sales, use and other transfer taxes which
apply to the Aircraft), such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, and the
reasonable out-of-pocket expenses of the Owner Participant,
such information to be furnished by the Owner Participant,
(iv) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture, such
information to be furnished by the Indenture Trustee, (v) the
fees of Aeroeconomics, Inc. and BK Associates, Inc. with
respect to the appraisals of the Aircraft pursuant to Sections
4(a)(xx) and 4(a)(xxix), respectively, of the Participation
Agreement, such information to be furnished by the Owner
Participant in the case of Aeroeconomics, Inc. and by the
Documentation Agent in the case of BK Associates, Inc., (vi)
the reasonable and actual fees, expenses and disbursements of
Dewey Ballantine, special counsel to the Owner Participant,
such information to be furnished by the Owner Participant,
(vii) the fee and reasonable disbursements of Babcock and
Brown Financial Corporation, such information to be furnished
by Lessee, and (viii) the fee payable to the Loan Participants
on the Delivery Date.
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<PAGE> 16
"Transition Date" means the date designated as such
in Exhibit B hereto.
"Trust Agreement" means that certain Trust Agreement
[NW 1996 E], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National
Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without
limitation, supplementation thereof by one or more Trust
Supplements entered into pursuant to the applicable provisions
thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1996 E], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier
as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations
under the Federal Aviation Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or
engines installed thereon to a third party pursuant to which
such Airframe and Engines or engines (i) shall be operated
solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be
required under the Federal Aviation Act or, if the Aircraft is
not registered in the United States, all certificates and
licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions
within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not
be regular employees of Lessee (or any Sublessee)) and (ii)
shall be maintained by Lessee (or any Sublessee) in accordance
with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees
(subject to satisfaction of the conditions set forth in Section 4(a) of the
Participation Agreement) to accept the transfer of title from and
simultaneously to lease to Lessee hereunder, and Lessee hereby agrees (subject
to satisfaction of the conditions set forth in Section 4(b) of the
Participation Agreement) to lease from Lessor hereunder, the Aircraft as
evidenced by the execution by Lessor and Lessee of a Lease Supplement leasing
the Aircraft hereunder. Lessee hereby
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<PAGE> 17
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic
Term. The Interim Term shall commence on the Delivery Date and end on and
include the day immediately preceding the Commencement Date unless earlier
terminated pursuant to the provisions hereof. The Basic Term shall commence on
the Commencement Date and end on January 2, 2019, or such earlier date as this
Lease may be terminated in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the
Commencement Date in an amount equal to Lessor's Cost multiplied by the
percentage specified in Exhibit B hereto for Interim Rent on the Commencement
Date.
Although the Interim Rent percentage set forth in Exhibit B
hereto has been computed on the assumption that the rate of interest on the
Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee
recognize that the actual rate of interest on the Secured Certificates may be a
rate from time to time which may be greater or less than the Assumed Interest
Rate and that the related basis upon which interest on the Secured Certificates
will be computed will be as provided in the Trust Indenture. Accordingly, the
Interim Rent payable on the Commencement Date shall be increased or decreased
(but not below zero) by the difference between (i) the aggregate amount of
interest due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to but excluding the
Commencement Date and (ii) the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the Secured Certificates
on the Commencement Date relating to the period from the Transition Date to the
Commencement Date if such Secured Certificates had borne interest at the
Assumed Interest Rate. If the amount determined in accordance with clause (i)
of the preceding sentence shall be greater than the amount determined in
accordance with clause (ii) of such sentence, the amount of Interim Rent
payable on the Commencement Date shall be increased by such difference. If the
amount determined in accordance with clause (i) of the preceding sentence shall
be less than the amount determined in accordance with clause (ii) of such
sentence, the amount of Interim Rent payable on the Commencement Date shall be
decreased (but not below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect
to each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 6.5% per annum, computed on
the basis of a 360-day year of twelve 30-day
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<PAGE> 18
months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the
actual rate of interest on the Secured Certificates may be a rate from time to
time which may be greater or less than the Assumed Interest Rate and that the
related basis upon which interest on the Secured Certificates will be computed
will be as provided in the Trust Indenture. Accordingly, each installment of
Basic Rent shall be increased or decreased (but not below zero), as the case
may be, by the Rent Differential Amount (as defined herein). For purposes
hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with
respect to the Basic Term, the difference between (i) the aggregate amount of
interest due and payable on such Lease Period Date on the Secured Certificates,
and (ii) the aggregate amount of interest on the Secured Certificates that
would have been due and payable on such Lease Period Date if such Secured
Certificates had borne interest at the Assumed Interest Rate, in each case for
the period from and including the Lease Period Date (or the Commencement Date
in the case of the first Lease Period) next preceding such Lease Period Date to
but excluding such Lease Period Date. If, as of any Lease Period Date, the
amount determined in accordance with clause (i) of the immediately preceding
sentence shall be greater than the amount determined in accordance with clause
(ii) of such sentence, the amount of Basic Rent payable on such Lease Period
Date shall be increased by the Rent Differential Amount. If, as of any Lease
Period Date, the amount determined in accordance with such clause (ii) shall
exceed the amount determined in accordance with such clause (i), the amount of
Basic Rent due on such Lease Period Date shall be decreased (but not below
zero) by the Rent Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date
occurs other than on April 30, 1996, or (B) Transaction
Expenses paid by Lessor pursuant to Section 16 of the
Participation Agreement are determined to be other than 1.0% of
Lessor's Cost, then in each case the Basic Rent percentages set
forth in Exhibit B and Stipulated Loss Value percentages set
forth in Exhibit C, the Termination Value percentages set forth
in Exhibit D and the Special Purchase Price shall be
recalculated on or prior to November 15, 1996 using the same
methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages and
Special Purchase Price, in order to: (1) maintain the Owner
Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing as
contemplated by Section 17 of the Participation Agreement, then
the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by the Owner Participant as contemplated by such
Section to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause
(1) hereof, minimize the Net Present Value of Rents to Lessee
and (B) in the event that Lessee elects, subject to the Owner
Participant's consent, which the Owner
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<PAGE> 19
Participant may withhold in its sole discretion, to satisfy
any indemnity obligation under the Tax Indemnity Agreement
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement,
then the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by Owner Participant, using the same methods and
assumptions (except to the extent such assumptions shall be
varied to take into account the Loss (as defined in the Tax
Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used
to calculate the Basic Rent percentages, the Stipulated Loss
Value percentages and the Termination Value percentages and
the Special Purchase Price on the Delivery Date, in order to
(1) maintain the Owner Participant's Net Economic Return and
(2) to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant
to this Section 3(d), the Owner Participant shall redetermine
the Excess Amount set forth in Exhibit B in a manner
consistent with such recalculation. In addition, (X) any
recalculation of Basic Rent, Stipulated Loss Value or
Termination Value percentages made pursuant to this Section
3(d) shall take into account any decrease in the Excess
Amount with respect to the Transition Date required by the
proviso to the definition of "Excess Amount", (Y) after
January 31, 1997 but prior to July 2, 1997, the Basic Rent
percentages set forth in Exhibit B, the Stipulated Loss Value
percentages set forth in Exhibit C and the Termination Value
percentages set forth in Exhibit D shall be recalculated to
take into account any decrease in Excess Amount with respect
to the Transition Date that has not theretofore been taken
into account in accordance with clause (X) of this sentence,
and (Z) at the time of any payment of Stipulated Loss Value
or Termination Value, the Stipulated Loss Value percentage
set forth in Exhibit C or the Termination Value percentage
set forth in Exhibit D, by reference to which the amount of
such payment is determined shall be recalculated to take into
account any decrease in the Excess Amount with respect to the
Transition Date that has not theretofore been taken into
account in accordance with clause (X) or clause (Y) of this
sentence.
(iv) Any recalculation of Basic Rent, Excess
Amount, Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price pursuant to this
Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in
Exhibit E hereto. In addition, notwithstanding any other
provisions herein, in no event shall the Special Purchase
Price be adjusted to an amount that is less than the greater
of (A) the Termination Value as of July 2, 2012, (B) the
estimated fair market value of the Aircraft on July 2, 2012,
determined as of the Delivery Date and set forth in the
opinion received from Aeroeconomics, Inc. pursuant to Section
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<PAGE> 20
4(a)(xx) of the Participation Agreement (the "APPRAISAL"),
and (C) 101% multiplied by the present value as of July 2,
2012 of (x) the remaining scheduled Basic Rent through the
end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e.,
the fair market value of the Aircraft as of the end of the
Basic Term as set forth in the Appraisal) (the present value
calculation described in this clause (C) shall utilize a
semi-annual compounded discount rate no lower than that
utilized by the Owner Participant in determining the Special
Purchase Price as of the Delivery Date, but in no event shall
such discount rate be less than 11.8% per annum). Such
recalculated Basic Rent, Excess Amount and Stipulated Loss
Value and Termination Value percentages and the Special
Purchase Price shall be set forth in a Lease Supplement or an
amendment to this Lease.
(v) Anything contained in the Participation
Agreement or this Lease to the contrary notwithstanding, each
installment of Interim Rent and Basic Rent payable hereunder,
whether or not adjusted in accordance with this Section 3(d),
shall, together with the amount of the Excess Amount in
respect of the date on which such installment is payable, and
each payment of Termination Value and Stipulated Loss Value,
whether or not adjusted in accordance with this Section 3(d),
shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the
Secured Certificates) payable simultaneously by Lessee
pursuant to this Lease, in each case be, under any
circumstances and in any event, in an amount at least
sufficient to pay in full, on the date on which such amount
of Rent is due, any payments then required to be made on
account of the principal of, premium, if any, and interest on
the Secured Certificates. It is agreed that no installment
of Basic Rent or payment of Termination Value or Stipulated
Loss Value shall be increased or adjusted by reason of (i)
any attachment or diversion of Rent on account of (A) Lessor
Liens or (B) any Loan Participant Lien or other Lien on or
against the Trust Estate, any part thereof or the Operative
Documents arising as a result of claims against the Indenture
Trustee not related to the transactions contemplated by the
Operative Documents, (ii) any modification of the payment
terms of the Secured Certificates made without the prior
written consent of Lessee or (iii) the acceleration of any
Secured Certificate or Secured Certificates due to the
occurrence of an "Event of Default" (as defined in the Trust
Indenture) which does not constitute an Event of Default
hereunder.
(vi) All adjustments to Basic Rent under this
Section 3(d) shall be (A) in compliance with the tests of
Sections 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28
and with Section 467 of the Internal Revenue Code of 1986, as
amended, as each is then in effect as long as the Schedule of
Basic Rent was in compliance with Section 467 of the Code as
in effect on the Closing Date, it being understood that, to
the extent that any grandfather, effective date, or similar
provisions in any regulations under Section 467 or other
administrative pronouncement interpreting Section 467
promulgated or issued after the Closing
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<PAGE> 21
Date causes such regulations or pronouncement not to be
applicable to the Schedule of Basic Rent in effect on the
Closing Date, such Schedule shall be deemed to be in
compliance with Section 467 as in effect on the Closing Date
(provided that the test of Rev. Proc. 75-28 Section 4.08(1)
and Section 467 shall be applied on a prospective basis from
the date of such adjustment if and to the extent permitted by
applicable law, as then in effect) and (B) subject to
verification pursuant to Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be
paid) promptly to Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent constituting Stipulated Loss Value or Termination Value
as the same shall become due and owing and all other amounts of Supplemental
Rent within five days after demand or within such other relevant period as may
be provided in any Operative Document, and in the event of any failure on the
part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or in any other Operative
Document or by law or equity or otherwise in the case of nonpayment of Basic
Rent. Lessee shall pay, on behalf of Lessor, as Supplemental Rent when due any
amount of premium payable when due under the Trust Indenture and shall pay on
behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16
and Section 11.02 of the Trust Indenture, as and when the same shall become due
and payable. Lessee also will pay to Lessor, or to whomsoever shall be
entitled thereto, on demand, as Supplemental Rent, to the extent permitted by
applicable law, interest at the Past Due Rate on any part of any installment of
Interim Rent and Basic Rent not paid when due for any period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due for
the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be
made directly by Lessee (whether or not any Sublease shall be in effect) by
wire transfer of immediately available funds prior to 10:30 A.M., New York
time, on the date of payment, to Lessor at its account at First Security Bank
of Utah, National Association, 79 South Main Street, Salt Lake City, Utah
84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust
Department, Credit Northwest/NW 1996 E (or such other account of Lessor in the
continental United States as Lessor shall direct in a notice to Lessee at least
10 Business Days prior to the date such payment of Rent is due); provided that
so long as the Trust Indenture shall not have been fully discharged, Lessor
hereby irrevocably directs and Lessee agrees, that, unless the Indenture
Trustee shall otherwise direct, all Rent payable to Lessor and assigned to the
Indenture Trustee pursuant to the Trust Indenture shall be paid prior to 10:30
A.M., New York time on the due date thereof in funds of the type specified in
this Section 3(f) directly to the Indenture Trustee at its account at State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust
Department, Reference: Northwest/NW 1996 E (or such other account of the
Indenture Trustee in the continental United States as the Indenture Trustee
shall direct in a notice to Lessee at least 10 Business Days prior to the date
such payment of Rent is due). All payments of Supplemental Rent owing to the
Indenture Trustee or to a Loan Participant or any other Certificate Holder
pursuant to the Participation Agreement shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New
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<PAGE> 22
York time, on the due date thereof at the office of the Indenture Trustee or at
such other office of such other financial institution located in the
continental United States as the party entitled thereto may so direct at least
10 Business Days prior to the due date thereof. All payments of Supplemental
Rent payable to the Owner Participant, to the extent that such amounts
constitute Excluded Payments (as defined in the Trust Indenture), shall be made
in Dollars in immediately available funds prior to 10:30 A.M., New York time,
on the due date thereof, to the account of the Owner Participant specified in
Schedule I to the Participation Agreement (or to such other account as may be
specified in writing by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent,
if any, that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by 10:30
A.M., New York time, on the Transition Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall on the Transition Date, prepay on the
Transition Date a portion of Basic Rent equal to the Excess Amount not so paid
(the amount of such Basic Rent to be prepaid by Lessee being herein called
"PREPAID RENT"); provided that Lessee shall, under all circumstances and
whether or not an Event of Default shall be continuing on the Transition Date,
pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount
equal to the excess, if any, of the interest on the Secured Certificates
relating to the period from and including the Delivery Date to but excluding
the Transition Date over the Excess Amount payable on the Transition Date;
provided, further, that Lessee will also pay to the Indenture Trustee, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate in effect from time to time on any part of any
Prepaid Rent and on the amount, if any, payable pursuant to the immediately
preceding proviso not paid when due for any period for which the same shall be
overdue. Lessor agrees to reimburse Lessee in the manner provided in the
following sentence for (x) the Prepaid Rent so paid by Lessee, plus (y) any
Supplemental Rent paid with respect to Prepaid Rent by Lessee pursuant to this
Section 3(g), plus (z) accrued interest on the unreimbursed portion thereof at
a rate equal to the Base Rate as in effect from time to time plus 5% per annum
from the date such amount is paid by Lessee to but not including the date of
each such reimbursement (such amounts to be reimbursed being herein called the
"REIMBURSEMENT AMOUNT"). Lessor shall pay to Lessee, in funds of the type
specified in Section 3(f) hereof, within five days after Lessor, the Owner
Participant and the Indenture Trustee shall have received written notice from
Lessee demanding payment, the Reimbursement Amount. In addition, if, for any
reason, Lessor shall fail to pay to Lessee the Reimbursement Amount as above
provided, Lessee shall be entitled to offsets (without duplication) against
each succeeding payment (other than as limited by the proviso to this sentence)
due from Lessee to Persons other than the Loan Participants, the Indenture
Trustee
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<PAGE> 23
and the Owner Trustee in its individual capacity (including, without
limitation, Basic Rent, payments due under Section 9, 10, 15 and 19 hereof,
payments due under the Tax Indemnity Agreement and payments due to Persons
other than the Loan Participants, the Indenture Trustee and Lessor in its
individual capacity under Section 7 of the Participation Agreement), until
Lessee has been fully reimbursed for the Reimbursement Amount; provided,
however, that in the case of any payment due from Lessee which is distributable
under the terms of the Trust Indenture, Lessee's right of offset shall be
limited to amounts distributable to Lessor thereunder. No such offset or
aggregate combined effect of separate offsets shall reduce the amount of any
installment of Interim Rent or Basic Rent to an amount insufficient, together
with the Excess Amount and all other amounts payable simultaneously by Lessee,
to pay in full the payments then required to be made on account of the
principal of and interest on (and premium, if any, due with respect to) the
Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES.
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS,"
"WHERE-IS." NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES,
HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS
AND WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
PART THEREOF, except that First Security Bank of Utah, National Association, in
its individual capacity, (i) represents and warrants that on the Delivery Date,
Lessor shall have received whatever title to the Aircraft was conveyed to it by
Lessee, (ii) represents and warrants that on the Delivery Date the Aircraft
shall be free of Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to it, (iii) covenants that it will not, through its own actions
or inactions, interfere in Lessee's quiet enjoyment of the Aircraft during the
Term, (iv) agrees that it will not directly or indirectly create, incur, assume
or suffer to exist any Lessor Lien attributable to it on or with respect to the
Airframe or any Engine or any portion of the Trust Estate and (v) represents
and warrants that it is a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement, and agrees that
if at any time it shall cease to be a Citizen of the United States without
making use of a voting trust, voting powers agreement or similar arrangement it
will promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Loan Participants, the Owner Participant or
Lessee), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. None of the provisions of
this Lease shall be deemed to amend, modify or
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<PAGE> 24
otherwise affect the representations, warranties or other obligations (express
or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not, through its own actions or inactions, interfere
in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and agrees
that it will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to the Airframe or
any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon
Return. Unless purchased by Lessee pursuant to Section 19 hereof, upon the
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c) or 15, Lessee, at its own expense, will return the
Airframe to Lessor at a Return Site then being serviced by Lessee's 757-200
aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable
to Lessee (provided, that at Lessor's request, Lessee will consider in good
faith a Return Site not then being serviced by Lessee's 757-200 aircraft,
provided, further, that, in the case of a return to a Return Site not then
being serviced by Lessee's 757-200 aircraft, Lessee is able to return the
Airframe immediately following a revenue passenger flight with the Airframe to
such Return Site), and Lessor will give Lessee at least ten (10) days' prior
written notice of the Return Site; provided, however, that if Lessor shall have
made the request for storage pursuant to Section 5(d) hereof, Lessee shall
return the Airframe to Lessor at the site of the storage at the end of the
storage period. At the time of such return, Lessee will, unless otherwise
requested by Lessor at least ninety (90) days prior to the return hereunder,
cause the Aircraft, if it is not then so registered, to be registered under the
laws of the United States with the Federal Aviation Administration in the name
of the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by
reason of the failure of Lessor or its designee to be eligible on such date to
own an aircraft registered with the Federal Aviation Administration or (ii)
such registration is otherwise prohibited by applicable law and not due to any
act or failure to act on the part of Lessee; the Airframe will be fully
equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two
engines of the same or another manufacturer of not less than equivalent
utility, fair market sales value and remaining useful life, and suitable for
installation and use on the Airframe without impairing the value, utility or
remaining useful life of the Aircraft; provided that both engines shall be of
the same make and model) duly installed thereon. Also, at the time of such
return, such Airframe and Engines or engines (i) shall be certified (or, if not
then registered under the Federal Aviation Act, shall be eligible for
certification) as an airworthy aircraft by the Federal Aviation Administration
without the necessity of any further expense being incurred by Lessor, (ii)
shall be free and clear of all Liens (other than Lessor Liens (including for
this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens), Indenture Trustee's Liens and Loan Participant
Liens) and rights of third parties under pooling, interchange, overhaul, repair
or other similar agreements or arrangements, (iii) shall be in as good an
operating condition as when delivered to Lessee hereunder, ordinary wear and
tear excepted, or, in the case of any such engines owned by Lessee, shall have
a value, utility and remaining useful life at least
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<PAGE> 25
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit F. Lessor agrees to pay Lessee those
amounts specified in Exhibit F to be for the cost, expense or account of
Lessor.
During the last six (6) months of the Term (unless Lessee
shall have elected to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease), with reasonable notice, Lessee will cooperate,
and cause any Sublessee to cooperate, in all reasonable respects with the
efforts of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not
interfere with the operation or maintenance of the Aircraft by Lessee or any
Sublessee.
(b) Return of the Engines. In the event that any engine
not owned by Lessor shall be delivered with the returned Airframe as set forth
in paragraph (a) of this Section 5, Lessee, concurrently with such delivery,
will, at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to
the effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the
return of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon
any termination of this Lease in accordance with paragraph (a) of this Section
5, (i) Lessee shall invoice Lessor, and Lessor shall pay Lessee, as
compensation for any fuel or oil contained in the fuel or oil tanks of such
Airframe, the value of such fuel or oil at the price paid by Lessee for such
fuel or oil, as the case may be, and (ii) Lessee shall deliver or cause to be
delivered to Lessor all logs, manuals and data and inspection, modification and
overhaul records required to be maintained with respect thereto under
applicable rules and regulations of each country under the laws of which the
Aircraft has been registered during the period of operation thereof, which
logs, manuals, data and records, if not maintained in English, shall be
translated into English at Lessee's expense.
(d) Storage Upon Return. If, at least thirty (30) days
prior to termination of this Lease at the end of the Basic Term or any Renewal
Term or pursuant to Section 9(c), Lessee receives from Lessor a written request
for storage of the Aircraft upon its return hereunder, Lessee will provide
Lessor, or cause Lessor to be provided, with free parking
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<PAGE> 26
facilities for the Aircraft (maintenance costs and other out-of-pocket costs
other than parking fees incurred by Lessee in connection with such storage to
be for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such
period not exceeding thirty (30) days and be reimbursed by Lessor for the
premiums thereon.
SECTION 6. LIENS. Lessee will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, title thereto or any interest therein or in this Lease, except
(i) the respective rights of Lessor as owner of the Aircraft and Lessee as
herein provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any Sublessee) either not yet due or being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture, (v)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, the Sublessee's) business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing
obligations that are not overdue for a period of more than forty-five (45) days
or are being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or any interest therein or, so long as any Secured
Certificates shall be outstanding, adversely affect the Lien of the Trust
Indenture, (vi) Liens arising out of any judgment or award against Lessee (or
any Sublessee), unless the judgment secured shall not, within sixty (60) days
after the entry thereof, have been discharged, vacated, reversed or execution
thereof stayed pending appeal or shall not have been discharged, vacated or
reversed within sixty (60) days after the expiration of such stay, (vii) any
other Lien with respect to which Lessee (or any Sublessee) shall have provided
a bond, cash collateral or other security adequate in the reasonable opinion of
Lessor, and (viii) Liens approved in writing by Lessor. Lessee will promptly,
at its own expense, take (or cause to be taken) such actions as may be
necessary duly to discharge any such Lien not excepted above if the same shall
arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION;
POSSESSION AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance.
Lessee, at its own cost and expense, shall (or shall cause any Sublessee to):
(i) forthwith upon the delivery thereof hereunder, cause the Aircraft to be
duly registered in the name of Lessor, and, subject to the second paragraph of
this Section 7(a) and Section 8(f) of the Participation Agreement, to remain
duly registered in the name of Lessor under the Federal Aviation Act, provided
that Lessor shall execute and deliver all such documents as Lessee (or any
Sublessee) may reasonably request for the purpose of effecting and continuing
such registration, and shall not
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<PAGE> 27
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section
8(f) of the Participation Agreement and shall cause the Trust Indenture to be
duly recorded and maintained of record as a first mortgage on the Aircraft;
(ii) maintain, service, repair and overhaul (or cause to be maintained,
serviced, repaired and overhauled) the Aircraft so as to keep the Aircraft in
as good an operating condition as delivered to Lessee hereunder, ordinary wear
and tear excepted, and as may be necessary to enable the applicable
airworthiness certification for the Aircraft to be maintained in good standing
at all times (other than during temporary periods of storage in accordance with
applicable regulations or during maintenance or modification permitted
hereunder) under the Federal Aviation Act, except when all Boeing 757-200
aircraft powered by engines of the same type as those with which the Airframe
shall be equipped at the time of such grounding and registered in the United
States have been grounded by the FAA (although such certification need actually
be maintained only during such periods as the Aircraft is registered in the
United States), or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, utilizing, except during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by Lessee with respect to similar aircraft operated by
Lessee in similar circumstances and utilizing, during any period that a
Sublease is in effect, the same manner and standard of maintenance, service,
repair or overhaul used by the Sublessee with respect to similar aircraft
operated by the Sublessee in similar circumstances or such manner as shall have
been approved by the Owner Participant pursuant to Section 7(b)(x) and without
in any way discriminating against the Aircraft, by reason of its leased status,
including, without limitation, the termination of airworthiness directives;
provided, however, that in all circumstances the Aircraft shall be maintained
by Lessee (or any Sublessee) in accordance with maintenance standards required
by, or substantially equivalent to those required by, the FAA or the central
civil aviation authority of Canada, France, Germany, Japan, the Netherlands or
the United Kingdom; (iii) maintain or cause to be maintained all records, logs
and other materials required to be maintained in respect of the Aircraft by the
FAA or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered (which records, logs and other
materials, as between Lessor and Lessee and all parties claiming through
Lessee, shall be the property of Lessor but shall be maintained by Lessee
during the Term and shall become the property of Lessee upon Lessee's purchase
of the Aircraft pursuant to the terms of this Lease or upon the occurrence of
an Event of Loss and Lessee's compliance with Section 10 hereof); and (iv)
promptly furnish or cause to be furnished to Lessor and the Owner Participant
such information as may be required to enable Lessor to file any reports
required to be filed by Lessor or the Owner Participant with any governmental
authority because of Lessor's ownership of the Aircraft. (II) Operation.
Lessee will not maintain, use, service, repair, overhaul or operate the
Aircraft (or permit any Sublessee to maintain, use, service, repair, overhaul
or operate the Aircraft) in violation of any law or any rule, regulation, order
or certificate of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority,
except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law,
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<PAGE> 28
rule, regulation or order in any reasonable manner which does not materially
adversely affect Lessor or the Owner Participant or, so long as any Secured
Certificates shall be outstanding, the first priority Lien of the Trust
Indenture and does not involve any material risk of sale, forfeiture or loss of
the Aircraft. Lessee will not operate the Aircraft, or permit any Sublessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 11; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in
the ordinary course of the regular operations of Lessee (or any Sublessee) and
in each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation
Agreement, shall, at the request and sole expense of Lessee, cooperate with
Lessee to take all actions required to change the registration of the Aircraft
to another country.
(b) Possession and Subleases. Lessee will not, without
the prior written consent of Lessor, sublease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe or enter into any Wet Lease; provided that, so long as no Default of
the type referred to in Section 14(a) or 14(e) or Event of Default shall have
occurred and be continuing at the time of such sublease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority lien of the Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7(b)) any Engine, and so long
as Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a)
and 11 hereof, Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or
engines then installed thereon to normal interchange
agreements or any Engine to normal pooling or similar
arrangements, in each case customary in the airline industry
and entered into by Lessee (or any Sublessee) in the ordinary
course of its business; provided that (A) no such agreement
or arrangement contemplates or requires the transfer of title
to the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Permitted Carrier;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof (or for delivery thereto)
or to any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work on
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<PAGE> 29
the Airframe or Engine or any part of any thereof or for
alterations or modifications in or additions to such Airframe
or Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii) install an Engine on an airframe owned by
Lessee (or any Sublessee) free and clear of all Liens,
except: (A) Permitted Liens and those which apply only to the
engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the
first priority Lien of the Trust Indenture shall not be
divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to
Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all Liens, except: (A) the rights of the parties to the
lease or conditional sale or other security agreement
covering such airframe, or their assignees, and (B) Liens of
the type permitted by subparagraph (iii) of this paragraph
(b) and (y) such lease, conditional sale or other security
agreement effectively provides that such Engine shall not
become subject to the lien of such lease, conditional sale or
other security agreement, notwithstanding the installation
thereof on such airframe;
(v) install an Engine on an airframe owned by
Lessee (or any Sublessee), leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject
to a conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b)
hereof, subject any appliances, Parts or other equipment
owned by Lessor and removed from the Airframe or any Engine
to any pooling arrangement referred to in Section 8(b)
hereof;
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<PAGE> 30
(vii) subject (or permit any Sublessee to subject)
the Airframe or any Engine to the Civil Reserve Air Fleet
Program and transfer (or permit any Sublessee to transfer)
possession of the Airframe or any Engine to the United States
of America or any instrumentality or agency thereof pursuant
to the Civil Reserve Air Fleet Program, so long as Lessee (or
any Sublessee) shall (A) promptly notify Lessor upon
subjecting the Airframe or any Engine to the Civil Reserve
Air Fleet Program in any contract year and provide Lessor
with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United
States Air Force to whom notice must be given pursuant to
Section 15 hereof, and (B) promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the
United States of America or any agency or instrumentality
thereof pursuant to such program;
(viii) for a period not to extend beyond the end of
the Term, enter into a Wet Lease (which, if entered into with
tax-exempt entities during the Depreciation Period, may not
exceed three years) for the Airframe and Engines or engines
then installed thereon with any third party; provided that if
Lessee (or any Sublessee) shall enter into any Wet Lease for
a period of more than one year (including renewal options)
Lessee shall provide Lessor written notice of such Wet Lease
(such notice to be given prior to entering into such Wet
Lease, if practicable, but in any event promptly after
entering into such Wet Lease);
(ix) for a period not to extend beyond the end of
the Term, transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof pursuant to a contract (the term of which,
during the Depreciation Period, may not exceed three years),
a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any
sublease with (1) a U.S. Air Carrier, (2) any Person approved
in writing by the Owner Participant and the Indenture Trustee
in their sole discretion, or (3) after the Depreciation
Period, any Permitted Sublessee if (A) in any such case, the
Sublessee under such sublease is not subject to a proceeding
or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered
into, (B) in the event that the Sublessee under such sublease
is a foreign air carrier (other than a foreign air carrier
principally based and domiciled in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based and domiciled at the
time such sublease is entered into (or, in the case of a
sublease to a proposed Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in
effect on the Delivery Date) and (C) in the event that the
Sublessee under such sublease is domiciled and principally
based in a country listed on Exhibit C to the Participation
Agreement and designated therein as a "Restricted Country",
Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee to the effect that (I) the terms
of the proposed
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<PAGE> 31
sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally)
enforceable against the proposed Sublessee in the country in
which the proposed Sublessee is principally based and
domiciled, (II) there exist no possessory rights in favor of
the Sublessee under such Sublease under the laws of such
Sublessee's country of domicile that would, upon bankruptcy
or insolvency of or other default by Lessee and assuming at
such time such Sublessee is not insolvent or bankrupt,
prevent the return or repossession of the Aircraft in
accordance with the terms of this Lease, (III) the laws of
such Sublessee's country of domicile require fair
compensation by the government of such jurisdiction payable
in currency freely convertible into Dollars for the loss of
use of the Aircraft in the event of the requisition by such
government of such use, (IV) the laws of such Sublessee's
country of domicile would give recognition to Lessor's title
to the Aircraft, to the registry of the Aircraft in the name
of Lessor (or Lessee, as "lessee", or the proposed Sublessee,
as "sublessee", as appropriate) and to the Lien of the
Trustee Indenture, (V) such Sublease will not result in a
risk of unindemnified Taxes to Lessor or the Owner
Participant (it being agreed that in the event such opinion
cannot be given in a form reasonably satisfactory to the
Owner Participant, such opinion will be waived if (A) the
Owner Participant has received assurances satisfactory to it
to the effect that such Sublease will not result in any such
risk, or (B) Lessee shall have entered into a binding
agreement to indemnify in a manner satisfactory in form and
substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant for such
unindemnified Taxes; provided, however, that if (a) Lessee
(or, so long as the Guarantee remains in full force and
effect, the Guarantor) has outstanding publicly issued or
privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (b) Lessee
provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and
substance to Lessor, the amount of which is sufficient (as
determined by the Owner Participant in its reasonable
judgment) to cover any anticipated adverse tax consequences
for which the Owner Participant has been indemnified by
Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such
subleasing or (c) the anticipated indemnified amount (as
determined by the Owner Participant in its reasonable
judgment) is less than $50,000, then, in determining whether
the indemnity to be provided by Lessee is satisfactory in
form and substance to the Owner Participant, the Owner
Participant will not take into account the creditworthiness
of Lessee), (VI) none of the Owner Trustee, the Owner
Participant or the Indenture Trustee will be required to
register to do business in such country as a result of such
sublease, after (A) taking into account any other contacts of
the Owner Trustee and the Owner Participant with such
jurisdiction (provided, that upon request by Lessee (such
request having been acknowledged by the Owner Participant's
general counsel), the Owner Trustee and the Owner Participant
must respond
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<PAGE> 32
within fourteen (14) Business Days after receipt of such
request describing its contacts in such jurisdiction, or else
such party shall be deemed for purposes of this clause (VI)
to have no such contacts) and (B) assuming that the Indenture
Trustee has no other contacts with such jurisdiction, and
(VII) there is no tort liability for owners not in possession
of aircraft in such country more onerous than under the laws
of the United States or any state thereof (it being agreed
that in the event such opinion cannot be given in a form
reasonably satisfactory to the Owner Participant, such
opinion will be waived if insurance reasonably satisfactory
to the Owner Participant is provided to cover the risk of
such tort liability), provided, however, that no sublease
entered into pursuant to this clause (x) shall extend beyond
the expiration of the Basic Term or any Renewal Term then in
effect unless Lessee shall have irrevocably committed to
purchase the Aircraft; provided, further, that in the event
the Sublessee's maintenance program for the Airframe will be
a block overhaul program, a sublease entered into pursuant to
this clause (x) to such Sublessee shall not extend beyond the
date which is six months prior to the expiration of the Basic
Term or any Renewal Term then in effect (and Lessee, if the
last Sublessee was not a U.S. Air Carrier, shall upon
expiration of the sublease to such Sublessee (1) incorporate
the Aircraft into Lessee's approved maintenance program for
aircraft of the same make and model and in active commercial
service and (2) place the Aircraft into active passenger
service or, in lieu thereof, upon the return of the Aircraft
to Lessor pursuant to Section 5, Lessee shall comply with
those return conditions that would have been applicable had
Lessee adopted a block overhaul program) unless either the
Owner Participant shall have previously approved in writing
the maintenance procedures of the Sublessee or Lessee shall
have irrevocably committed to purchase the Aircraft at, or
extend the Term of this Lease by a period of at least six
months from, the end of the Basic Term or such Renewal Term,
as the case may be.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any Sublease permitted by this
paragraph (b) shall be expressly subject and subordinate to, all the terms of
this Lease and to the Lien of the Trust Indenture, including, without
limitation, the covenants contained in Section 7(a) hereof and Lessor's rights
to repossession pursuant to Section 15 hereof and to avoid such Sublease upon
such repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided
herein, the terms of any such Sublease shall not permit any Sublessee to take
any action not permitted to be taken by Lessee in this Lease with respect to
the Aircraft. No pooling agreement, sublease or other relinquishment of
possession of the Airframe or any Engine or Wet Lease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or
constitute a waiver of Lessor's rights or remedies hereunder. Any sublease
permitted under Section 7(b) shall expressly prohibit any further sub-sublease
by the Sublessee. Lessor agrees, for the benefit of Lessee (and any Sublessee)
and for the benefit of any mortgagee or other holder of a
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<PAGE> 33
security interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee
(or any Sublessee) and any conditional vendor of any engine (other than an
Engine) purchased by Lessee (or any Sublessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that none of Lessor,
its successors or assigns will acquire or claim, as against Lessee (or any
Sublessee) or any such mortgagee, lessor or conditional vendor or other holder
of a security interest or any successor or assignee of any thereof, any right,
title or interest in such engine as the result of such engine being installed
on the Airframe; provided, however, that such agreement of Lessor shall not be
for the benefit of any lessor or secured party of any airframe (other than the
Airframe) leased to Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security agreement or for the
benefit of any mortgagee of or any other holder of a security interest in an
airframe owned by Lessee (or any Sublessee), unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against Lessor, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Sublease
hereunder (such notice to be given not later than (A) fifteen (15) days prior
to entering into any Sublease with a term of more than one (1) year, (B) five
(5) Business Days prior to entering into any Sublease with a term equal to or
less than one (1) year with a Permitted Sublessee and (C) five (5) days prior
to entering into any Sublease with a term equal to or less than one (1) year
with any proposed Sublessee other than a Permitted Sublessee, if practicable,
but in any event promptly after entering into any such Sublease) and (ii) a
copy of each Sublease which has a term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as
soon as practicable thereafter, Lessee agrees to affix and maintain (or cause
to be affixed and maintained), at its expense, in the cockpit of the Airframe
adjacent to the airworthiness certificate therein and on each Engine a
nameplate bearing the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien
of the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
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<PAGE> 34
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be placed on the Airframe or on any
Engine as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Lessee (or any Sublessee)
from placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee,
at its own cost and expense, will promptly replace or cause to be replaced all
Parts which may from time to time be incorporated or installed in or attached
to the Airframe or any Engine and which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever, except as
otherwise provided in paragraph (c) of this Section 8 or if the Airframe or an
Engine to which a Part relates has suffered an Event of Loss. In addition,
Lessee (or any Sublessee) may, at its own cost and expense, remove in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or any Sublessee), except as otherwise provided in paragraph (c) of
this Section 8, will, at its own cost and expense, replace such Parts as
promptly as practicable. All replacement Parts shall be free and clear of all
Liens (except for Permitted Liens and pooling arrangements to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis) and shall be
in as good operating condition as, and shall have a value and utility at least
equal to, the Parts replaced assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof. Except as otherwise
provided in paragraph (c) of this Section 8, all Parts at any time removed from
the Airframe or any Engine shall remain the property of Lessor, no matter where
located, until such time as such Parts shall be replaced by Parts which have
been incorporated or installed in or attached to the Airframe or such Engine
and which meet the requirements for replacement Parts specified above.
Immediately upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine as above provided, without further act
(subject only to Permitted Liens and any pooling arrangement to the extent
permitted by paragraph (b) of this Section 8 and except in the case of
replacement property temporarily installed on an emergency basis), (i) title to
such replacement Part shall thereupon vest in Lessor, (ii) such replacement
Part shall become subject to this Lease and be deemed part of the Airframe or
such Engine for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine, and
(iii) title to the replaced Part shall thereupon vest in Lessee (or, if a
Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe
or any Engine as provided in paragraph (a) of this Section 8 may be subjected
by Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part
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<PAGE> 35
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or Engine a further replacement
Part owned by Lessee (or any Sublessee) free and clear of all Liens except
Permitted Liens (other than pooling arrangements) and by causing title to such
further replacement Part to vest in Lessor in accordance with such paragraph
(a).
(c) Alterations, Modifications and Additions. Lessee, at
its own expense, will make (or cause to be made) such alterations and
modifications in and additions to the Airframe and Engines as may be required
from time to time to meet the applicable standards of the FAA or any applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
adversely affect Lessor, the Owner Participant, or, so long as any Secured
Certificates are outstanding, the Indenture Trustee. In addition, Lessee (or
any Sublessee), at its own expense, may from time to time add further parts or
accessories and make such alterations and modifications in and additions to the
Airframe or any Engine as Lessee (or any Sublessee) may deem desirable in the
proper conduct of its business, including, without limitation, removal of Parts
which Lessee (or any Sublessee) has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such
Engine (such parts, "OBSOLETE PARTS"); provided that no such alteration,
modification or addition shall diminish the value, utility or remaining useful
life of the Airframe or such Engine, or materially impair the condition or
airworthiness thereof, below the value, utility, remaining useful life,
condition or airworthiness thereof immediately prior to such alteration,
modification or addition, assuming the Airframe or such Engine was then in the
condition required to be maintained by the terms of this Lease, except that the
value (but not the utility or remaining useful life) of the Airframe or any
Engine may be reduced by the value of Obsolete Parts which shall have been
removed so long as the aggregate original cost of all Obsolete Parts which
shall have been removed and not replaced shall not exceed $500,000. Title to
all Parts incorporated or installed in or attached or added to the Airframe or
an Engine as the result of such alteration, modification or addition (the
"ADDITIONAL PARTS") shall, without further act, vest in Lessor.
Notwithstanding the foregoing sentence, Lessee (or any Sublessee) may remove or
suffer to be removed any Additional Part, provided that such Additional Part
(i) is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or
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<PAGE> 36
any Engine at the time of delivery thereof hereunder or any Part in replacement
of, or substitution for, any such Part, (ii) is not required to be incorporated
or installed in or attached or added to the Airframe or any Engine pursuant to
the terms of Section 7 hereof or the first sentence of this paragraph (c) and
(iii) can be removed from the Airframe or such Engine without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Airframe or such Engine would have had at the time of removal had
such alteration, modification or addition not occurred, assuming that such
Airframe or Engine was in the condition and repair required to be maintained by
the terms hereof. Upon the removal by Lessee (or Sublessee) of any Part as
provided above, title thereto shall, without further act, vest in Lessee (or
any Sublessee, as the case may be) and such Part shall no longer be deemed part
of the Airframe or Engine from which it was removed. Any Part not removed by
Lessee (or any Sublessee) as above provided prior to the return of the Airframe
or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination
Event. (1) [Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate
this Lease on any Lease Period Date occurring on or after January 2, 2003 if
Lessee shall have made the good faith determination, which shall be evidenced
by a resolution duly adopted by its Board of Directors (or the Executive
Committee thereof), that the Aircraft is obsolete or surplus to its needs.
(3) Lessee shall give to Lessor at least one hundred
twenty (120) days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) that Lessee has determined that the Aircraft is obsolete or surplus to its
needs. Any Termination Notice shall become irrevocable fifteen (15) days prior
to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that
Lessee shall have exercised its right to terminate this Lease under Section
9(a)(2), then during the period from the giving of the notice referred to in
Section 9(a)(3) until the proposed Termination Date (unless Lessee shall have
revoked the Termination Notice specifying such proposed Termination Date),
Lessee, as agent for Lessor and at no expense to Lessor, shall use its best
efforts to obtain bids in Dollars in the worldwide market for the purchase of
the Aircraft and, in the event it receives any bid, Lessee shall, within five
Business Days after receipt thereof and at least ten Business Days prior to the
proposed Termination Date, certify to Lessor in writing the amount and terms of
such bid, and the name and address of the party or parties (who shall not be
Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such
Affiliate has an arrangement or understanding regarding the future use, lease
or ownership of the Aircraft by Lessee or any such Affiliate but who may be the
Owner Participant, any Affiliate thereof or any Person contacted by the Owner
Participant) submitting such bid. After Lessee shall have certified to Lessor
all bids received, the Owner Participant, any Affiliate thereof or any Person
contacted by the Owner Participant may submit a further
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bid or bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date). Subject to the
next succeeding sentence, on or before the Termination Date, subject to the
release of all mortgage and security interests with respect to the Aircraft
under the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
Aircraft to be delivered, to the bidder(s), if any, which shall have submitted
the highest cash bid therefor (net of any brokerage commissions) at least ten
(or, in the case of the Owner Participant, any Affiliate thereof, or Person
contacted by the Owner Participant, five) Business Days prior to such
Termination Date, in the same manner and in the same condition and otherwise in
accordance with all the terms of this Lease as if delivery were made to Lessor
pursuant to Section 5, and shall duly transfer to Lessor title to any engines
not owned by Lessor all in accordance with the terms of Section 5, (2) Lessor
shall comply with the terms of the Trust Indenture and shall, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), subject to prior or concurrent payment by Lessee of all
amounts due under clause (3) of this sentence, sell all of Lessor's right,
title and interest in and to the Aircraft for cash in Dollars to such
bidder(s), the total sales price realized at such sale to be retained by
Lessor, and (3) Lessee shall simultaneously pay or cause to be paid to Lessor
in funds of the type specified in Section 3(f) hereof, an amount equal to the
sum of (A) the excess, if any, of (i) the Termination Value for the Aircraft,
computed as of the Termination Date, over (ii) the sale price of the Aircraft
sold by Lessor after deducting the reasonable expenses incurred by Lessor, the
Owner Participant or the Indenture Trustee in connection with such sale, (B)
all unpaid Basic Rent with respect to the Aircraft due prior to such
Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect
to the Aircraft, and (C) on behalf of Lessor, the premium and Funding Loss
Amount, if any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor
shall give to Lessee written notice of such election at least five Business
Days prior to the Termination Date accompanied by an irrevocable undertaking by
the Owner Participant to make available to the Lessor for payment to the
Indenture Trustee on the Termination Date the amount required to pay in full
the unpaid principal amount of the Secured Certificates outstanding on the
Termination Date plus interest accrued thereon through the Termination Date.
Upon receipt of notice of such an election by Lessor and the accompanying
undertaking by the Owner Participant, Lessee shall cease its efforts to obtain
bids as provided above and shall reject all bids theretofore or thereafter
received. On the Termination Date, Lessor shall (subject to the payment by
Lessee of all Rent due on or prior to such date as set forth below) pay in full
the unpaid principal amount of the Secured Certificates outstanding on the
Termination Date plus interest accrued thereon through the Termination Date
together with all premium and Funding Loss Amount, if any, due on the Secured
Certificates and, so long as
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the Secured Certificates are paid as aforesaid, Lessee shall deliver the
Airframe and Engines or engines to Lessor in accordance with Section 5 and
shall pay all Basic Rent due prior to the Termination Date and, if such Basic
Rent is payable in arrears on such Termination Date as indicated on Exhibit B,
on such Termination Date, and all Supplemental Rent (other than Termination
Value) due on or prior to the Termination Date. If no sale shall have occurred
on the Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, if Lessee
revokes its Termination Notice or, unless Lessee shall have provided Lessor
with an opinion of counsel selected by Lessee and reasonably acceptable to
Lessor to the effect that payment by Lessee of the amount specified in clause
(3)(A) above in connection with a termination where Lessor has not elected to
retain title will not constitute a preference under applicable U.S. bankruptcy
laws, a Default or an Event of Default of the type referred to in Section 14(e)
hereof shall exist on such Termination Date (unless, in the case of any such
Default or Event of Default, Lessee has obtained an order from the applicable
bankruptcy court approving the payment of any such amount), this Lease shall
continue in full force and effect as to the Aircraft, Lessee shall pay the
reasonable costs and expenses incurred by the Owner Participant, the Indenture
Trustee and Lessor (unless such failure to terminate the Lease is a consequence
of the failure of Lessor or the Owner Participant without due cause to make, or
cause to be made, the payment referred to in the immediately preceding
sentence, in which case Lessee shall pay only the reasonable costs and expenses
of the Indenture Trustee), if any, in connection with preparation for such sale
and Lessee may give one or more additional Termination Notices in accordance
with Section 9(a)(2), subject to the last sentence of this Section 9(c). In
the event of any such sale or such retention of the Aircraft by Lessor and upon
compliance by Lessee with the provisions of this paragraph, Basic Rent or any
other amounts hereunder arising subsequent to such date of sale or retention
shall cease to accrue, Lessee shall have no further obligation in this respect
and this Lease shall terminate. Lessor may, but shall be under no duty to,
solicit bids, inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than to transfer (in
accordance with the foregoing provisions) to the purchaser named in the highest
bid certified by Lessee to Lessor all of Lessor's right, title and interest in
the Aircraft, against receipt of the payments provided herein. Lessee may
revoke a Termination Notice given pursuant to Section 9(a)(2) no more than two
times during the Term and a Termination Notice may be given not more than once
during any 365-day period.
If (x) there is a sale of the Aircraft pursuant to this
Section 9(c), (y) an Event of Default of the type described in Section 14(c)
relating to Section 7(a) or Section 8 shall have occurred and be continuing on
the date of such sale and (z) the fair market sales value of the Aircraft on
the date of such sale is lower than it would have been had no such Event of
Default occurred, Lessee shall pay to Lessor, in addition to any other amounts
due hereunder, the amount in excess of Termination Value that Lessor would have
received had no such Event of Default occurred. Lessor and Lessee shall confer
in good faith with a view to reaching agreement on what the fair market sales
value of the Aircraft would have been in the absence of such Event of Default.
If Lessor and Lessee have not so agreed within 10 days after notice by Lessor
or the Owner Participant of the occurrence of such Event of Default, the
question
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<PAGE> 39
shall be determined by an appraisal in accordance with the procedures described
in Section 19(c).
(d) Termination as to Engines. So long as no Event of
Default shall have occurred and be continuing, Lessee shall have the right at
its option at any time during the Term, on at least thirty (30) days' prior
written notice, to terminate this Lease with respect to any Engine. In such
event, and prior to the date of such termination, Lessee shall replace such
Engine hereunder by complying with the terms of Section 10(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine, and
Lessor shall transfer such right, title and interest as it may have to the
replaced Engine as provided in Section 5(b). No termination of this Lease with
respect to any Engine as contemplated by this Section 9(d) shall result in any
reduction of Interim Rent or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a)
Event of Loss with Respect to the Aircraft. Upon the occurrence of an Event of
Loss with respect to the Airframe or the Airframe and the Engines and/or
engines then installed thereon, Lessee shall forthwith (and in any event,
within fifteen (15) days after such occurrence) give Lessor written notice of
such Event of Loss, and within forty-five (45) days after such Event of Loss
Lessee shall give Lessor written notice of its election to perform one of the
following options (it being agreed that if Lessee shall not have given such
notice of election within such period, Lessee shall be deemed to have elected
the option set forth in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause
(i), in which event not later than the earlier of (x) the
Business Day next succeeding the 120th day following the
occurrence of such Event of Loss or (y) the third Business
Day following the receipt of insurance proceeds in respect of
such occurrence (but not earlier than thirty (30) days after
such occurrence) (the "LOSS PAYMENT DATE") Lessee shall pay
or cause to be paid to Lessor in funds of the type specified
in Section 3(f) hereof, an amount equal to the Stipulated
Loss Value of the Aircraft corresponding to the Stipulated
Loss Value Date occurring on or immediately following the
Loss Payment Date; provided, however, that if the
Commencement Date or a Lease Period Date shall occur prior to
the Loss Payment Date with respect to which Stipulated Loss
Value is determined, Lessee shall pay on such Lease Period
Date an amount equal to the Interim Rent or Basic Rent that
would have been due on the Commencement Date or such Lease
Period Date as if such Event of Loss had not occurred, or
(ii) so long as no Default of the type referred to
in Section 14(a) or 14(e) or Event of Default shall have
occurred and be continuing, substitute an aircraft or an
airframe or an airframe and one or more engines, as the case
may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee
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<PAGE> 40
shall pay or cause to be paid to Lessor on the Business Day next succeeding the
120th day following the occurrence of such Event of Loss the amount specified
in clause (i) above.
At such time as Lessor shall have received the amounts
specified in subparagraph (i) above, together with all other amounts that then
may be due hereunder (including, without limitation, all Basic Rent due before
the date of such payment, and, if Basic Rent is payable in arrears on the date
of such payment as indicated on Exhibit B hereto, Basic Rent due on such
payment date, and all Supplemental Rent), under the Participation Agreement and
under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent,
Stipulated Loss Value, Termination Value or any other amount due hereunder
shall cease to accrue, and Lessee shall have no further obligation in any such
respect, provided, that the obligations of Lessee under the other Operative
Documents which, by their express terms, are stated to survive shall not be
terminated, (2) this Lease shall terminate, (3) Lessor will comply with the
terms of the Trust Indenture and transfer to or at the direction of Lessee,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest
in and to the Airframe and any Engines subject to such Event of Loss, as well
as any Engines not subject to such Event of Loss, and furnish to or at the
direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, and (4)
Lessee will be subrogated to all claims of Lessor, if any, against third
parties, for damage to or loss of the Airframe and any Engines which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft. Notwithstanding anything to the contrary contained in the foregoing,
in the event that any payment of Stipulated Loss Value is to be made pursuant
to this Section 10(a) on a date that is subsequent to the scheduled expiration
of the Term, then Lessee shall, in addition to any other amounts payable
pursuant to this Section 10(a), pay on the relevant Loss Payment Date such
additional amount as is necessary to preserve the Owner Participant's Net
Economic Return. Any calculation of any such additional amount shall be made
by the Owner Participant and shall be subject to the verification procedures
set forth in Exhibit E hereto.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause
to be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or
an airframe or an airframe and one or more engines which, together with the
Engines constituting a part of the Aircraft but not installed thereon at the
time of such Event of Loss constitute the Aircraft) free and clear of all Liens
(other than Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Aircraft subject to such Event of Loss (Lessee shall
in connection therewith provide the certificate or the appraisal described in
Section 5.06(4) of the Trust Indenture) assuming that the Aircraft had been
maintained in accordance with this Lease; provided that any aircraft, airframe
or engine so substituted hereunder shall be of the same or improved model as
those initially leased hereunder and any airframe so substituted hereunder
shall have a year of manufacture after December 31, 1994 and (B) prior to or at
the time of any such substitution, Lessee (or any Sublessee), at its own
expense, will (1) furnish Lessor with a full warranty bill of sale and a
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<PAGE> 41
Federal Aviation Administration bill of sale, in form and substance reasonably
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an
opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not,
other counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the substitute aircraft, provided that such
opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, (7)(x) furnish Lessor with an opinion of tax counsel
chosen by the Owner Participant and reasonably acceptable to Lessee to the
effect that such substitution will not result in any adverse tax consequences
to the Owner Participant or (y) indemnify the Owner Participant as to such tax
consequences in a manner reasonably satisfactory in form and substance, which
may include consideration of the creditworthiness of Lessee, to the Owner
Participant; provided, however, that if (a) Lessee (or, so long as the
Guarantee remains in full force and effect, the Guarantor) has outstanding
publicly issued or privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB+/Baa1" or better from either
S&P or Moody's so long as the rating by the other agency is not less than "BBB"
or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant
with cash collateral or a letter of credit reasonably satisfactory in form and
substance to Lessor, the amount of which is sufficient (as determined by the
Owner Participant in its reasonable judgment) to cover any anticipated adverse
tax consequences for which the Owner Participant has been indemnified by Lessee
under the Operative Documents in addition to any additional adverse tax
consequences resulting from such substitution or (c) the anticipated
indemnified amount (as determined by the Owner Participant in its reasonable
judgment) is less than $50,000, then, in determining whether the indemnity to
be provided by Lessee is satisfactory in form and substance to the
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<PAGE> 42
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee, and (8) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe
or the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60)
days after the occurrence of such Event of Loss, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to which such Event of
Loss occurred, title to another Pratt & Whitney Model PW2037 engine (or engine
of the same or another manufacturer of the same, an equivalent or an improved
model and suitable for installation and use on the Airframe without impairing
the value, utility or remaining useful life of the Aircraft, and Lessee shall
in connection therewith provide the certificate or appraisal described in
Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both Engines shall
be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine,
(ii) cause a Lease Supplement and Trust Supplement to be duly executed by
Lessee and to be filed for recording pursuant to the Federal Aviation Act, or
the applicable laws, rules and regulations of any other jurisdiction in which
the Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (B) all claims, if any,
against third parties, for damage to or loss of the Engine subject to such
Event of Loss, and such Engine shall thereupon cease to be the Engine leased
hereunder. For all purposes hereof, each such replacement engine shall, after
such conveyance, be deemed part of the property leased hereunder, and shall be
deemed an
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<PAGE> 43
"ENGINE". No Event of Loss with respect to an Engine under the circumstances
contemplated by the terms of this paragraph (b) shall result in any reduction
in Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with
respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement
of Lessor (as provided in Section 7.01 of the Trust
Agreement) and the Owner Participant for reasonable costs and
expenses, so much of such payments remaining as shall not
exceed the Stipulated Loss Value required to be paid by
Lessee pursuant to Section 10(a), shall be applied in
reduction of Lessee's obligation to pay Stipulated Loss
Value, if not already paid by Lessee, or, if already paid by
Lessee, shall be applied to reimburse Lessee for its payment
of Stipulated Loss Value, and following the foregoing
application, the balance, if any, of such payments will be
paid to Lessor and Lessee, as their interests may appear;
provided that Lessee shall have fully performed or,
concurrently therewith, will fully perform the terms of the
last paragraph of Section 10(a) with respect to the Event of
Loss for which such payments are made; and
(ii) if such payments are received with respect to
an Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after
reimbursement of Lessor (as provided for in Section 7.01 of
the Trust Agreement) and the Owner Participant for reasonable
costs and expenses shall be paid over to, or retained by,
Lessee, provided that Lessee shall have fully performed, or
concurrently therewith will perform, the terms of Section
10(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of the Aircraft which is a
Specified Country. In the event of the requisition for use of the Airframe and
the Engines or engines installed on the Airframe during the Term by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any instrumentality or agency of any thereof whose
obligations are backed by the full faith and credit of such government, Lessee
shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government, instrumentality or agency, as the case may be, prior to the
end of the Term, Lessee shall be obligated to return the Airframe and such
Engines or engines to Lessor
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<PAGE> 44
pursuant to, and in all other respects in compliance with the provisions of,
Section 5 promptly on the date of such return by such government,
instrumentality or agency. If, in the event of any such requisition, Lessee
shall fail to return the Aircraft on or before the thirtieth day beyond the end
of the Term, such failure shall constitute an Event of Loss which shall be
deemed to have occurred on the last day of the Term and in such event Lessee
shall make the payment contemplated by Section 10(a)(i) in respect of such
Event of Loss; provided, however, that Lessor may notify Lessee in writing on
or before the twentieth day prior to the last day of the Term that, in the
event Lessee shall fail by reason of such requisition to return the Airframe
and such Engines or engines on or before the thirtieth day beyond the end of
the Term, such failure shall not be deemed an Event of Loss. Upon the giving
of such notice and such failure to return by the thirtieth day beyond the end
of the Term, Lessee shall be relieved of all of its obligations pursuant to the
provisions of Section 5 (including Exhibit F) but not under any other Section,
except that if any engine not owned by Lessor shall then be installed on the
Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be furnished,
to Lessor a full warranty (as to title) bill of sale with respect to each such
engine, in form and substance reasonably satisfactory to Lessor (together with
an opinion of counsel to the effect that such full warranty bill of sale has
been duly authorized and delivered and is enforceable in accordance with its
terms and that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), against receipt from Lessor of a
bill of sale evidencing the transfer, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), by Lessor
to Lessee or its designee of all of Lessor's right, title and interest in and
to any Engine constituting part of the Aircraft but not then installed on the
Airframe. All payments received by Lessor or Lessee from such government for
the use of such Airframe and Engines or engines during the Term shall be paid
over to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and
all payments received by Lessor or Lessee from such government for the use of
such Airframe and Engines or engines after the end of the Term shall be paid
over to, or retained by, Lessor unless Lessee shall have exercised its purchase
option hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft which is a Specified
Country. In the event of the requisition for use of an Engine by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any agency or instrumentality of any thereof whose
obligations are backed by the full faith and credit of such government (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with
the terms of Section 10(b) to the same extent as if an Event of Loss had
occurred with respect thereto, and, upon compliance with Section 10(b) hereof,
any payments received by Lessor or Lessee from such government with respect to
such requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any
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Sublessee) shall not be paid to or retained by Lessee (or such Sublessee) if at
the time of such payment or retention, an Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or such Sublessee) under this Lease and, if Lessor
declares this Lease to be in default pursuant to Section 15 hereof, applied
against Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Default, such amount shall
be paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and
Property Damage Insurance. (I) Except as provided in clause (II) of this
Section 11(a), Lessee will carry or cause to be carried at its or any
Sublessee's expense (i) aircraft public liability (including, without
limitation, passenger legal liability) (and including aircraft war risk and
hijacking insurance, if and to the extent the same is maintained by Lessee (or
any Sublessee) with respect to other aircraft owned or leased, and operated by
Lessee (or such Sublessee) on the same routes) insurance and property damage
insurance (exclusive of manufacturer's product liability insurance) with
respect to the Aircraft, in an amount not less than the greater of (x) the
amount of public liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee of the same type as the
Aircraft and (y) such amount per occurrence as may have been agreed to on the
Delivery Date by the Owner Participant and (ii) cargo liability insurance, in
the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft operated by Lessee of
the same type as the Aircraft and (B) which is maintained in effect with
insurers of recognized responsibility. Any policies of insurance carried in
accordance with this paragraph (a) and any policies taken out in substitution
or replacement for any of such policies (A) shall be amended to name Lessor, in
its individual capacity and as owner trustee, the Indenture Trustee and the
Owner Participant (but without imposing on any such parties liability to pay
the premiums for such insurance) (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds
as their respective interests may appear, (B) shall provide that in respect of
the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) in such policies the insurance shall not be
invalidated by any action or inaction of Lessee (or, if any Sublease is then in
effect, any Sublessee) or any other Person and shall insure Lessor, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) regardless of
any breach or violation of any warranty, declaration or condition contained in
such policies by Lessee (or, if any Sublease is then in effect, any Sublessee),
(C) may provide for self-insurance to the extent permitted by Section 11(d) and
(D) shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of Lessor, the Indenture Trustee or the Owner Participant
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), or such insurance shall lapse for non-payment of premium,
such cancellation, lapse or change shall not be effective as to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) for thirty (30)
days (seven (7) days in the case of war risk and allied perils coverage) after
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<PAGE> 46
issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (2) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, and (3) shall
waive any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
Lessor or the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) to
the extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft.
(I) Except as provided in clause (II) of this Section 11(b), Lessee shall
maintain or cause to be maintained in effect, at its or any Sublessee's
expense, with insurers of recognized responsibility, all-risk ground and flight
aircraft hull insurance covering the Aircraft and all-risk ground and flight
coverage of Engines and Parts while temporarily removed from the Aircraft and
not replaced by similar components (including, without limitation, war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance, if and to the extent the
same is maintained by Lessee (or, if a Sublease is then in effect, any
Sublessee) with respect to other aircraft owned or operated by Lessee (or such
Sublessee) on the same routes, except that Lessee (or such Sublessee) shall
maintain war risk and governmental confiscation and expropriation (other than
by the government of registry of the Aircraft) and hijacking insurance if the
Aircraft is operated on routes where the custom is for major international air
carriers flying comparable routes to carry such insurance) which is of the type
as from time to time applicable to aircraft owned by Lessee of the same type as
the Aircraft; provided that such insurance shall at all times while the
Aircraft is subject to this Lease be for an amount (subject to self-insurance
to the extent permitted by Section 11(d)) not less than the Stipulated Loss
Value for the Aircraft. Any policies carried in accordance with this paragraph
(b) covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Lessor, as owner trustee, the
Indenture
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<PAGE> 47
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds,
as their respective interests may appear (but without imposing on any such
party liability to pay premiums with respect to such insurance), (ii) may
provide for self-insurance to the extent permitted in Section 11(d), (iii)
shall provide that (A) in the event of a loss involving proceeds in excess of
$3,500,000 (or, if the Aircraft is then under a Sublease, in excess of
$2,000,000), the proceeds in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (or, so long
as the Trust Indenture shall not have been discharged, the Indenture Trustee)
(except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Sublessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be
held for the account of Lessor (or, so long as the Trust Indenture shall not
have been discharged, the Indenture Trustee) whether such payment is made to
Lessee (or any Sublessee) or any third party), it being understood and agreed
that in the case of any payment to Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, Lessor (or the Indenture Trustee) shall,
upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to
pay for repairs then being made, pay the amount of such payment to Lessee or
its order, and (B) the entire amount of any loss involving proceeds of
$3,500,000 (or, if the Aircraft is then under a Sublease, of $2,000,000) or
less or the amount of any proceeds of any loss in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee or its order unless an Event of
Default or a Default of the type referred to in Section 14(a) or 14(e) shall
have occurred and be continuing and the insurers have been notified thereof by
Lessor or the Indenture Trustee, (iv) shall provide that if the insurers cancel
such insurance for any reason whatever, or such insurance lapses for
non-payment of premium or if any material change is made in the insurance which
adversely affects the interest of Lessor, the Indenture Trustee or the Owner
Participant, such cancellation, lapse or change shall not be effective as to
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) for
thirty (30) days (seven (7) days in the case of hull war risk and allied perils
coverage) after issuance to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), respectively, of written notice by such insurers
of such cancellation, lapse or change, provided, however, that if any notice
period specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be reasonably
obtainable, (v) shall provide that in respect of the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) in
such policies the insurance shall not be invalidated by any action or inaction
of Lessee (or, if a Sublease is then in effect, any Sublessee) or any other
Person and shall insure the respective interests of Lessor, the Indenture
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if a Sublease is then in effect, any
Sublessee), (vi) shall be primary without any right of contribution from any
other insurance which is carried by Lessor, the Owner Participant or the
Indenture Trustee (or, if
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<PAGE> 48
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease),
and (viii) shall waive any right of the insurers to set-off or counterclaim or
any other deduction, whether by attachment or otherwise, in respect of any
liability of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or
any Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee
or the Owner Participant. In the case of a loss with respect to an engine
(other than an Engine) installed on the Airframe, Lessor shall hold any payment
to it of any insurance proceeds in respect of such loss for the account of
Lessee or any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to
the Airframe (or the Airframe and the Engines installed
thereon), (i) unless such property is replaced pursuant to the
last paragraph of Section 10(a), so much of such payments
remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) and the Owner Participant
for reasonable costs and expenses, as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a) hereof shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if not
already paid by Lessee, or, if already paid by Lessee, shall
be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such
payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee);
or (ii) if such property is replaced pursuant to the last
paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), provided that Lessee shall have fully performed
or, concurrently therewith, will fully perform the terms of
the last paragraph of Section 10(a) with respect to the Event
of Loss for which such payments are made; and
(y) if such payments are received with respect to
an Engine under the circumstances contemplated by Section
10(b) hereof, so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) and the Owner Participant for reasonable
costs and expenses, shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided
that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any
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<PAGE> 49
balance (or if already paid for by Lessee (or any Sublessee), all such
insurance proceeds) remaining after compliance with such Sections with respect
to such loss shall be paid to Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft
owned by Lessee of the same type similarly on the ground and not in operation,
provided that Lessee shall maintain insurance against risk of loss or damage to
the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft
during such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants
or the Owner Participant to anyone except (A) to permitted transferees of
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's interest who agree to hold such information confidential, (B) to
Lessor's, the Loan Participants', the Owner Participant's or the Indenture
Trustee's counsel or independent certified public accountants or independent
insurance advisors who agree to hold such information confidential or (C) as
may be required by any statute, court or administrative order or decree or
governmental ruling or regulation. Lessee will cause such Insurance Brokers to
agree to advise Lessor, the Indenture Trustee and the Owner Participant in
writing of any default in the payment of any premium and of any other act or
omission on the part of Lessee of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate of insurance, substantially in the same form as delivered by Lessee
to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or
the Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or
the Indenture Trustee, as the case may be, without waiver of
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<PAGE> 50
any other rights Lessor or the Indenture Trustee may have; provided, however,
that no exercise by Lessor or the Indenture Trustee, as the case may be, of
said option shall affect the provisions of this Lease, including the provisions
of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to
this Section 11 under a program applicable to all aircraft in Lessee's fleet,
but in no case shall the aggregate amount of self-insurance in regard to
Section 11(a) and Section 11(b) exceed during any policy year, with respect to
all of the aircraft in Lessee's fleet (including, without limitation, the
Aircraft), the lesser of (a) 50% of the largest replacement value of any single
aircraft in Lessee's fleet or (b) 1-1/2% of the average aggregate insurable
value (during the preceding policy year) of all aircraft (including, without
limitation, the Aircraft) on which Lessee carries insurance. In addition,
Lessee (and any Sublessee) may self-insure to the extent of any applicable
mandatory minimum per aircraft (or, if applicable, per annum or other period)
hull or liability insurance deductible imposed by the aircraft hull or
liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee
(and any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance with respect
to its interest in the Aircraft, provided that such insurance does not prevent
Lessee (or any Sublessee) from carrying the insurance required or permitted by
this Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written
consent of Lessor, other government of registry of the Aircraft or any agency
or instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) Application of Payments During Existence of an Event
of Default. Any amount referred to in paragraph (b) of this Section 11 which
is payable to or retainable by Lessee (or any Sublessee) shall not be paid to
or retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default or a Default of the type referred to in Section
14(a) or 14(e) shall have occurred and be continuing, but shall be held by or
paid over to Lessor as security for the obligations of Lessee (or any
Sublessee) under this Lease and, if Lessor declares this Lease to be in default
pursuant to Section 15 hereof, applied against Lessee's obligations hereunder
as and when due. At such time as there shall not be continuing
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<PAGE> 51
any such Event of Default or Default, such amount shall be paid to Lessee (or
such Sublessee) to the extent not previously applied in accordance with the
preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, and
upon at least 15 days' prior written notice to Lessee, Lessor, the Owner
Participant or the Indenture Trustee or their respective authorized
representatives may (not more than once every calendar year (unless an Event of
Default has occurred and is continuing when such inspection right shall not be
so limited)) inspect the Aircraft and inspect and make copies (at Lessor's, the
Owner Participant's or the Indenture Trustee's expense, as the case may be
unless an Event of Default shall have occurred and be continuing) of the books
and records of Lessee relating to the maintenance of the Aircraft; any such
inspection of the Aircraft shall be limited to a visual, walk-around inspection
and shall not include opening any panels, bays or the like without the express
consent of Lessee; provided that no exercise of such inspection right shall
interfere with the operation or maintenance of the Aircraft by, or the business
of, Lessee (or any Sublessee). Upon receipt by Lessee of a written request
from the Owner Participant specifying that the Owner Participant desires to
have an authorized representative observe the next scheduled major overhaul to
be performed on the Aircraft, Lessee shall cooperate with the Owner Participant
to enable the Owner Participant's authorized representative to observe the next
scheduled major overhaul to be performed on the Aircraft; provided that Lessee
shall be required to so cooperate only to the extent necessary to enable the
Owner Participant's authorized representative to observe one scheduled major
overhaul during each three-year period of the Term; provided that the Owner
Participant's authorized representative shall merely observe such major
overhaul, shall not interfere with or extend in any manner the conduct or
duration of the major overhaul and shall not be entitled to direct any of the
work performed in connection with such overhaul. None of Lessor, the Owner
Participant or the Indenture Trustee shall have any duty to make any such
inspection nor shall any of them incur any liability or obligation by reason of
not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided
herein, Lessee will not, without prior written consent of Lessor, assign in
whole or in part any of its rights or obligations hereunder. Lessor agrees
that it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as provided herein, in the Trust Agreement or in
the Participation Agreement. Subject to the foregoing, the terms and
provisions of this Lease shall be binding upon and inure to the benefit of
Lessor and Lessee and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following
events shall constitute an Event of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
each such Event of Default shall continue so long as, but only as long as, it
shall not have been remedied:
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<PAGE> 52
(a) Lessee shall not have made a payment of
Interim Rent, Basic Rent or Stipulated Loss Value within ten
(10) days after the same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for
ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax
Indemnity Agreement or any failure of Lessee to pay to Lessor
or the Owner Participant when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(c) Lessee shall have failed to perform or
observe (or caused to be performed and observed) in any
material respect any covenant or agreement (except the
covenants set forth in the Tax Indemnity Agreement and in
clauses (i)(B) and (ii) of the first sentence of second
paragraph of Exhibit F) to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of thirty (30) days after receipt by
Lessee of written notice thereof from Lessor or the Indenture
Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause
(ii) or clause (iii) of the first sentence of Section 7(a), or
under the second sentence of Section 7(a) as it relates to
maintenance, service, repair or overhaul or under Section 8
and, notwithstanding the diligence of Lessee in attempting to
cure such failure, such failure is not cured within said
thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so
long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such
written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose and except the representations and warranties
in, or in connection with, the Credit Agreement) shall prove
to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the
interests of the Owner Participant, Lessor or the Certificate
Holders) within thirty (30) days after the receipt by Lessee
of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
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<PAGE> 53
(e) the commencement of an involuntary case or
other proceeding in respect of Lessee in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its
property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of ninety
(90) consecutive days or an order, judgment or decree shall be
entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Lessee, a
receiver, trustee or liquidator of Lessee, or of any
substantial part of its property, or sequestering any
substantial part of the property of Lessee and any such order,
judgment or decree or appointment or sequestration shall be
final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of
entry thereof; or
(f) the commencement by Lessee of a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as
Lessee is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event
of Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one
or more of the following with respect to all or any part of the Airframe and
any or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then in effect; provided, however, that during any period
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 7(b) hereof and in possession of the United
States government or an agency or instrumentality of the United States, Lessor
shall
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<PAGE> 54
not, on account of any Event of Default, be entitled to do any of the following
in such manner as to limit Lessee's control under this Lease (or any
Sublessee's control under any Sublease) of any Airframe or any Engines
installed thereon, unless at least sixty (60) days' (or such lesser period, if
any, as may then be applicable under the Air Mobility Command program of the
United States Government) written notice of default hereunder shall have been
given by Lessor by registered or certified mail to Lessee (and any Sublessee)
with a copy addressed to the Contracting Office Representative for the Air
Mobility Command of the United States Air Force under any contract with Lessee
(or any Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at
Lessee's expense, cause Lessee to return promptly, and Lessee
shall return promptly, the Airframe or any Engine as Lessor
may so demand to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of
the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or
otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all
without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public
or private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Stipulated
Loss Value Date not earlier than ten days from the date of
such notice, may demand that the Lessee pay to Lessor, and
Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Interim Rent or Basic Rent for
the Aircraft due on or after the payment date specified in
such notice), any unpaid Interim Rent or Basic Rent due on the
payment date so specified (unless Basic Rent is payable in
advance on such date but including, without limitation, any
adjustments to Basic Rent payable pursuant to Section 3(d)),
plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from
such specified payment date until the date of actual payment
of such amount): (i) an amount equal to the excess, if any,
of the Stipulated Loss Value for the Aircraft, computed as of
the Stipulated Loss Value Date specified as the payment date
in
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such notice, over the aggregate fair market rental value
(computed as hereafter in this Section 15 provided) of such
Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the
Stipulated Loss Value Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 3%;
or (ii) an amount equal to the excess, if any, of the
Stipulated Loss Value for such Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
such notice over the fair market sales value of such Aircraft
(computed as hereafter in this Section provided) as of the
Stipulated Loss Value Date specified as the payment date in
such notice;
(d) in the event Lessor, pursuant to paragraph
(b) above, shall have sold the Airframe and/or any Engine,
Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the
installments of Interim Rent or Basic Rent for the Aircraft
due on or after such date), any unpaid Interim Rent or Basic
Rent with respect to the Aircraft due prior to such date
(including, without limitation, any adjustments to Basic Rent
payable pursuant to Section 3(d)) plus the amount of any
deficiency between the net proceeds of such sale (after
deduction of all reasonable costs of sale) and the Stipulated
Loss Value of such Aircraft, computed as of the Stipulated
Loss Value Date on or immediately following the date of such
sale together with interest, if any, on the amount of such
deficiency, at the Past Due Rate, from the date of such sale
to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to
the Aircraft, and/or may exercise any other right or remedy
which may be available to it under applicable law or proceed
by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser,
as the case may be, under no compulsion to lease or purchase, as the case may
be, and an informed and willing lessor or seller in possession under no
compulsion to sell, as the case may be, in each case based upon the actual
condition and location of the Aircraft and an all cash, contemporaneous sale,
which value shall be determined by mutual agreement or, in the absence of
mutual written agreement, pursuant to an appraisal prepared and delivered by a
nationally recognized firm of independent aircraft appraisers nominated by
Lessor, and Lessor shall immediately notify Lessee of such nomination. Unless
Lessee shall have objected in writing within ten days after its receipt of
Lessor's notice, Lessor's nomination shall be conclusive and binding. If
Lessee shall object, however, Lessor and Lessee shall endeavor, within ten days
after such objection is made, to
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select a mutually acceptable appraiser; provided that, if Lessee shall not so
endeavor to make such selection, Lessor's nomination referred to in the
preceding sentence hereof shall be conclusive and binding. If Lessor and
Lessee fail to reach agreement (except for the reason referred to in the
proviso in the preceding sentence), or if any appraiser selected fails to act
for any reason, then the question shall be determined by an appraisal (applying
the definitions of "fair market rental value" and "fair market sales value" as
set forth above based upon the actual condition of the Aircraft) mutually
agreed to by two recognized independent aircraft appraisers, one of which
appraisers shall be chosen by Lessor and one by Lessee within five Business
Days after Lessor or Lessee shall have received written notice from the other
party of a demand that such an appraisal be made, which notice shall specify
the appraiser chosen by the party giving the notice or, if such appraisers
cannot agree on the amount of such appraisal within twenty Business Days after
the end of such five-day period, each shall render its own appraisal and shall
by mutual consent choose another appraiser within five Business Days after the
end of such twenty-day period. If, within such five-day period, such two
appraisers fail to appoint a third appraiser, then either Lessor or Lessee, on
behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall
be given within twenty Business Days after the appointment of such third
appraiser. As soon as the third appraiser has delivered his appraisal, that
appraisal shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more disparate from the
average of all three determinations than each of the other two determinations,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. The cost of
such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any
and all unpaid Rent due hereunder before, after or during the exercise of any
of the foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) or Lessee may bid for and purchase such property. Lessor
will endeavor to give Lessee at least fifteen (15) days' prior written notice
of the date fixed for any public sale of the Airframe or any Engine and any
such public sale shall be conducted in general so as to afford Lessee (and any
Sublessee) a commercially reasonable opportunity to bid (it being understood
that Lessor shall
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<PAGE> 57
incur no liability for its failure to provide any such notice). Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all of such other remedies. No waiver by Lessor of any Event
of Default shall in any way be, or be construed to be, a waiver of any future
or subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN
MATTERS. Forthwith upon the execution and delivery of each Lease Supplement
and Trust Supplement from time to time required by the terms hereof and upon
the execution and delivery of any amendment to this Lease, to the Trust
Indenture or to the Trust Agreement, Lessee will cause such Lease Supplement,
Trust Supplement (and, in the case of the initial Lease Supplement and Trust
Supplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. In addition, Lessee will at its expense promptly and duly execute
and deliver to Lessor such further documents and take such further action as
Lessor or the Indenture Trustee may from time to time reasonably request in
order more effectively to carry out the intent and purpose of this Lease and to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor and the Indenture Trustee hereunder, including, without
limitation, if requested by Lessor or the Indenture Trustee, at the expense of
Lessee, the execution and delivery of supplements or amendments hereto or to
the Trust Indenture, each in recordable form, subjecting to this Lease and the
Trust Indenture, any airframe or engine substituted for the Airframe or any
Engine pursuant to the terms thereof and the recording or filing of
counterparts thereof, in accordance with the laws of such jurisdictions as
Lessor or the Indenture Trustee may from time to time deem advisable. Lessee
agrees to furnish to Lessor and the Indenture Trustee promptly after execution
and delivery of any supplement and amendment hereto and promptly after the
execution and delivery of any supplement and amendment to the Trust Indenture
(except for any such supplement or amendment which does not require or receive
the approval of Lessee pursuant to the Operative Documents and is not required
pursuant to the terms of the Operative Documents), an opinion of counsel
reasonably satisfactory to Lessor and the Indenture Trustee as to the due
recording or filing of such supplement or amendment. Commencing in 1997, on or
before April 30 of each year during the Term, Lessee will deliver to Lessor and
the Indenture Trustee a certificate of Lessee, signed by the President, a Vice
President or the Chief Financial Officer of Lessee to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and
the signer does not have actual knowledge of the existence, as of the date of
such certificate, of any condition or event which constitutes a Default or an
Event of Default. Lessee agrees that if the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer
of Lessee has actual knowledge of the existence of a Default, then Lessee shall
promptly give to Lessor, the Owner Participant and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor, the Owner
Participant or the Indenture Trustee may reasonably request. Lessee agrees
that if an officer of Lessee has knowledge of the existence of an Event of
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<PAGE> 58
Default, Lessee shall promptly give to Lessor and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor or the Indenture
Trustee may reasonably request. Lessee will deliver to Lessor, the Owner
Participant and the Indenture Trustee (i) within sixty (60) days after the end
of each of the first three quarterly periods of each fiscal year of the
Guarantor, the publicly filed Form 10-Q report of the Guarantor; and (ii)
within one hundred twenty (120) days after the close of such fiscal year, the
publicly filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the
terms and provisions hereof shall be by telecopy or other telecommunication
means (with such telecopy or other telecommunication means to be confirmed in
writing), or if such notice is impracticable, by registered, first-class
airmail, with postage prepaid, or by personal delivery of written notice and
any such notice shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice President-Finance and
Treasurer (Telecopy No. (612) 726-0665), or to such other
address or telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address or
telecopy number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at
such address or telecopy number as such Loan Participant, the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at its address
or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is
a net lease. All Rent shall be paid by Lessee to Lessor in funds of the type
specified in Section 3(f). Except as provided in Section 3(g) hereof,
Lessee's obligation to pay all Rent payable hereunder shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which Lessee may have against Lessor, in its individual capacity or as Owner
Trustee under the Trust Agreement, the Indenture Trustee (in its individual
capacity or as Indenture Trustee), any Loan Participant, the Owner Participant,
or anyone else for any reason whatsoever (whether in connection with the
transactions contemplated hereby or any other transactions), including, without
limitation, any breach by Lessor or the Owner Participant of their respective
warranties, agreements or covenants contained in any of the Operative
Documents,
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<PAGE> 59
(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in or prohibition of the use or
possession thereof by Lessee (or any Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation or prohibition
resulting from the act of any government authority, (iii) any insolvency,
bankruptcy, reorganization or similar case or proceedings by or against Lessee
(or any Sublessee) or any other person, or (iv) any other circumstance,
happening, or event whatsoever, whether or not unforeseen or similar to any of
the foregoing. 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 without limitation of the other
rights or remedies of Lessor hereunder, subject to the rights of Lessee to
setoff under Section 3(g) hereof, to pay to Lessor an amount equal to each Rent
payment at the time such payment would have become due and payable in
accordance with the terms hereof had this Lease not been terminated in whole or
in part. Lessee hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION.
(a) Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right,
upon compliance with the notice provisions set forth in Section 19(e) hereof,
to renew this Lease for up to three consecutive one year renewal terms the
first of which shall commence only upon the expiration of the Basic Term (any
such renewal term, a "FIXED RENEWAL TERM"). Basic Rent during any Fixed
Renewal Term shall be payable in an amount and at the times specified in
Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the
third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the
option, upon compliance with the notice provisions set forth in Section 19(e)
hereof, to renew this Lease for a renewal term of not less than one year and
not more than three years for a Basic Rent equal to the "fair market rental
value" of the Aircraft for such period (any such renewal term, a "FAIR MARKET
RENEWAL TERM"). The aggregate length of all Fair Market Renewal Terms pursuant
to this Section 19(a)(2) may not exceed five years.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(e) on or before the day specified therefor, Lessee shall
be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Default of the type referred
to in Section 14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all
necessary governmental authorizations and approvals shall have been received
and that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease
shall continue in full force
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and effect during the Renewal Term, except that (x) Lessee shall pay Lessor
Basic Rent for the Aircraft during the Renewal Term in an amount equal to the
"fair market rental value" thereof determined in accordance with Section 19(c),
but not to exceed in the case of a Fixed Renewal Term one-half of the average
Basic Rent during the Basic Term (such average being determined as the total of
all payments of Basic Rent during the Basic Term added together and divided by
the number of payments of Basic Rent during the Basic Term), which Basic Rent
shall be payable in semi-annual installments in arrears unless any portion of
Basic Rent during the Basic Term was payable in advance, in which case the same
proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic
Term divided into the total Basic Rent payable in advance during the Basic
Term) shall be payable in advance during such Renewal Term, each such
installment being due and payable on each Lease Period Date occurring during
the Renewal Term, commencing with the Lease Period Date immediately following
the commencement of the Renewal Term, and (y) the Stipulated Loss Values
applicable during the Renewal Term shall be determined separately for each
Renewal Term by the Owner Participant in good faith to reflect Stipulated Loss
Values determined in accordance with the following sentence. Stipulated Loss
Values during a Renewal Term shall on the date on which such Renewal Term
begins be equal to the fair market sales value of the Aircraft as of such date,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof, and shall decline ratably on a monthly basis to the fair
market sales value of the Aircraft as of the last day of such Renewal Term,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the fair market sales value of the Aircraft;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the purchase price by Lessee will not constitute a
preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled
to purchase the Aircraft if there shall exist on such last Business Day of the
Basic Term or any Renewal Term, as the case may be, a Default of the type
referred to in Section 14(e) hereof. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right,
title and interest in and to the Aircraft.
(c) Valuation. For all purposes of this Section 19,
including the appraisal referred to in this Section 19(c), in determining "fair
market rental value" or "fair market sales value", the Aircraft shall be valued
(i) as if in the condition and otherwise in compliance with
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the terms of Section 5 upon a return of the Aircraft to the United States and
as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the
basis of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding this Lease, including the purchase and renewal options
of Lessee provided in this Lease, and (iii) in the case of such valuation for
determining "fair market rental value", assuming such lessee would have
substantially the same obligations during the Fair Market Renewal Term as
provided hereunder including without limitation the obligations of Lessee to
carry and maintain the insurance required by Section 11 hereof and to make
certain payments with reference to Stipulated Loss Value during the applicable
Fair Market Renewal Term. Upon receipt of a notice from Lessee pursuant to
Section 19(e) hereof, Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred
seventy (270) days prior to the end of the Basic Term or the Renewal Term in
question, then the question shall be determined by an appraisal mutually agreed
to by two recognized independent aircraft appraisers, one of which appraisers
shall be chosen by Lessor and one by Lessee within five Business Days after
Lessor or Lessee shall have received written notice from the other party of a
demand that such an appraisal be made, which notice shall specify the appraiser
chosen by the party giving the notice or, if such appraisers cannot agree on
the amount of such appraisal within twenty Business Days after the end of such
five-day period, each shall render its own appraisal and shall by mutual
consent choose another appraiser within five Business Days after the end of
such twenty-day period. If, within such five-day period, such two appraisers
fail to appoint a third appraiser, then either Lessor or Lessee, on behalf of
both, may request such appointment by the then President of the Association of
the Bar of the City of New York (or any successor organization thereto) or, in
his absence, failure, refusal or inability to act, then either Lessor or Lessee
may apply to the American Arbitration Association (or any successor
organization thereto) in New York, New York for the appointment of such third
appraiser. The decision of the third appraiser so appointed shall be given
within twenty Business Days after the appointment of such third appraiser. As
soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations, then
such average shall be final and binding upon the parties thereto. Lessee and
Lessor shall share equally all expenses relating to such appraisal procedure
provided if Lessee elects not to renew this Lease or purchase the Aircraft
following such appraisal, Lessee shall pay all expenses of such appraisal.
(d) Special Purchase Option. On July 2 , 2012 (or, if
July 2, 2012 is not a Business Day, the Business Day immediately succeeding
July 2, 2012), Lessee shall have the
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option, upon at least ninety (90) days' irrevocable prior notice to Lessor and,
if any Secured Certificates are then outstanding, the Indenture Trustee, to
purchase the Aircraft on such date for a purchase price equal to the Special
Purchase Price; provided that, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to
the effect that the payment of the Special Purchase Price by Lessee will not
constitute a preference under applicable U.S. bankruptcy laws, Lessee shall
not be entitled to purchase the Aircraft if there shall exist on July 2, 2012
(or, if July 2, 2012 is not a Business Day, on the Business Day immediately
succeeding July 2, 2012) a Default of the type referred to in Section 14(e)
hereof. In addition, if on such date there shall be any Secured Certificates
outstanding, Lessee shall have the option to assume, pursuant to Section 8(x)
of the Participation Agreement and Section 2.15 of the Trust Indenture, all of
the obligations of Lessor under the Trust Indenture. If such assumption is
made, Lessee shall pay Lessor a purchase price equal to (I) the Special
Purchase Price minus (II) an amount equal to principal of, and accrued but
unpaid interest on, any Secured Certificates that are outstanding on such date.
Upon such payment in full and payment of any other amounts then due hereunder
(including costs or expenses of the Owner Participant in connection with such
purchase, any installments of Basic Rent due prior to such date and, if Basic
Rent is payable in arrears on such date as indicated on Exhibit B, on such date
(but not any installment of Basic Rent due on such date if Basic Rent is
payable in advance on such date), and all unpaid Supplemental Rent due on or
prior to such date), Lessor will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest in and to the Aircraft
and under the Trust Indenture and, unless there shall be any Secured
Certificates outstanding after such payment, exercise such rights as it has to
cause the Aircraft to be released from the Lien of the Trust Indenture.
(e) In order to exercise any right pursuant to Sections
19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than
270 days prior to the expiration of the Basic Term or any Renewal Term, as the
case may be, deliver to Lessor a notice in writing stating that it intends to
exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any
such notice shall be revocable until the date that is 270 days prior to the
expiration of the Basic Term or such Renewal Term, as the case may be. Failure
to revoke any such notice prior to such 270th day prior to the end of the Basic
Term or such Renewal Term, as the case may be, shall constitute a binding and
irrevocable election by Lessee to exercise one of the options set forth in
Sections 19(a) or 19(b) hereof. In the event that any such notice has so been
provided to Lessor, Lessee shall, no earlier than the 270th day and no later
than the 90th day prior to the expiration of the Basic Term or such Renewal
Term, as the case may be, specify which of the options in Sections 19(a) or
19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree
and acknowledge that Lessee may not specify which of the options in Sections
19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier
than the expiration of the Basic Term or such Renewal Term, as the case may be.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS
OF SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this
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Lease, the Lease Supplements and any amendments to this Lease and to mortgage
its interest in the Aircraft in favor of the Indenture Trustee, subject to the
reservations and conditions therein set forth. To the extent, if any, that
this Lease, the Lease Supplements and any amendments to this Lease constitute
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, the
Lease Supplements and any amendments to this Lease may be created through the
transfer or possession of any counterpart other than the original counterpart,
which shall be identified as the counterpart containing the receipt therefor
executed by the Indenture Trustee on the signature page thereof. Lessee hereby
accepts and consents to the assignment of all Lessor's right, title and
interest in and to this Lease pursuant to the terms of the Trust Indenture.
Subject to Section 3(f) hereof, Lessee agrees to pay directly to the Indenture
Trustee (or, after receipt by Lessee of notice from the Indenture Trustee of
the discharge of the Trust Indenture, to Lessor), all amounts of Rent due or to
become due hereunder and assigned to the Indenture Trustee and Lessee agrees
that the Indenture Trustee's right to such payments hereunder shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, the circumstances set forth in clauses (i) through (iv) of
Section 18 hereof. Notwithstanding the foregoing assignment of this Lease, the
obligations of Lessor to Lessee to perform the terms and conditions of this
Lease shall remain in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If
Lessee fails to make any payment of Rent required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein, then
(but in each case, except in the case of failure to pay Rent or in the case of
failure to maintain insurance as required hereunder, no earlier than the
fifteenth day after the occurrence of such failure, whether or not it shall yet
constitute an Event of Default hereunder) Lessor may itself make such payment
or perform or comply with such agreement but shall not be obligated hereunder
to do so, and the amount of such payment and the amount of the reasonable
expenses of Lessor incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with
interest thereon at the Past Due Rate, shall be deemed Supplemental Rent,
payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF
LESSOR LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor
as security hereunder for future payments to Lessee at a time when there is not
continuing an Event of Default shall, until paid to Lessee, be invested by
Lessor or, if the Trust Indenture shall not have been discharged, by the
Indenture Trustee, as the case may be, as Lessee may from time to time direct
in writing (and in absence of a written direction by Lessee, there shall be no
obligation to invest such moneys) in (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of ninety (90) days or less from date of purchase
thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings as of
its last report of condition of at least $500,000,000 and having a rating of Aa
or better by Moody's or AA or better by S&P and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii) commercial
paper
- 63 -
<PAGE> 64
of any holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America
or any state thereof having a rating assigned to such commercial paper of A1 by
S&P or P1 by Moody's and having a final maturity of ninety (90) days or less
from the date of purchase thereof; provided, however, that the aggregate amount
at any one time so invested in certificates of deposit issued by any one bank
shall not be in excess of 5% of such bank's capital and surplus. There shall
be promptly remitted to Lessee or its order (but no more frequently than
monthly) any gain (including interest received) realized as a result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) unless a Default of the type
referred to in Section 14(a) or 14(e) or an Event of Default shall have
occurred and be continuing. If a Default of the type referred to in Section
14(a) or 14(e) or an Event of Default shall have occurred and be continuing,
Lessor, or if the Trust Indenture shall not have been discharged, the Indenture
Trustee as assignee of Lessor, shall hold any such gain as security for the
obligations of Lessee under this Lease and apply it against such obligations as
and when due, and once all such Defaults and Events of Default have been
remedied, any gain not so applied shall be remitted to Lessee. Lessee shall be
responsible for any net loss realized as a result of any such investment and
shall reimburse Lessor (or the Indenture Trustee, as the case may be) therefor
on demand.
(b) Liability of Lessor Limited. It is expressly agreed
and understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under
the Trust Agreement, and the institution acting as Lessor shall not be liable
in its individual capacity for any breach thereof except for its gross
negligence or willful misconduct or for breach of its covenants,
representations and warranties contained herein, to the extent covenanted or
made in its individual capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each
hereby irrevocably submits itself to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. This Lease shall constitute an
agreement of lease, and nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee only. Neither Lessee nor any affiliate of Lessee will file any tax
returns in a manner inconsistent with the
- 64 -
<PAGE> 65
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof and all references herein to numbered sections,
unless otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 10 of the Participation Agreement) and without in
any way altering the terms of this Lease or Lessee's obligations hereunder.
One such appointment and designation of a successor Owner Trustee shall not
exhaust the right to appoint and designate further successor Owner Trustees
pursuant to the Trust Agreement, but such right may be exercised repeatedly as
long as this Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no
Event of Default shall have occurred and be continuing and notwithstanding any
default by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations pursuant to the Overall Transaction during the Term of this Lease,
and this Lease shall not be terminated except as expressly provided herein.
SECTION 27. HOLDOVER RENT. In the event that Lessee
shall fail to return the Aircraft in accordance with Section 5 hereof at the
scheduled expiration of the Term, then, unless such failure shall occur as a
result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee
having purchased the Aircraft pursuant to Section 19 hereof and, in the case of
either clauses (x) or (y) above, Lessee shall have made all payments required
to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such
day beyond the scheduled expiration of the Term during which the Aircraft is
not returned to Lessor in accordance with Section 5 hereof, an amount equal to
the higher of (A) the daily fair market rental value of the Aircraft during
such period, computed in accordance with Section 19(c) hereof, and (B) the
average daily Basic Rent payable by Lessee during the Term.
- 65 -
<PAGE> 66
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY:
----------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY:
----------------------------------
Title: Senior Vice President-
Finance and Treasurer
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of __________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY:
-----------------------------------
Title:
- Signature Page -
<PAGE> 67
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 E]
LEASE SUPPLEMENT NO.
[NW 1996 E]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement [NW 1996 E], dated as of
April 29, 1996, between [ ], as Owner Participant, and such Owner
Trustee (such Owner Trustee, in its capacity as such Owner Trustee, being
herein called "LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1996 E], dated as of April 29, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the Federal Aviation
Administration as one document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as
of the date hereof consists of the following components:
- --------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 68
(i) Airframe: FAA Registration No. ______;
manufacturer's serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037
engines bearing, respectively, manufacturer's serial nos.
P______ and P______ (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such
horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as
otherwise provided in the Lease, the Term for the Aircraft shall commence on
the Delivery Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor
Basic Rent for the Aircraft throughout the Term therefor in accordance with
Section 3 of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has
accepted the Aircraft for all purposes hereof and of the Lease as being
airworthy, in good working order and repair and without defect or inherent vice
in title, condition, design, operation or fitness for use; provided, however,
that nothing contained herein or in the Lease shall in any way diminish or
otherwise affect any right Lessee or Lessor may have with respect to the
Aircraft against The Boeing Company, or any subcontractor or supplier of The
Boeing Company, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the same extent as
if fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee
on the signature page hereof.
EXHIBIT A - PAGE 2
<PAGE> 69
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By
-------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By
-------------------------------
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
-------------------------------
Title:
- --------------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 70
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 E]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
---------------------- ------------------
Interim Rent
Commencement (Percentage of
Date Lessor's Cost)
---------------------- ------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
<PAGE> 71
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
--------------------- ----------------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
EXHIBIT B - Page 5 of 5
<PAGE> 72
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - Page 5 of 5
<PAGE> 73
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 E]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------ ------------------
<PAGE> 74
EXHIBIT D
TO
[NW 1996 E]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
------------- ------------
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 E]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 E], dated as
of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement [NW 1996 E], dated as of April 29, 1996
(in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation
organized and existing pursuant to the laws of the State of Minnesota
("LESSEE"), to a certain Lease Agreement [NW 1996 E], dated as of April 29, 1996
(the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as
supplemented by Lease Supplement No. 1 [NW 1996 E] ("LEASE SUPPLEMENT NO. 1")
between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N541US; manufacturer's serial No. 26488; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727172 and P727173;
WHEREAS, Section 17 of the Participation Agreement [NW 1996
E], dated as of April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee,
[ ] (the "OWNER PARTICIPANT"), the loan participants named therein,
as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street
Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured
Certificates issued by the Owner Trustee under the Trust Indenture and Security
Agreement [NW 1996 E], dated as of April 29, 1996, between Lessor (not in its
individual capacity except as expressly provided therein but as trustee) and the
Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding
Agreement [NW 1996 E], dated as of the date hereof (the "REFUNDING AGREEMENT"),
with State Street Bank and Trust Company, as Pass Through Trustee under the Pass
Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price in order to reflect, among other things, the interest
rate of the refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess
Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and
the Special Purchase Price, Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were
attached and made a part thereof counterparts of Lease Supplement No. 1, the
Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996,
and the Trust Agreement and Indenture Supplement [NW 1996 E], dated April 30,
1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3,
1996, and assigned Conveyance No. E21279;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Excess Amount",
"Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss
Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in
Section 1 of the Lease are hereby amended applicable on and after the Closing
Date to read as follows:
"BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in the City of New York, New York; Boston,
Massachusetts; or Minneapolis, Minnesota.
"EXCESS AMOUNT" for the Closing Date or the
Commencement Date means an amount equal to the amount
determined by multiplying Lessor's Cost by the percentage set
forth in Exhibit B hereto under the heading "Excess Amount"
opposite the Closing Date or the Commencement Date.
"INDEMNITEE" means (i) the Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement,
(ii) the Indenture Trustee, (iii) the Owner Participant, (iv)
the Trust Estate, (v) Loan Participants and each other
Certificate Holder, (vi) the Subordination Agent, (vii) the
Liquidity Provider, (viii) the Pass Through Trustees, (ix)
each Affiliate of the Persons described in clauses (i) through
(iv), inclusive, (x) each Affiliate of the Persons described
in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of
the Persons described in clauses (i) through (viii),
inclusive, (xii) the successors and permitted assigns of the
Persons described in clauses (i) through (iv), inclusive, and
(xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"LOAN PARTICIPANT" means for any period prior to the
Closing, the Original Loan Participants and their successors
and assigns, and from and after the Closing, the Purchasers
and their successors and registered assigns, including any
Certificate Holder.
-2-
<PAGE> 3
"OPERATIVE DOCUMENTS" means each of the Participation
Agreement, the documents referred to in Section 4(a)(v) of the
Participation Agreement (including any amendments,
modifications or supplements thereto), the Refunding
Agreement, the Trust Indenture Amendment and the Refinancing
Secured Certificates, collectively, and "Operative Document"
shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost by
the percentage specified in Exhibit C hereto opposite the
Stipulated Loss Value Date with respect to which the amount is
determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of
the Tax Indemnity Agreement). "Stipulated Loss Value" as of
any date after January 2, 2019 shall be the amount determined
as provided in Section 19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a)
all amounts, liabilities, indemnities and obligations (other
than Interim Rent or Basic Rent) which Lessee assumes or
agrees to pay under any Lessee Document to or on behalf of
Lessor or any other Person, (b) amounts payable by Lessor
pursuant to clause (b) of the third paragraph of Section 2.02
of the Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust
Agreements and the Other Pass Through Trust Agreement, and (d)
Lessor's pro rata share of all compensation and reimbursement
of expenses and disbursements payable to the Subordination
Agent under the Intercreditor Agreement except with respect to
any income or franchise taxes incurred by the Subordination
Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata
share" means as of any time a fraction, the numerator of which
is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes"
(as such term is defined in the Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate and the Indenture
Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the
preceding clause (i), and (iii) the Trust Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of Section 3(d)(v), the
amount determined by multiplying Lessor's Cost by the
percentage specified in Exhibit D hereto opposite the
Termination Date with
-3-
<PAGE> 4
respect to which the amount is determined (as such Exhibit D
may be adjusted from time to time as provided in Section 3(d)
hereof and in Section 7 of the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in
Section 1 of the Lease in alphabetical order to be applicable
on and after the Closing Date:
"CLOSING" means the consummation of the refinancing
operation contemplated by Section 1 of the Refunding
Agreement.
"CLOSING DATE" means the date on which the Closing
shall occur.
"INDEMNITY ADJUSTED PAYMENT" means any indemnity
payment made pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Provider and the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving
Credit Agreements between the Subordination Agent, as
borrower, and the Liquidity Provider, and any replacement
thereof, in each case as the same may be amended, modified or
supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank
Girozentrale, acting through its New York branch, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider under the Liquidity Facilities, or any
successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that
term in the Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution
executing the Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture
and Security Agreement [NW 1996 E], dated as of April 29,
1996, between the Owner Trustee and State Street Bank and
Trust Company, as amended, modified and supplemented prior to
the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass
through trust agreement and supplement pursuant to which the
Class D pass through trust certificates are issued.
-4-
<PAGE> 5
"PASS THROUGH CERTIFICATES" means the pass through
certificates to be issued by the Pass Through Trustee in
connection with the Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through
trust agreement and each of the three separate pass through
trust supplements referred to on Schedule I to the Refunding
Agreement to be entered into by and between Lessee and the
Pass Through Trustee in connection with the Refinancing
Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and
Trust Company, a Massachusetts trust company, in its capacity
as trustee under each Pass Through Trust Agreement, and each
other person that may from time to time be acting as successor
trustee under any such Pass Through Trust Agreement.
"PURCHASERS" means the Pass Through Trustees under
each Pass Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an
authorized representative of the Owner Participant delivered
pursuant to Section 17(a)(1) of the Participation Agreement,
setting forth, among other things, the Refinancing Date, the
principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, and the proposed revised schedules of
Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization
Schedules.
"REFINANCING DATE" means the proposed date on which
the outstanding Secured Certificates will be redeemed and
refinanced pursuant to Section 17 of the Participation
Agreement.
"REFINANCING EXPENSES" means the costs, fees,
commissions and other expenses payable by the Owner
Participant pursuant to Section 11(a) of the Refunding
Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured
Certificates to be issued by Lessor to the Purchasers pursuant
to the Trust Indenture Amendment and the Refunding Agreement
on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing
transaction pursuant to Section 17 of the Participation
Agreement involving, among other things, (i) the redemption of
the Secured Certificates issued on the Refinancing Date and
the concurrent issuance and sale of the Refinancing Secured
Certificates to the Pass Through Trustees (or their designee)
and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
-5-
<PAGE> 6
"REFUNDING AGREEMENT" means that certain Refunding
Agreement [NW 1996 E], dated as of June 3, 1996, among Lessor,
Lessee, the Owner Participant, the Purchasers, the Indenture
Trustee, the Subordination Agent, and the Guarantor, as the
same may from time to time be supplemented or amended, or the
terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms thereof.
"SUBORDINATION AGENT" means State Street Bank and
Trust Company of Connecticut, National Association, a national
banking association, as subordination agent under the
Intercreditor Agreement, or any successor thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and
Restated Trust Indenture and Security Agreement [NW 1996 E],
dated as of the Closing Date, 1996, between Lessor and State
Street Bank and Trust Company, as Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to
that term in the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed
Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss
Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in
Section 1 of the Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended by deleting on
and after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended by deleting on
and after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in
its entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs
other than on June 12, 1996, (B) Transaction Expenses paid by
Lessor pursuant to Section 16 of the Participation Agreement
are determined to be other than 1.0% of Lessor's Cost, or (C)
Refinancing Expenses paid by Lessor or the Owner Participant
pursuant to Section 11(a) of the Refunding Agreement are
determined to be other than 1.3281% of Lessor's Cost, then in
each case, the Basic Rent percentages set forth in Exhibit B
and the Stipulated Loss Value percentages set forth in Exhibit
C, the Termination Value percentages set forth in Exhibit D
and the Special Purchase Price shall be recalculated by the
Owner Participant, on or prior to November 15, 1996 using the
same methods and assumptions used to
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<PAGE> 7
calculate original Basic Rent, Stipulated Loss Value
and Termination Value percentages and the Special Purchase
Price, in order to: (1) maintain the Owner Participant's Net
Economic Return and (2) minimize the Net Present Value of
Rents to Lessee to the extent possible consistent with clause
(1) hereof. In such recalculation there will be no change in
the amortization of the Secured Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by (i)
deleting on and after the Closing Date "(A)" at the beginning thereof, (ii)
deleting on and after the Closing Date the word "and" at the end of clause (A)
thereof and substituting a period therefor, and (iii) deleting on and after the
Closing Date clause (B) thereof in its entirety.
(e) Section 3(d)(iii) of the Lease is hereby amended by
deleting on and after the Closing Date the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is hereby
amended to read in its entirety as follows on and after the Closing Date:
"Lessee shall pay, on behalf of Lessor, as
Supplemental Rent the Make-Whole Amount, if any, due pursuant
to Section 2.10(b) or Section 2.11 of the Trust Indenture in
connection with a prepayment of the Secured Certificates upon
redemption of such Secured Certificates in accordance with
such Section 2.10(b) or Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by deleting on
and after the Closing Date the numbers and punctuation "124-000-12" in the first
sentence thereof and substituting therefor the numbers and punctuation
"124-0000-12".
(h) Section 3(g) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(g) Prepayment of Certain Rent Payments. To the
extent, if any, that there shall not have been received by the
Indenture Trustee to its account and in funds of the type
specified in Section 3(f) hereof by 10:30 A.M., New York time,
on the Commencement Date from Lessor an amount equal to the
Excess Amount for such date, Lessee shall, on the Commencement
Date, prepay on the Commencement Date a portion of Basic Rent
equal to the Excess Amount not so paid (the amount of such
Basic Rent to be prepaid by Lessee being herein called
"PREPAID Rent"); provided, that Lessee will also pay to the
Indenture Trustee, on demand, as Supplemental Rent, to the
extent permitted by applicable law, interest at the Past Due
Rate in effect from time to time on any part of any Prepaid
Rent not paid when due for any period for which the same shall
be overdue. Lessor agrees to reimburse Lessee in the manner
provided in the following sentence for (x) the Prepaid Rent so
paid by Lessee, plus (y) any Supplemental Rent paid with
respect to Prepaid Rent by Lessee pursuant to this Section
3(g), plus (z) accrued interest on the unreimbursed portion
thereof at a
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<PAGE> 8
rate per annum equal to the Base Rate as in effect from time
to time plus 5% per annum from the date such amount is paid by
Lessee to but not including the date of each such
reimbursement (such amounts to be reimbursed being herein
called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to
Lessee, in funds of the type specified in Section 3(f) hereof,
within five days after Lessor, the Owner Participant and the
Indenture Trustee shall have received written notice from
Lessee demanding payment, the Reimbursement Amount. In
addition, if, for any reason, Lessor shall fail to pay to
Lessee the Reimbursement Amount as above provided, Lessee
shall be entitled to offsets (without duplication) against
each succeeding payment (other than as limited by the proviso
to this sentence) due from Lessee to Persons other than the
Loan Participants, the Indenture Trustee and the Owner Trustee
in its individual capacity (including, without limitation,
Basic Rent, payments due under Section 9, 10, 15 and 19
hereof, payments due under the Tax Indemnity Agreement and
payments due to Persons other than the Loan Participants, the
Indenture Trustee and Lessor in its individual capacity under
Section 7 of the Participation Agreement), until Lessee has
been fully reimbursed for the Reimbursement Amount; provided,
however, that in the case of any payment due from Lessee which
is distributable under the terms of the Trust Indenture,
Lessee's right to offset shall be limited to amounts
distributable to Lessor thereunder. No such offset or
aggregate combined effect of separate offsets shall reduce the
amount of any installment of Interim Rent or Basic Rent to an
amount insufficient, together with the Excess Amount and all
other amounts payable simultaneously by Lessee, to pay in full
the payments then required to be made on account of the
principal of and interest on (and Make-Whole Amount, if any,
due with respect to) the Secured Certificates then
outstanding.
(i) The following new Section 3(h) shall be added to the end
of Section 3 of the Lease to be applicable on and after the Closing Date:
(h) In the event that Lessee exercises its option to
satisfy any indemnity obligation under the Tax Indemnity
Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity
Agreement, Lessee shall pay, in addition to any other payments
due hereunder, (i) on each Lease Period Date, the portion of
the Indemnity Adjusted Payments then due and payable on such
date as set forth in an appropriate schedule to the Tax
Indemnity Agreement and (ii) on the date that Stipulated Loss
Value, Termination Value or the Special Purchase Price becomes
due and payable, as the case may be, the Indemnity Adjusted
Payment then due and payable by reference to the date as of
which such Stipulated Loss Value, Termination Value or Special
Purchase Price is payable as set forth in an appropriate
schedule to the Tax Indemnity Agreement.
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<PAGE> 9
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by (i)
deleting on and after the Closing Date the words "the Owner Participant and the
Indenture Trustee" and substituting therefor the word "Lessor", and (ii)
deleting on and after the Closing Date the word "their" and substituting
therefor the word "its".
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
Section 9(c) of the Lease is hereby amended by deleting on and
after the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by (i) deleting
on and after the Closing Date the words "the third Business Day following the
receipt of insurance proceeds in respect of such occurrence (but not earlier
that thirty (30) days after such occurrence)" in clause (i)(y) thereof and
substituting therefor the words "an earlier Business Day irrevocably specified
fifteen days in advance by notice from Lessee to Lessor and the Indenture
Trustee" and (ii) inserting on and after the Closing Date the words and
punctuation ", which appraisal shall be from a firm of independent aircraft
appraisers satisfactory to the Owner Participant," after the words "the
certificate or the appraisal" in the third parenthetical phrase of clause (A) of
the third paragraph thereof.
SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on
and after the Closing Date the words and punctuation ", the Refunding Agreement"
after the words "Participation Agreement" and (ii) adding on and after the
Closing Date the words "and except for representations or warranties contained
in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in
the Refunding Agreement) or any document or instrument furnished pursuant to
either thereof" after the word "Agreement" at the end of the first parenthetical
phrase therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of
the Lease is hereby amended to read in its entirety on and after the Closing
Date as follows:
"Section 17. Notices. All notices required under the
terms and provisions hereof shall be by telecopier or other
telecommunication means (with such telecopy or other
telecommunication means to be confirmed in writing), or if
such notice is impracticable by registered, first-class
airmail, with postage prepaid, or by personal delivery of
written notice and any such notice shall become effective when
received, addressed:
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<PAGE> 10
(i) if to Lessee, for U.S. Mail at 5101
Northwest Drive (A4010), St. Paul, Minnesota
55111-3034, and for overnight courier at
2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer, (Telecopy
No. (612) 726-0665), or to such other
address, telex number or telecopy number as
Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate
Trust Department (Telecopy No. (801)
246-5053), or to such other address or
telecopy number as Lessor shall from time to
time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed
to such Loan Participant, the Indenture
Trustee or the Owner Participant at such
address or telecopy number as such Loan
Participant, the Indenture Trustee or the
Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until
an address is so furnished, addressed to
such Loan Participant, the Indenture Trustee
or the Owner Participant at its address or
telecopy number set forth on the signature
pages of the Refunding Agreement."
SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE.
The second sentence of Section 19(d) of the Lease is hereby
amended to read in its entirety on and after the Closing Date as follows:
In addition, if on such date there shall be any
Secured Certificates outstanding, Lessee shall have
the option to assume, pursuant to Section 8(x) of the
Participation Agreement and Section 2.13 of the Trust
Indenture, all of the obligations of Lessor under the
Trust Indenture.
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of
the Lease is hereby amended by (i) deleting on and after the Closing Date the
word "or" between the words "Trust Agreement" and the words "the Trust
Indenture" and substituting a comma therefor and (ii) inserting on and after the
Closing Date the words "or the Refunding Agreement" after the words "Trust
Indenture".
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are
applicable on and after the Closing Date. Exhibits B, C and D to the Lease are
applicable until the Closing Date
(b) The parties hereto agree that Exhibits B, C and D attached
hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss
Value and Termination
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<PAGE> 11
Value percentages and the Special Purchase Price to take into account the
interest rates borne by the Secured Certificates as of the Closing Date.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the
Lease set forth in Sections 1 through 10 hereof shall be effective as of the
date hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease
as heretofore supplemented continues and shall remain in full force and effect
in all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Lessor, Lessee and any
assignee of Lessor's rights hereunder. Nothing contained herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft
except as a lessee. The section and paragraph headings in this Amendment and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 12
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amendment to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
By: ____________________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: ____________________________________________
Title:
(1)Receipt of this original counterpart of the foregoing
Amendment is hereby acknowledged this _____ day of ______________, 1996.
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By: ____________________________________________
Title:
- --------------------
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 E]
This GUARANTEE [NW 1996 E], dated as of April 29, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1996 E], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1996 E], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1996 E], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is
fully aware of the terms and conditions of the Lease, the Participation
Agreement and the other Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby,
and does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent),
the Participation Agreement, the Tax Indemnity Agreement and the other
Operative Documents to which the Lessee is a party (such obligations of the
Lessee guaranteed hereby being hereafter referred to, individually, as a
"FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in
accordance with the terms of the Operative Documents, and the timely
performance of all other obligations of the Lessee thereunder (individually, a
"NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or,
collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor
does hereby agree that in the event that the Lessee fails to pay any Financial
Obligation when due for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party
in any such proceeding) within five days after the date on which such Financial
Obligation became due and payable and the applicable grace period has expired,
the Guarantor shall pay or cause to be paid forthwith, upon the receipt of
notice from any Party (such notice to be sent to the Lessee (to the extent such
Party is not stayed or prevented from doing so by operation of law) and the
Guarantor) stating that such Financial Obligation was not paid when due and for
five days after the applicable grace period has expired, the amount of such
Financial Obligation. The Guarantor hereby agrees that in the event the Lessee
fails to perform any Nonfinancial Obligation for any reason (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Lessee, or the disaffirmance
with respect to the Lessee of the Lease or the Operative Documents to which the
Lessee is a party in any such proceeding) within 10 Business Days after the
date on which such Nonfinancial Obligation is required to be performed (for
avoidance of doubt, to include any applicable grace period), the Guarantor
shall cause such Nonfinancial Obligation to be performed within 10 Business
Days following the receipt of notice from any Party (such notice to be sent to
the Lessee (to the extent such Party is not stayed or prevented from doing so
by operation of law) and the Guarantor) stating that such Nonfinancial
Obligation was not performed when so required and that any applicable grace
period has expired.
(b) The obligations of the Guarantor hereunder shall not
be, to the fullest extent permitted by law, affected by: the genuineness,
validity, regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
in writing shall be given effect in determining the obligations of the
Guarantor hereunder), or by any substitution, release or exchange of collateral
for or other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is
-2-
<PAGE> 3
undertaken in accordance with the terms of the Operative Documents) without the
consent of the Guarantor, or by any priority or preference to which any other
obligations of the Lessee may be entitled over the Lessee's obligations under
the Lease and the other Operative Documents to which the Lessee is a party, or
by any other circumstance that might otherwise constitute a legal or equitable
defense to or discharge of the obligations of a surety or guarantor including,
without limitation, any defense arising out of any laws of the United States of
America or any State thereof which would excuse, discharge, exempt, modify or
delay the due or punctual payment and performance of the obligations of the
Guarantor hereunder. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not, to
the fullest extent permitted by law, affect the liability of the Guarantor
hereunder: (a) the extension of the time for or waiver of, at any time or from
time to time, without notice to the Guarantor, the Lessee's performance of or
compliance with any of its obligations under the Operative Documents (except
that such extension or waiver in writing shall be given effect in determining
the obligations of the Guarantor hereunder)), (b) any assignment, transfer,
sublease or other arrangement by which the Lessee transfers possession or loses
control of the use of the Aircraft, (c) any defect in the title, condition,
design, operation or fitness for use of, or damage to or loss or destruction
of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger
or consolidation of the Lessee or the Guarantor into or with any other Person,
or any sale, transfer, lease or disposal of any of its assets or (e) any change
in the ownership of any shares of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any
unpaid amounts due or otherwise to enforce performance by the Lessee. The
Guarantor specifically agrees, to the fullest extent permitted by law, that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Party (i) file suit or proceed to obtain or
assert a claim for personal judgment against the Lessee for the Obligations, or
(ii) make any effort at collection of the Obligations from the Lessee, or (iii)
foreclose against or seek to realize upon any security now or hereafter
existing for the Obligations, including the Trust Estate or the Trust Indenture
Estate (as such term is defined in the Trust Indenture), or (iv) file suit or
proceed to obtain or assert a claim for personal judgment against any other
Person liable for the Obligations, or make any effort at collection of the
Obligations from any such other Person, or exercise or assert any other right
or remedy to which any Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, or (v) assert or file
any claim against the assets of the Lessee or any other guarantor or other
Person liable for the Obligations, or any part thereof, before or as a
condition of enforcing the liability of the Guarantor under this Guarantee or
requiring payment of said Obligations by the Guarantor hereunder, or at any
time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted
by law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be
prevented by applicable law from exercising its remedies (or any of
-3-
<PAGE> 4
them) under Section 15 of the Lease, the Lessor (or any assignee thereof,
including, without limitation, the Indenture Trustee) shall be, nevertheless,
entitled to receive hereunder from the Guarantor, upon demand therefor the sums
that would otherwise have been due from the Lessee under the Lease had such
remedies been able to be exercised. The Guarantor hereby unconditionally
waives, to the fullest extent permitted by law, any requirement that, as a
condition precedent to the enforcement of the obligations of the Guarantor
hereunder, the Lessee or all or any one or more of any other guarantors of any
of the Obligations be joined as parties to any proceedings for the enforcement
of any provision of this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee
shall not be deemed to create any right in any Person except a Party and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest
extent permitted by law, all other demands or notices whatsoever, other than
the request for payment hereunder and notice provided for in Section 1 hereof.
The obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect
of any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim
by the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings relating to
the Lessee, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Lessee, whether or
not involving insolvency or bankruptcy proceedings, in which case the
Obligations shall be paid and performed in full before any payment in
respect of a claim by the Guarantor shall be made by or on behalf of
the Lessee.
-4-
<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless evidenced by an instrument in writing signed
by the Guarantor and each Party against whom such amendment, supplement,
waiver, modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent
provided in the Trust Indenture, the Lessor will assign, and create a security
interest in, certain of its rights hereunder to and for the benefit of the
Indenture Trustee. From and after the execution and delivery of the Trust
Indenture, and until receipt by the Guarantor of a written notice from the
Indenture Trustee to the effect that the Trust Indenture has been fully
satisfied and discharged, no remedy or election hereunder may be exercised by
the Lessor or consent given by the Lessor, except by or with the prior written
consent of the Indenture Trustee, and the Guarantor will make payment of all
amounts hereunder that are assigned to the Indenture Trustee directly to the
Indenture Trustee, and such payments shall discharge the obligations of the
Guarantor to the Lessor to the extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly
existing in good standing pursuant to the laws of the State of
Delaware. It has all requisite corporate power and authority to own
and operate its properties, to carry on its business as presently
conducted and to enter into and perform its obligations under this
Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to
authorize the execution, delivery and performance (other than as
contemplated by the Operative Documents in the case of the
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<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee,
or for the legality, validity, binding effect or enforceability
hereof.
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation of
the transactions contemplated hereby, will conflict with or result in
any breach of, or constitute a default under, or result in any
creation or imposition of any Lien upon any of its property or assets
under, any applicable laws or any indenture, mortgage, deed of trust
or other instrument or agreement to which it is a party or by which it
may be bound or to which any of its property or assets may be subject,
or its Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor
in New York City as from time to time may be designated by the Guarantor in
writing to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to
the fullest extent permitted by applicable laws. The headings in this
Guarantee are for purposes of reference only, and shall not limit or otherwise
affect the meanings hereof.
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<PAGE> 7
10. NOTICES. All requests, notices or other
communications hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance
and Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth
in the Participation Agreement
All requests, notices or other communications shall be given in the manner,
and shall be effective at the times and under the terms, set forth in Section
13(b) of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder or under the Lease, the Participation Agreement or
the other Operative Documents, and any other agreement or instrument relating
thereto will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further
exercise of such right or remedy or the exercise of any other right or remedy
or under the Lease, the Participation Agreement or the other Operative
Documents, and any other agreement or instrument relating thereto.
12. SURVIVAL. All representations and warranties
contained herein or made in writing by the Guarantor in connection herewith
shall survive the execution and delivery of this Guarantee regardless of any
investigation made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or any provision in any other
Operative Document, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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<PAGE> 8
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND
SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK,
NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to
any Party any and all reasonable costs and expenses (including reasonable legal
fees and expenses) incurred by such Party in enforcing, or collecting under,
this Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
-----------------------------------------
Name: Joseph E. Francht, Jr.
Title: Senior Vice President-Finance
and Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
---------------------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
---------------------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 E]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 E]
THIS PARTICIPATION AGREEMENT [NW 1996 E] dated as of April 29, 1996,
among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws
of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed
on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which
executes and delivers a counterpart of this Agreement and of the Trust
Agreement (as hereinafter defined) on or prior to the Delivery Date referred to
below, (iii) the institutions listed on Schedule I and identified therein as
"LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee under the Trust
Agreement (herein, in such latter capacity, together with any successor owner
trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is defined
in the Lease hereinafter referred to) between Lessee and the Manufacturer, the
Manufacturer has agreed to sell to Lessee, among other things, certain Boeing
757-251 aircraft, including the Aircraft which has been delivered by the
Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1996 E], dated as of the date hereof (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the
Owner Trustee certain rights and interests of Lessee under the Purchase
Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and Agreement [NW
1996 E] (herein called the "CONSENT AND AGREEMENT"), substantially in the
form attached to the Purchase Agreement Assignment (herein called the
"CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996
E], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the Trust
Estate defined
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<PAGE> 2
in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and
benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with
the execution and delivery of this Agreement are entering into the Trust
Indenture and Security Agreement [NW 1996 E], dated as of the date hereof (said
Trust Indenture and Security Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST INDENTURE", such
term to include, unless the context otherwise requires, the Trust Supplement
referred to below) pursuant to which the Owner Trustee issues to each of the
Loan Participants one or more secured certificates (herein called collectively,
the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as
evidence of the Owner Trustee's indebtedness to the Loan Participants arising
from the Loan Participants' making secured loans to the Owner Trustee to
finance a portion of the Owner Trustee's purchase of the Aircraft, which
Secured Certificates are to be secured by the mortgage and security interests
created by the Owner Trustee in favor of the Indenture Trustee, and the Owner
Trustee shall execute and deliver a Trust and Indenture Supplement
substantially in the form of Exhibit A to the Trust Indenture (the "TRUST
SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement and the
Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1996 E], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a)
Participation by Loan Participants. Subject to the terms and conditions of
this Agreement, each Loan Participant agrees to finance, in part, the Owner
Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to
the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule
II opposite the name of such Loan Participant. Each Loan Participant shall
make such Loan to the Owner Trustee on a date to be designated pursuant to
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<PAGE> 3
Section 2 hereof, by transferring to the account of the Owner Trustee at
Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No.
02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date
in immediately available funds in Dollars, the amount set forth opposite such
Loan Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan Participants to
the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon, the Owner Trustee shall issue and the
Indenture Trustee shall authenticate Secured Certificates which shall be
delivered simultaneously to the Loan Participants under the Trust Indenture to
evidence the obligation of the Owner Trustee to repay the Loans together with
interest thereon. The Owner Trustee agrees to pay the Secured Certificates in
installments in the amounts and on the dates provided in the Trust Indenture
together with interest thereon and all other amounts payable with respect
thereto, all as more fully provided in the Trust Indenture.
(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite the Owner Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation of each of
the Loan Participants and the Owner Participant to be made as provided above in
the payment of Lessor's Cost for the Aircraft is hereinafter called such
party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or
the Owner Participant shall default in its obligation under the provisions of
this Section 1, no other such party shall have any obligation to make any
portion of such defaulted amount available or to increase the amount of its
Commitment and the obligation of such nondefaulting party shall remain subject
to the terms and conditions set forth in this Agreement. Upon receipt by the
Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost.
(d) Determination of Interest Period. The length of each Interest
Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
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<PAGE> 4
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each
Participant, the Owner Trustee and the Indenture Trustee at least two Business
Days' telecopy or other written notice of the Delivery Date for the Aircraft,
which Delivery Date shall be a Business Day, which notice shall specify the
amount of Lessor's Cost and the amount of each Participant's Commitment for the
Aircraft. As to each Participant, the making of its Commitment for the
Aircraft available in the manner required by Section 1 shall constitute a
waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 4(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the Aircraft
on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill of
Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
(v) to borrow from the Loan Participants to finance a portion of the
Lessor's Cost for the Aircraft and to issue to the Loan Participants
Secured Certificates in aggregate principal amount equal to the amount
borrowed, pursuant hereto and to the Trust Indenture; and
(vi) to take such other action as may be required to be taken by
the Owner Trustee on the Delivery Date by the terms of any Operative
Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations
in the Aircraft. It is agreed that the obligations of each of the Loan
Participants and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it
relates to representations and warranties only contained in the Tax Indemnity
Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants),
(xxvi) and (xxvii) shall not be a condition precedent to the obligations of the
Loan Participants, and paragraphs (iv), (x) (insofar as it
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<PAGE> 5
relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a
condition precedent to the obligations of the Owner Participant:
(i) The Loan Participants and the Owner Participant shall have
received due notice with respect to such participation pursuant to Section
2 hereof (or shall have waived such notice either in writing or as provided
in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be in
effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would make it
a violation of law or regulations or guidelines for such Loan Participant
or the Owner Participant to make its Commitment available in accordance
with Section 1 hereof or, in the case of such Loan Participant, to acquire
a Secured Certificate or to realize the benefits of the security afforded
by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan Participants
shall have made available the amount of their Commitments for the Aircraft
in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(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 the Documentation Agent and the Owner
Participant and shall be in full force and effect and executed counterparts
shall have been delivered to the Loan Participants and the Owner
Participant, or their respective counsel, provided that only each Loan
Participant shall receive an executed original of its respective Secured
Certificate and provided, further, that an excerpted copy of the Purchase
Agreement shall only be delivered to and retained by the Owner Trustee and
the Owner Participant (but the Indenture Trustee shall also retain an
excerpted copy of the Purchase Agreement which may be inspected by the
Documentation Agent and its counsel before the Delivery Date and subsequent
to the Delivery Date may be inspected and reviewed by the Indenture
Trustee, any Loan Participant and their respective counsel if and only if
there shall occur and be continuing an Event of Default), the chattel paper
counterpart of the Lease and the Lease Supplement covering the Aircraft
dated the Delivery Date shall be delivered to the Indenture Trustee, and
the Tax Indemnity Agreement shall only be delivered to Lessee and the Owner
Participant and their respective counsel:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft);
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<PAGE> 6
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the Delivery
Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the Delivery
Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Documentation Agent, the Owner Participant and
Lessee (herein called the "ACCEPTANCE CERTIFICATE") duly completed and
executed by the Owner Trustee or its agent, which may be a
representative of Lessee, and by such representative on behalf of
Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the Owner Participant Guaranty.
All of the foregoing documents, together with this Agreement, are sometimes
referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and,
individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture that are not covered by the recording system
established by the Federal Aviation Act shall have been executed and
delivered by the Owner Trustee, and such financing statement or statements
shall have been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing statements deemed advisable by
the Owner Participant or the Documentation Agent shall have been executed
and delivered by Lessee or the Owner Trustee and duly filed.
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<PAGE> 7
(vii) The Loan Participants and the Owner Participant shall have
received the following, in each case in form and substance satisfactory to
the Documentation Agent and the Owner Participant:
(1) a certified copy of the Certificate of Incorporation and
By-Laws of Lessee and a copy of resolutions of the board of directors
of Lessee, certified by a Vice President, the Secretary or an
Assistant Secretary of Lessee, duly authorizing the sale of the
Aircraft and the lease by Lessee of the Aircraft under the Lease and
the execution, delivery and performance by Lessee of this Agreement,
the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease
Supplement covering the Aircraft, the Purchase Agreement Assignment,
the Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on or before the Delivery Date in
accordance with the provisions hereof and thereof, and a certified
copy of the Certificate of Incorporation and By-Laws of the Guarantor
and a copy of resolutions of the Board of Directors of the Guarantor,
certified by a Vice President, the Secretary or an Assistant Secretary
of the Guarantor, duly authorizing the execution, delivery and
performance by the Guarantor of the Guarantee;
(2) such other documents and evidence with respect to Lessee, the
Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant,
the Owner Participant Guarantor, the Indenture Trustee, and the Loan
Participants as the Loan Participants or the Owner Participant, or the
respective counsel for the Loan Participants or the Owner Participant,
may reasonably request in order to establish the authority of such
parties to consummate the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection therewith;
and
(3) a certificate of Lessee as to the person or persons authorized
to execute and deliver this Agreement, the Purchase Agreement
Assignment, the Lease, the Lease Supplement covering the Aircraft and
any other documents to be executed on behalf of Lessee in connection
with the transactions contemplated hereby and as to the signatures of
such person or persons, and a certificate of the Guarantor as to the
person or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken prior to
the Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of the
United States, and all orders, permits, waivers, authorizations, exemptions
and approvals of such entities required to be in effect on the Delivery
Date in connection with the transactions contemplated by this Agreement
shall
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<PAGE> 8
have been issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the Delivery
Date.
(ix) On the Delivery Date the following statements shall be true,
and the Documentation Agent and the Owner Participant shall have received
evidence satisfactory to it to the effect that:
(1) the Owner Trustee has good title (subject to filing and
recording the FAA Bill of Sale with the Federal Aviation
Administration) to the Aircraft on such Delivery Date, free and clear
of Liens other than the rights of Lessee under the Lease and Lease
Supplement covering the Aircraft, the mortgage and security interests
created by the Trust Indenture, the rights of the Owner Participant
under the Trust Agreement and the Trust Supplement, and Liens
permitted by clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the Federal Aviation
Administration (or there shall have been received adequate assurances
from the Federal Aviation Administration that the certification will
be issued as soon as the registration of the Aircraft is complete) as
to type and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft shall
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Federal Aviation
Administration, and the Trust Agreement shall have been filed (or
shall be in the process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft in the name of
the Owner Trustee has been duly made with the Federal Aviation
Administration.
(x) On the Delivery Date, (A) the representations and warranties of
Lessee, the Owner Participant and the Owner Trustee contained in Sections 7
and 8 of this Agreement and in the Tax Indemnity Agreement shall be true
and accurate as though made on and as of such date except to the extent
that such representations and 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, or would result from the purchase, sale, lease
or mortgage of the Aircraft, which constitutes (or would, with the passage
of time or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner
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<PAGE> 9
Participant and the Owner Trustee, and reasonably satisfactory as to scope
and substance to the Documentation Agent and the Owner Participant, from
Cadwalader, Wickersham & Taft, special counsel for Lessee and the
Guarantor, as to New York and certain federal law matters, and Lessee's and
the Guarantor's in-house or other counsel, as to Minnesota and certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) Lessee is a corporation duly organized and validly existing
pursuant to the laws of the State of Minnesota and has the corporate
power and authority to carry on its business as now conducted and to
enter into and perform its obligations under the Lessee Documents.
Lessee is a Certificated Air Carrier. The Guarantor is a corporation
duly organized and validly existing pursuant to the laws of the State
of Delaware and has the corporate power and authority to enter into
and perform its obligations under the Guarantee;
(2) the execution, delivery and performance of the Lessee
Documents by Lessee and of the Guarantee by the Guarantor have been
duly authorized by all necessary corporate action on the part of
Lessee and the Guarantor, as the case may be, do not require any
approval of stockholders of Lessee or the Guarantor, as the case may
be, or, to the knowledge of such counsel after due inquiry, any
approval or consent of any trustee or holders of any indebtedness or
obligations of Lessee or the Guarantor, as the case may be (or that
any such approval or consent as is required has been obtained), and
neither the execution and delivery of any thereof by Lessee or the
Guarantor, as the case may be, nor the performance by Lessee or the
Guarantor, as the case may be, of its respective obligations
thereunder (A) contravenes any law, governmental rule or regulation
or, to the knowledge of such counsel after due inquiry, judgment or
order applicable to or binding on Lessee or the Guarantor, as the case
may be, or (B) to the knowledge of such counsel after due inquiry,
contravenes or results in any breach of, or constitutes any default
under, or results in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee or the Guarantor, as the case may
be, under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or any
other agreement or instrument, corporate charter, by-law or permit
issued by any Minnesota or United States governmental authority to
which Lessee or the Guarantor, as the case may be, is a party or by
which Lessee or the Guarantor, as the case may be, or its properties
may be bound or affected;
(3) neither the execution and delivery by Lessee of the Lessee
Documents or by the Guarantor of the Guarantee nor the performance by
Lessee or the Guarantor of their respective obligations thereunder
requires the consent or approval of, or the giving of notice to, or
the registration with, or the taking of any other action in respect
of, any Federal or state governmental authority in the
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<PAGE> 10
United States, except for (A) the registration of the Aircraft
(including the placement on board of the owner's copy of the
application for registration of the Aircraft and, if necessary, a
flying time wire), recordations and other actions referred to in
paragraph 5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the Lessee
Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and delivered by the
Guarantor, the Purchase Agreement (insofar as it relates to the
Aircraft) has been duly entered into and delivered by Lessee, and each
of the other Lessee Documents has been duly entered into and delivered
by Lessee and each of such other Lessee Documents and the Guarantee
constitutes the legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or the
Guarantor, as the case may be, in accordance with its respective
terms, except as limited by (A) general principles of equity, (B)
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally, (C) applicable laws which may affect
the remedies provided in the Lease, which laws, however, do not in the
opinion of such counsel make the remedies provided in the Lease
inadequate for the practical realization of the benefits provided
thereby, but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in particular, no
opinion is expressed as to the effect on such remedies of Section
1-201(37) of the Uniform Commercial Code, as in effect in any
jurisdiction, and (D) in the case of indemnity provisions contained in
such documents, as limited by public policy considerations;
(5) subject to the registration of the Aircraft with the Federal
Aviation Administration in the name of the Owner Trustee, and assuming
the due and timely filing for recordation in accordance with the
provisions of the Federal Aviation Act of (A) the FAA Bill of Sale,
(B) the Lease with the Lease Supplement covering the Aircraft, the
Trust Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust Supplement
attached thereto and made a part thereof, with respect to such portion
of the Aircraft as is covered by the recording system established by
the Federal Aviation Administration pursuant to Section 44107 of Title
49 of the United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal Aviation
Act, no further filing or recording of any document (including any
financing statement with respect to the Lease under Article 9 of the
Uniform Commercial Code of Minnesota or Utah), is necessary in any
applicable jurisdiction within the United States in order (x) to
establish the Owner Trustee's title to such portion of the Aircraft as
against Lessee or any third parties or (y) to create and perfect the
Indenture Trustee's security interest in such portion of the Aircraft
as against the Owner Trustee or any third parties. With
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<PAGE> 11
respect to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in the
Federal Aviation Act, except for the filing of financing statements in
appropriate filing offices in the States of Minnesota and Utah and
such other states as may be specified in such counsel's opinion, and
for the filings of periodic continuation statements with respect to
such filings as and when required, (x) under the federal laws of the
United States and the laws of the State of New York no filing or
recording of any document (including any financing statement) is
necessary under Article 9 of the Uniform Commercial Code in order to
establish the Owner Trustee's title to such portion of the Aircraft as
against Lessee and any third parties in any applicable jurisdiction
within the United States, and (y) under the federal laws of the United
States and the laws of the State of New York no filing or recording of
any document (including any financing statement) is necessary or
advisable under Article 9 of the Uniform Commercial Code in order to
create or perfect the Indenture Trustee's security interest in such
portion of the Aircraft as against the Owner Trustee and any third
parties in any applicable jurisdiction within the United States; and
(6) there are no legal or governmental proceedings pending or, to
the best knowledge of such in-house counsel, threatened to which
Lessee or Guarantor or any of their respective subsidiaries is a party
or to which any of the properties of Lessee or Guarantor or any of
their respective subsidiaries is subject other than those proceedings
summarized in the Guarantor's publicly filed annual, quarterly and
other reports filed with the Securities and Exchange Commission, and
proceedings which such in-house counsel believes would not reasonably
be expected to have a material adverse effect on Lessee and its
subsidiaries, taken as a whole, or on the power or ability of Lessee
to perform its obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such further
effect with respect to such other matters as the Documentation Agent or the
Owner Participant may reasonably request. Such opinion with respect to the
matters specified in this paragraph (xi) may rely exclusively (A) upon the
opinion of special counsel in Oklahoma City, Oklahoma, referred to in
paragraph (xv) of this Section 4(a) with respect to the matters stated
therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to
the opinion in paragraph (5) above insofar as it relates to the laws of the
State of Utah and (C) upon the representations and warranties set forth
herein, including, without limitation, in Section 8 hereof, with respect to
matters of fact, and may state that no opinion is expressed as to laws
other than laws of the State of New York (in the case of such special
counsel's opinion), the State of Minnesota and the Delaware General
Corporation Law (in the case of Lessee's in-house or other counsel's
opinion) and the Federal laws of the United States. Such counsel may
assume that, except for the filings and recordations contemplated herein,
there are no filings or recordations with respect to
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<PAGE> 12
the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the
Trust Agreement, the Trust Supplement or the Trust Indenture with the
Federal Aviation Administration, or of Uniform Commercial Code financing
statements naming the Owner Trustee as a debtor in the filing offices of
the Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be identified in
such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and
reasonably satisfactory as to scope and substance to the Documentation
Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, from a counsel to the Manufacturer, with respect to the
Manufacturer Documents and such other matters as such parties may
reasonably request.
(xiii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and
reasonably satisfactory as to scope and substance to the Documentation
Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee,
to the effect that:
(1) First Security Bank of Utah, National Association is a
national banking association duly organized, validly existing and in
good standing under the laws of the United States, is a Citizen of the
United States and has under the laws of the State of Utah and federal
banking law the power, authority and legal right to execute, deliver
and carry out in its capacity as Owner Trustee or in its individual
capacity, as the case may be, the terms of the Owner Trustee
Documents, including the Secured Certificates;
(2) each of the Owner Trustee Documents has been duly authorized,
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, and each of the Owner Trustee Documents constitutes
the legal, valid and binding obligation of First Security Bank of
Utah, National Association, in its individual capacity, as Owner
Trustee, or both, as the case may be, enforceable against First
Security Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in accordance
with its respective terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and,
in the case of indemnity provisions contained herein and therein, as
limited by public policy
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<PAGE> 13
considerations, and except that certain of the remedial provisions in
the Lease and the Trust Indenture may be limited or rendered
unenforceable by applicable laws, which laws, however, do not in the
opinion of such counsel make the remedies provided in such document
inadequate for the practical realization of the benefits provided
thereby;
(3) the execution, delivery and performance by the Owner Trustee
and by First Security Bank of Utah, National Association, in its
individual capacity, or both, as the case may be, of the Owner Trustee
Documents and the consummation of the transactions by the Owner
Trustee and by First Security Bank of Utah, National Association in
its individual capacity contemplated thereby are not and will not be
in violation of the articles of association or By-Laws of First
Security Bank of Utah, National Association or of any indenture,
mortgage, credit agreement, license or other agreement or instrument
known to such counsel after due inquiry to which First Security Bank
of Utah, National Association in its individual capacity or as the
Owner Trustee is a party or by which it is bound, or of any Federal or
Utah law, governmental rule or regulation applicable to First Security
Bank of Utah, National Association in its individual capacity or as
the Owner Trustee or any judgment or order applicable to it and known
to such counsel after due inquiry;
(4) neither the execution and delivery by the Owner Trustee and,
where appropriate, by First Security Bank of Utah, National
Association in its individual capacity, or both, as the case may be,
of the Owner Trustee's Documents nor the consummation of any of the
transactions by the Owner Trustee, by First Security Bank of Utah,
National Association in its individual capacity, or both, as the case
may be, contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action with respect to, any governmental authority or agency
under any existing Federal law governing the banking and trust powers
of First Security Bank of Utah, National Association or Utah law
(except for filings pursuant to the Uniform Commercial Code, and
except for compliance with requirements of the Federal Aviation Act as
to which such counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the Trust Supplement,
duly creates for the benefit of the Owner Participant the trust
interest in the Trust Estate which the Trust Agreement by its terms
purports to create;
(6) assuming that Utah law were to govern the perfection of the
security interests in the Trust Indenture Estate under the Trust
Indenture, except for (i) the Indenture Trustee's taking of possession
of the original counterparts of the Lease and the Lease Supplement
covering the Aircraft (insofar as the Lease and the Lease Supplement
covering the Aircraft may constitute chattel paper (as
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<PAGE> 14
such term is defined in the Uniform Commercial Code as in effect in
Utah)) and all monies and securities (including instruments) required
to be deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office of the
Division of Corporations and Commercial Code of the State of Utah with
respect to the security interests created in the Trust Indenture
Estate under the Trust Indenture, naming the Owner Trustee as debtor
and the Indenture Trustee as secured party, which filing has been duly
effected, no other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain the
perfected status of such security interest (except for the timely
filing of continuation statements in respect of such financing
statements);
(7) assuming that the Operative Documents were negotiated to a
substantial degree in the State of New York and that the closing of a
substantial portion of the transactions contemplated by the Operative
Documents occurred in the State of New York, the choice of New York
law to govern the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which the Owner
Trustee or First Security Bank of Utah, National Association in its
individual capacity, or both, is a party is, under the laws of the
State of Utah, a valid choice of law and should, in a properly
presented case, be honored by the courts of the State of Utah;
(8) the Owner Trustee has received from Lessee such title to the
Aircraft as Lessee had immediately prior to the conveyance to the
Owner Trustee, subject to the rights of the Owner Trustee and Lessee
under the Lease and the security interest created pursuant to the
Trust Indenture and the Trust Supplement;
(9) no taxes, fees or other charges, except taxes imposed on fees
payable to the Owner Trustee, will be imposed by Salt Lake City or the
State of Utah or any political subdivision or taxing authority thereof
on or with respect to the execution, delivery or performance of any of
the Operative Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other charges
on, based on or measured by the net income of the Trust Estate (as
distinguished from the net income of the Owner Participant) solely by
reason of the Owner Trustee's location in Salt Lake City or the State
of Utah (assuming for purposes of this opinion that the Owner
Participant, the Owner Trustee and the Trust Estate would not be
subject to any such tax, fee or other charge if the Owner Trustee
performed its duties under the Trust Agreement and the Trust Indenture
from an office located outside Utah); and
(10) there are no pending or, to the knowledge of such counsel
after due inquiry, threatened proceedings against or affecting the
Owner Trustee before any court or administrative agency, individually
or in the aggregate, which, if
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<PAGE> 15
determined adversely to it, would materially adversely affect the
power or ability of the Owner Trustee to perform its obligations under
the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such other matters
incident to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Indenture Trustee or Lessee may reasonably request. Such
opinion may state that (A) no opinion is expressed as to laws other than the
laws of the State of Utah, the Federal laws of the United States governing the
banking and trust powers of First Security Bank of Utah, National Association,
and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion
is expressed as to the priority of security interests or as to title to any part
of the Trust Estate. Such opinion may assume (M) the due authentication of the
Secured Certificates by the Indenture Trustee, (N) that the Operative Documents
(other than the Trust Agreement) are legal, valid and binding under the laws of
the State of New York and (O) the due authorization, execution and delivery of
the Trust Agreement by the Owner Participant and of the other Operative
Documents by each of the parties thereto other than First Security Bank of Utah,
National Association in its individual capacity and as the Owner Trustee.
(xiv) The Loan Participants shall have received a favorable opinion
addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee
and Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from
Dewey Ballantine, special counsel for the Owner Participant and the Owner
Participant Guarantor, and the Owner Participant's in-house counsel, to the
collective effect that:
(1) the Owner Participant is a duly incorporated and validly
existing corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to execute, deliver
and carry out the terms of the Owner Participant Documents; the Owner
Participant Guarantor is a duly incorporated and validly existing
corporation in good standing under the laws of the State of Delaware
and has the corporate power and authority to execute, deliver and
carry out the terms of the Owner Participant Guaranty;
(2) the Owner Participant Documents have been duly authorized,
executed and delivered by the Owner Participant and, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, constitute legal, valid and binding obligations of the Owner
Participant, enforceable against the Owner Participant in accordance
with their respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the rights of creditors generally and, in the
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<PAGE> 16
case of indemnity provisions contained herein and therein, as limited
by public policy considerations; the Owner Participant Guaranty has
been duly authorized, executed and delivered by the Owner Participant
Guarantor and constitutes the legal, valid and binding obligation of
the Owner Participant Guarantor, enforceable against the Owner
Participant Guarantor in accordance with its terms, except as limited
by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors generally;
(3) neither the execution and delivery by the Owner Participant of
the Owner Participant Documents or by the Owner Participant Guarantor
of the Owner Participant Guaranty nor the consummation of any of the
transactions by the Owner Participant or the Owner Participant
Guarantor contemplated thereby requires the consent or approval of,
the giving of notice to, or the registration with, or the taking of
any other action with respect to, any governmental authority or agency
of the United States, the State of Delaware or the State in which the
principal office of the Owner Participant or the Owner Participant
Guarantor is located (or any governmental subdivision of any thereof)
(except as shall have been duly obtained or given, specifying the
same);
(4) assuming the due authorization, execution and delivery thereof
by the Owner Trustee and the other parties, if any, thereto (other
than the Owner Participant in the case of this Agreement), and the due
authentication of the Secured Certificates by the Indenture Trustee,
the Owner Trustee Documents (other than the Trust Agreement)
constitute legal, valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the rights of creditors generally and except
that certain of the remedial provisions in the Lease and the Trust
Indenture may be limited or rendered unenforceable by applicable laws,
which laws, however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the practical
realization of the benefits provided thereby;
(5) assuming the due authorization, execution and delivery thereof
by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust
Indenture duly creates for the benefit of the Indenture Trustee the
security interests which the Trust Indenture purports to create and
the Indenture Trustee is entitled to the benefits and security
afforded by the Trust Indenture;
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<PAGE> 17
(6) the execution, delivery and performance of the Owner
Participant Documents by the Owner Participant does not require any
approval of stockholders of the Owner Participant, or, to the
knowledge of such counsel after due inquiry, any approval or consent
of any trustee or holders of any indebtedness or obligations of the
Owner Participant (or that any such approval or consent as is required
has been obtained), and neither the execution and delivery of the
Owner Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations thereunder (A)
contravenes any law, governmental rule or regulation or, to the
knowledge of such counsel after due inquiry, judgment or order
applicable to or binding on the Owner Participant or (B) to the
knowledge of such counsel after due inquiry, contravenes or results in
any breach of, or constitutes any default under, or results in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, or any other agreement
or instrument, corporate charter or by-law or permit issued by any New
York, Delaware or United States governmental authority to which the
Owner Participant is a party or by which it or its properties may be
bound or affected; the execution, delivery and performance of the
Owner Participant Guaranty by the Owner Participant Guarantor does not
require any approval of stockholders of the Owner Participant
Guarantor, or, to the knowledge of such counsel after due inquiry, any
approval or consent of any trustee or holders of any indebtedness or
obligations of the Owner Participant Guarantor (or that any such
approval or consent as is required has been obtained), and neither the
execution and delivery of the Owner Participant Guaranty by the Owner
Participant Guarantor, nor the performance by the Owner Participant
Guarantor of its obligations thereunder (A) contravenes any law,
governmental rule or regulation or, to the knowledge of such counsel
after due inquiry, judgment or order applicable to or binding on the
Owner Participant Guarantor or (B) to the knowledge of such counsel
after due inquiry, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of any Lien
(other than Liens provided for in the Operative Documents) upon any
property of the Owner Participant Guarantor under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement, or any other agreement or instrument,
corporate charter or by-law or permit issued by any New York, Delaware
or United States governmental authority to which the Owner Participant
Guarantor is a party or by which it or its properties may be bound or
affected; and
(7) there are no pending or, to the best knowledge of such
counsel, threatened actions or proceedings against or affecting the
Owner Participant before any court or administrative agency
individually or in the aggregate which,
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<PAGE> 18
if determined adversely to the Owner Participant, would have a
material adverse effect on the Owner Participant or the ability of the
Owner Participant to perform its obligations under the Owner
Participant Documents; there are no pending or, to the best knowledge
of such counsel, threatened actions or proceedings against or
affecting the Owner Participant Guarantor before any court or
administrative agency individually or in the aggregate which, if
determined adversely to the Owner Participant Guarantor, would have a
material adverse effect on the Owner Participant Guarantor or the
ability of the Owner Participant Guarantor to perform its obligations
under the Owner Participant Guaranty;
and to such further effect with respect to such other matters or documents
relating to the Owner Participant's or the Owner Participant Guarantor's
obligations in connection with this Agreement as the Documentation Agent,
the Indenture Trustee, the Owner Trustee or Lessee may reasonably request.
Such opinion may rely upon the representations and warranties set forth
herein, including, without limitation, in Section 8 hereof, as to matters
of fact. Such opinion may state that (M) no opinion is expressed as to
laws other than the General Corporation Law of the State of Delaware, the
laws of the State of New York and the Federal laws of the United States,
and (N) no opinion is expressed as to the priority of security interests or
as to title to any part of the Trust Estate.
(xv) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and
reasonably satisfactory as to scope and substance to the Documentation
Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and the Trust Indenture with the Trust Supplement
attached thereto are in due form for recording by and have been duly
filed for recordation with the Federal Aviation Administration in
accordance with the provisions of Section 44107 of Title 49 of the
United States Code;
(2) proper application for registration of the Aircraft in the
name of the Owner Trustee together with the affidavits of the Owner
Trustee and the Owner Participant required by Section 47.7(c)(2)(ii)
of Part 47 of the Federal Aviation Regulations and the Trust Agreement
have been duly filed with the Federal Aviation Administration in
accordance with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in response to
said application;
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<PAGE> 19
(3) the Owner Trustee is the owner of the legal title to the
Aircraft, and the Aircraft is free and clear of all Liens, except the
security interests created by the Trust Indenture and such other Liens
as are permitted by the Lease or this Agreement;
(4) the Aircraft is eligible for registration in the name of the
Owner Trustee and will be duly registered in due course in the name of
the Owner Trustee pursuant to and in accordance with the provisions of
Sections 44102 and 44103 of Title 49 of the United States Code;
(5) the Trust Indenture as supplemented by the Trust Supplement
creates a duly and validly perfected first priority security interest
in the Aircraft and a duly perfected assignment of all the right,
title and interest of the Owner Trustee in, to and under the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to Section
44107 of Title 49 of the United States Code), subject only to the
Lease and to Liens permitted by the Lease and the Trust Indenture, it
being understood that no opinion need be expressed as to the validity
or enforceability of such security interest under local law or as
against third parties in respect of the Aircraft when the same is
outside the United States;
(6) none of the Trust Indenture, the Trust Agreement, the Trust
Supplement, the Lease or the Lease Supplement is required to be filed
or recorded in any other place within the United States in order to
perfect the security interest in the Aircraft and the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to Section
44107 of Title 49 of the United States Code), under the applicable
laws of any jurisdiction within the United States;
(7) no authorization, approval, consent, license or order of, or
registration with, or giving of notice to, the FAA Aircraft Registry
is required for the valid authorization, delivery or performance of
the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture and the Trust Supplement except for such authorizations,
approvals, consents, licenses, orders, registrations, and notices as
have been effected; and
(8) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
referred to above) are necessary to provide constructive notice to
third parties in any jurisdiction within the United States of the
Owner Trustee's title to the Aircraft or the beneficial interest of
the Owner Participant in the Aircraft.
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<PAGE> 20
Such opinion may state that no opinion is expressed as to laws other than
the Federal laws of the United States. Said opinion may also contain a
statement to the effect that such opinion is limited to the records
maintained by the Federal Aviation Administration Aircraft Registry and
does not cover liens that are perfected without the filing of notice
thereof with the Federal Aviation Administration, such as Federal tax
liens, liens arising under Section 1368(a) of Title 29 of the United States
Code and possessory artisans' liens, and is subject to the accuracy of FAA
personnel in the filing, indexing and recording of instruments filed with
the FAA and in the search for encumbrance cross-reference index cards for
the Engines. Said opinion may also rely on the opinion obtained by such
counsel from counsel for the Aeronautical Center of the FAA, satisfactory
in form and scope to such counsel, and on past practice of the FAA which is
consistent with such Aeronautical Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants, the Owner
Participant, the Owner Trustee and Lessee, and reasonably satisfactory as
to scope and substance to the Documentation Agent, the Owner Participant,
the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special
counsel for the Indenture Trustee, to the effect that:
(1) State Street Bank and Trust Company is a Massachusetts trust
company, duly organized and validly existing in good standing under
the laws of the Commonwealth of Massachusetts and has the full
corporate power, authority and legal right to enter into and perform
its obligations under the Indenture Trustee Documents and, in its
capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(2) the execution, delivery and performance by State Street Bank
and Trust Company, in its individual capacity or as Indenture Trustee,
as the case may be, of the Indenture Trustee Documents and the
consummation by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
transactions contemplated thereby and compliance by State Street Bank
and Trust Company, in its individual capacity or as Indenture Trustee,
as the case may be, with the terms thereof including, without
limitation, the authentication of the Secured Certificates to be
delivered on the Delivery Date, have been duly authorized by all
necessary corporate action on the part of State Street Bank and Trust
Company, and neither the execution and delivery thereof nor the
consummation by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
transactions contemplated thereby nor compliance by State Street Bank
and Trust Company, in its individual capacity or as Indenture Trustee,
as the case may be, with any of the terms and provisions thereof (i)
does or will contravene any law or governmental rule or regulation of
the United States governing the banking or trust powers of
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<PAGE> 21
State Street Bank and Trust Company or the Commonwealth of
Massachusetts or any order or judgment known to such counsel and
applicable to or binding on State Street Bank and Trust Company, or
(ii) does or will contravene or result in any breach of, or constitute
any default under, the charter documents or By-Laws of State Street
Bank and Trust Company or the provisions of any indenture, mortgage,
contract or other agreement, in each case known to such counsel, to
which State Street Bank and Trust Company is a party or by which it or
any of its properties is or may be bound or affected;
(3) neither the execution and delivery by State Street Bank and
Trust Company, in its individual capacity or as Indenture Trustee, of
the Indenture Trustee Documents or the certificates of authentication
on the Secured Certificates to be delivered on the Delivery Date, nor
the performance by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, of
any of the transactions contemplated thereby requires or required the
consent or approval of, the giving of notice to, the registration
with, the recording or filing of any document with, or the taking of
any other action in respect of, any Federal or Massachusetts
governmental authority or agency governing the banking or trust powers
of State Street Bank and Trust Company or under any Massachusetts law;
(4) each of the Indenture Trustee Documents has been duly executed
and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and
binding obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be,
enforceable against State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to
or affecting the enforcement of creditors' rights;
(5) the Secured Certificates to be issued and dated the Delivery
Date have been duly authenticated and delivered by the Indenture
Trustee pursuant to the terms of the Indenture Trustee Documents;
(6) to the best knowledge of such counsel, there are no pending or
threatened actions or proceedings against or affecting State Street
Bank and Trust Company before any court or administrative agency or
arbitration board or tribunal which individually or in the aggregate,
if determined adversely to it, would materially adversely affect the
ability of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
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<PAGE> 22
(7) there are no taxes, fees or other governmental charges
("TAXES") payable under the laws of the Commonwealth of Massachusetts
with respect to the execution of and delivery by State Street Bank and
Trust Company, in its individual capacity or as Indenture Trustee, as
the case may be, of any of the Indenture Trustee Documents (except for
taxes on any fees payable to State Street Bank and Trust Company in
its individual capacity) which would not have been imposed if State
Street Bank and Trust Company did not have its principal place of
business in Massachusetts or did not perform its administrative duties
under the Indenture Trustee Documents in Massachusetts. Neither State
Street Bank and Trust Company, in its individual capacity or as
Indenture Trustee, as the case may be, the Owner Participant, the
Owner Trustee, nor the trust created by the Trust Agreement will, as a
result of the transactions contemplated thereby, be subject to any
taxes under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for taxes on any fees payable to
State Street Bank and Trust Company in its individual capacity) which
would have not been imposed if State Street Bank and Trust Company did
not have its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts, and there are no taxes under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof
(except for taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) upon or with respect to the
Aircraft or any Engine or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession, presence,
use, operation, condition, storage, maintenance, modification,
alteration, repair, sale, return, transfer or other disposition of the
Aircraft or any Engine which would not have been imposed if State
Street Bank and Trust Company did not have its principal place of
business in Massachusetts or did not perform its administrative duties
under the Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident to
the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request. Such
opinion may state that no opinion is expressed as to laws other than the
internal substantive laws of the Commonwealth of Massachusetts and the
Federal laws of the United States. Such opinion may further state that
with respect to paragraph (4) in connection with the opinion relating to
legality, validity and binding effect of the documents there referred to,
such counsel has assumed that the laws of the jurisdictions whose laws
govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from Vedder, Price,
Kaufman & Kammholz, special counsel for the Loan Participants, a favorable
opinion satisfactory
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<PAGE> 23
in substance and form to the Documentation Agent, as to such matters
incident to the transactions contemplated hereby as the Documentation Agent
may reasonably request.
(xviii) The Loan Participants and the Owner Participant shall have
received a certificate signed by the President, any Executive Vice
President, any Senior Vice President or any Vice President of Lessee, dated
the Delivery Date, addressed to the Loan Participants and the Owner
Participant and certifying as to the matters stated in paragraphs (viii),
(x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a).
Copies of the orders, permits, waivers, authorizations, exemptions and
approvals referred to in Section 4(a)(viii) shall have been furnished to
the Loan Participants and the Owner Participant.
(xix) The Owner Participant and the Loan Participants shall, by
making their Commitments available as provided in Section 1(b) of this
Agreement, be deemed to have reaffirmed the representations and warranties
made by them in Section 8 of this Agreement.
(xx) The Owner Participant shall have received an opinion, in form
and substance satisfactory to the Owner Participant, from Aeroeconomics,
Inc., independent aircraft appraisers, or such other recognized aircraft
appraiser, to the effect, among other relevant matters, that (A) the
Aircraft will have, at the end of the third Fixed Renewal Term, (i) at
least 20% of its original economic life remaining and (ii) a fair market
value of at least 20% of Lessor's Cost (without taking into account any
increase or decrease for inflation or deflation during the Interim Term,
the Basic Term and the Fixed Renewal Terms or the terms of any purchase
option provided in the Lease) and taking into account any costs to the
Owner Trustee or the Owner Participant of removal and delivery of the
Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term;
(B) the fair market value of the Aircraft on the Delivery Date is equal to
Lessor's Cost; and (C) it will be commercially feasible for a third party
to utilize the Aircraft at the end of the third Fixed Renewal Term.
(xxi) The Loan Participants and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Documentation Agent and the Owner Participant, as to
the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event of Loss
(or event which with the passage of time would become an Event of Loss)
with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
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<PAGE> 24
(xxiv) 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
to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(xxv) The representations and warranties of the Indenture Trustee
and the Loan Participants contained in Section 8 shall be true and accurate
as of the Delivery Date as though made on and as of such date except to the
extent that such representations and warranties relate solely to an earlier
date (in which event such representations and warranties shall have been
true and accurate on and as of such earlier date) and each Participant
shall have received a certificate signed by the Chairman of the Board, the
President, any Vice President or any Assistant Vice President of the
Indenture Trustee addressed to such Participant and certifying as to the
foregoing matters with respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from Dewey
Ballantine, special counsel to the Owner Participant, a favorable opinion,
in form and substance satisfactory to the Owner Participant, with respect
to certain Federal income tax aspects of the transaction contemplated by
the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its special
counsel, there shall have been, since the date hereof, no amendment,
modification, addition, or change in or to the provisions of the Internal
Revenue Code of 1986, as amended through the date hereof, and the
regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or Executive
Orders of the President of the United States, all as in effect on the date
hereof, the effect of which might preclude the Owner Participant from
obtaining any of the income tax benefits and consequences assumed to be
available to the Owner Participant as set forth in Section 2 of the Tax
Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant shall have
received a favorable opinion addressed to the Loan Participants and the
Owner Participant, and reasonably satisfactory as to scope and substance to
the Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee, which opinion shall state
(with customary assumptions and qualifications) that the Owner Trustee, as
lessor under the Lease, and the Indenture Trustee, as assignee of the Owner
Trustee's rights under the Lease pursuant to the Trust Indenture, would be
entitled to the benefits of 11 U.S.C. Section 1110 with respect to the
Aircraft.
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<PAGE> 25
(xxix) The Loan Participants shall have received an opinion, in form
and substance reasonably satisfactory to the Documentation Agent, from BK
Associates, Inc., independent aircraft appraisers, to the effect that the
fair market value of the Aircraft on the Delivery Date is equal to Lessor's
Cost.
(xxx) Lessee shall have executed and delivered to the Owner
Participant a letter from the Owner Participant to Lessee relating to
Lessee's weighted average cost of capital.
Promptly upon the registration of the Aircraft and the recording of
the Trust Indenture, the Lease, the Lease Supplement covering the Aircraft and
the Trust Supplement covering the Aircraft pursuant to the Federal Aviation
Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee and Lessee an opinion as to the due and valid
registration of the Aircraft in the name of the Owner Trustee, the due
recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement,
such Trust Supplement, the Lease and the Trust Agreement and the lack of filing
of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It is agreed
that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee
and (B) to accept delivery of the Aircraft under the Lease, are all subject to
the fulfillment to the satisfaction of Lessee prior to or on the Delivery Date
of the following conditions precedent:
(i) All appropriate action required to have been taken on or prior to
the Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of the
United States, and all orders, permits, waivers, exemptions, authorizations
and approvals of such entities required to be in effect on the Delivery
Date in connection with the transactions contemplated by this Agreement
shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and
4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee and the Guarantor) in the manner specified in
Section 4(a)(v), shall each be satisfactory in form and substance to
Lessee, shall be in full force and effect on the Delivery Date, and an
executed counterpart of each thereof (other than the Secured Certificates)
shall have been delivered to Lessee or its special counsel.
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<PAGE> 26
(iv) Lessee shall have received a copy of the resolutions or other
instruments satisfactory to Lessee of the Board of Directors of the Owner
Participant, or other evidence of authority satisfactory to Lessee,
certified as of the Delivery Date by the Secretary or an Assistant
Secretary of the Owner Participant, duly authorizing or evidencing
authority for the execution, delivery and performance by the Owner
Participant of all of the Owner Participant Documents, a copy of the
resolutions or other instruments satisfactory to Lessee of the Board of
Directors of the Owner Participant Guarantor, certified as of the Delivery
Date by the Secretary or Assistant Secretary of the Owner Participant
Guarantor, duly authorizing the execution, delivery and performance by the
Owner Participant Guarantor of the Owner Participant Guaranty, and a copy
of the general authorizing resolutions of the boards of directors of the
Indenture Trustee and the Owner Trustee, certified as of the Delivery Date
by the Secretary or an Assistant Secretary of the Indenture Trustee and the
Owner Trustee, respectively, which authorize the execution, delivery and
performance by the Indenture Trustee of the Indenture Trustee Documents and
the Secured Certificates and by the Owner Trustee of the Owner Trustee
Documents, together with such other documents and evidence with respect to
the Indenture Trustee, the Owner Participant, the Owner Participant
Guarantor and the Owner Trustee as Lessee or its special counsel may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all corporate
proceedings in connection therewith and compliance with the conditions
herein set forth.
(v) The representations and warranties of the Loan Participants, the
Indenture Trustee, the Owner Participant and the Owner Trustee, contained
in Section 8 hereof shall be true and accurate as of the Delivery Date as
though made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which
event such representations and warranties shall have been true and accurate
on and as of such earlier date) and Lessee shall have received a
certificate signed by the Chairman of the Board, the President, any Vice
President or any Assistant Vice President or other authorized
representative of the Indenture Trustee, the Owner Participant and the
Owner Trustee, respectively, addressed to Lessee and certifying as to the
foregoing matters with respect to the Indenture Trustee, the Owner
Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in Sections
4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case
addressed to Lessee and dated the Delivery Date and in each case in scope
and substance reasonably satisfactory to Lessee and Lessee's special
counsel.
(vii) 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
to set aside, restrain, enjoin or
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<PAGE> 27
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in effect
which, in the opinion of Lessee or its special counsel, would make it a
violation of law or regulations or guidelines for Lessee to enter into any
transaction contemplated by the Operative Documents.
(ix) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under any
of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best
efforts not to disclose, or permit any of its employees or agents to disclose,
the identity of the Owner Participant or the terms of the Operative Documents
in connection with the issuance or release for external publication of any
article or advertising or publicity matter relating to the terms and conditions
of any of the Operative Documents or the transactions contemplated thereby
without the prior written consent of the Owner Participant and Lessee, provided
that nothing in this Section 5 shall prevent the Loan Participants from
publishing a tombstone which may include the initial principal amount of the
Secured Certificates, provided, further, that no such tombstone shall disclose
the identity of the Owner Participant without the prior written consent of the
Owner Participant.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full. Each of the Loan Participants and, by its acceptance
of a Secured Certificate, each Certificate Holder agrees that it will look
solely to the income and proceeds from the Trust Indenture Estate to the extent
available for distribution to such Certificate Holder as provided in Article
III of the Trust Indenture and that neither the Owner Participant nor the Owner
Trustee shall be personally liable to the Loan Participants or any Certificate
Holder for any amounts payable under the Secured Certificates, the Trust
Indenture or hereunder, except as expressly provided in the Operative
Documents.
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<PAGE> 28
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In
General. Lessee represents, warrants and covenants to each of the Loan
Participants, the Owner Trustee, the Indenture Trustee, and the Owner
Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly existing
pursuant to the laws of the State of Minnesota; is duly qualified to do
business as a foreign corporation in each jurisdiction in which its
operations or the nature of its business requires, other than failures to
qualify which would not have a material adverse effect on the consolidated
business, assets, properties or condition (financial or otherwise) of
Lessee and its subsidiaries taken as a whole or on the ability of Lessee to
perform its obligations under the Lessee Documents; is a Certificated Air
Carrier; has its chief executive office (as such term is used in Article 9
of the Uniform Commercial Code) located at Eagan, Minnesota; holds all
licenses, certificates, permits and franchises from the appropriate
agencies of the United States and/or all other governmental authorities
having jurisdiction necessary to authorize Lessee to engage in air
transport and to carry on scheduled passenger service as presently
conducted (other than those licenses, certificates, permits and franchises
which, if not obtained, would not have a material adverse effect on the
consolidated business assets, properties or condition (financial or
otherwise) of Lessee and its subsidiaries taken as a whole or on the
ability of Lessee to perform its obligations under the Lessee Documents);
and has the corporate power and authority to own or hold under lease its
properties wherever located or used and to enter into and perform its
obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of the
Lessee Documents will, on the Delivery Date, have been duly authorized by
all necessary corporate action on the part of Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holders of
any indebtedness or obligations of Lessee except such as have been duly
obtained or by the Delivery Date will have been duly obtained, and none of
such agreements contravenes any law, judgment, government rule, regulation
or order binding on Lessee or the certificate of incorporation or By-Laws
of Lessee or contravenes the provisions of, or constitutes a default under,
or results in the creation of any Lien (other than Permitted Liens) upon
the property of Lessee under, any indenture, mortgage, contract or other
agreement to which Lessee is a party or by which it or its properties may
be bound or affected;
(iii) neither the execution and delivery by Lessee of the Lessee
Documents nor the performance by Lessee of its obligations thereunder
require the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of, any
Federal, State or foreign government authority or agency, except for (A)
the orders, permits, waivers, exemptions, authorizations and approvals of
the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee required to be obtained on or prior to the Delivery
Date, which orders, permits, waivers, exemptions, authorizations and
approvals have been duly obtained and are, or will on the Delivery
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<PAGE> 29
Date be, in full force and effect (other than a flying time wire, all steps
to obtain the issuance of which will have been, on the Delivery Date, taken
or caused to be taken by Lessee), (B) the registration of the Aircraft
referred to in Section 4(a)(ix)(4) and (C) such consents, approvals,
notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only after
the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each constitute
legal, valid and binding obligations of Lessee enforceable against Lessee
in accordance with the terms thereof (subject to the qualifications set
forth in clause (4) of the form of opinion of counsel to Lessee in Section
4(a)(xi));
(v) there are no pending or, to the best of Lessee's knowledge,
threatened actions, suits or proceedings before any court or administrative
agency which might materially adversely affect the business, condition
(financial or otherwise), operations or properties of Lessee and its
subsidiaries taken as a whole or Lessee's ability to perform its
obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft pursuant to
the Federal Aviation Act, (B) the filing for recording pursuant to said Act
of the Lease with the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a part
thereof, the Trust Indenture with the Trust Supplement attached thereto and
made a part thereof and the FAA Bill of Sale, (C) the filing of financing
statements (and continuation statements at periodic intervals) with respect
to the security and other interests created by such documents under the
Uniform Commercial Code of Minnesota and Utah and such other states as may
be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof,
and (D) the taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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 Owner Trustee's title to
and the Indenture Trustee's security interest in the Aircraft as against
Lessee and any third parties in any applicable jurisdictions in the United
States;
(vii) there has not occurred any event which constitutes an Event of
Default under the Lease (or any event which with the giving of notice or
the passage of time or both would constitute an Event of Default under the
Lease) which is presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of Lessee
will not be unreasonably small for the conduct of the business in which
Lessee is engaged or is about to engage; Lessee has no intention or belief
that it is about to incur debts beyond its ability to pay as they
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<PAGE> 30
mature; and Lessee's sale of the Aircraft is made without any intent to
hinder, delay or defraud either present or future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and its
consolidated subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common stockholders'
equity of the Guarantor and its consolidated subsidiaries for the year then
ended, which have been audited by independent certified public accountants,
copies of which have been furnished to the Owner Participant and each Loan
Participant, fairly present the consolidated financial condition of the
Guarantor and its consolidated subsidiaries as at such date and the results
of operations and cash flow of the Guarantor and its consolidated
subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied and since
December 31, 1995 there has been no material adverse change in the
consolidated financial condition, cash flow or results of operations of the
Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive good title to
the Aircraft free and clear of all Liens, except Liens permitted by clause
(v) of Section 6 of the Lease, the rights of Lessee under the Lease and the
Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and
the beneficial interest of the Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or indirectly
by Lessee to purchase or carry any "margin security" as such term is
defined in Regulation G or U of the Board of Governors of the Federal
Reserve System;
(xii) Lessee is not in default in the performance of any term or
condition of the Purchase Agreement which materially adversely impairs the
transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft or any interest therein;
(xiv) On the Delivery Date, the Aircraft will be duly certified by
the FAA as to type and airworthiness, will be insured by Lessee in
accordance with the terms of the Lease and will be in the condition and
state of repair required under the terms of the Lease; and
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<PAGE> 31
(xv) neither Lessee nor any subsidiary of Lessee is an "investment
company" or a company "controlled by an investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(b) General Tax Indemnity. [Reserved]
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<PAGE> 32
(c) General Indemnity. [Reserved]
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<PAGE> 33
(d) Income Tax. For purposes of this Section 7, the term "INCOME TAX"
means any Tax based on or measured by gross or net income or receipts (other
than taxes in the nature of sales, use, license, property or value added Taxes
(except value added taxes in the nature of any income, franchise, capital,
doing business, excess profits or net worth tax) (including, without
limitation, capital gains taxes, minimum taxes, income taxes collected by
withholding and taxes on tax preference items), and Taxes which are capital,
doing business, excess profits or net worth taxes and interest, additions to
tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner
Participant represents that it is acquiring its interest in the Trust Estate
for investment and not with a present intent as to any resale or distribution
thereof (subject nonetheless to any requirement of law that the disposition of
its properties shall at all times be and remain within its control) and that
neither it nor anyone acting on its behalf has directly or indirectly offered
any interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire any of the same from,
anyone in a manner which would result in a
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<PAGE> 34
violation of the Securities Act of 1933, as amended, or the securities laws,
rules and regulations of any state.
(b) Lessee represents and warrants that neither Lessee nor anyone
acting on behalf of Lessee has directly or indirectly offered any interest in
the Trust Estate or any Secured Certificates for sale to, or solicited any
offer to acquire any of the same from, anyone in a manner which would result in
a violation of the Securities Act of 1933, as amended, or the securities laws,
rules and regulations of any state.
(c) Each of the Owner Participant and First Security Bank of Utah,
National Association, in its individual capacity, represents and warrants to
the other parties to this Agreement that it is, and on the Delivery Date will
be, a Citizen of the United States without making use of any voting trust,
voting powers agreement or similar arrangement. The Owner Participant agrees,
solely for the benefit of Lessee and the Loan Participants, that if (i) it
shall cease to be, or believes itself likely to cease to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore become ineligible
for registration in the name of the Owner Trustee under the Federal Aviation
Act and regulations then applicable thereunder, then the Owner Participant
shall (at its own expense and without any reimbursement or indemnification from
Lessee) promptly effect a voting trust, voting powers agreement or other
similar arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee
and the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole
expense of the Owner Participant, to cooperate with the Owner Participant in
complying with its obligations under the provisions of the second sentence of
this Section 8(c). First Security Bank of Utah, National Association, in its
individual capacity, agrees that if at any time an officer or responsible
employee of the Corporate Trust Department of First Security Bank of Utah,
National Association, shall obtain actual knowledge that First Security Bank of
Utah, National Association, has ceased to be a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
Lessee or the Owner Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the
Owner Participant or First Security Bank of Utah, National Association, in its
individual capacity, does not comply with the requirements of this Section
8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby
agree that an Event of Default (or an
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event which would constitute an Event of Default but for lapse of time or the
giving of notice or both) shall not have occurred and be continuing under the
Lease due to non-compliance by Lessee with the registration requirements in the
Lease.
(d) First Security Bank of Utah, National Association, in its
individual capacity, represents and warrants that both the principal place of
business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of
Utah, National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and delivered, shall have been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such instruments
on behalf of the Owner Trustee. First Security Bank of Utah, National
Association, in its individual capacity, represents that it has not offered any
interest in the Trust Estate or any Secured Certificates or any similar
securities for sale to, or solicited any offer to acquire the same from,
anyone, and that no officer or responsible employee of the Corporate Trust
Department of First Security Bank of Utah, National Association, has knowledge
of any such offer or solicitation by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither it nor
anyone acting in its behalf has offered any Secured Certificates or any similar
securities related to the Aircraft for sale to, or solicited any offer to buy
any Secured Certificate from, any person or entity other than in a manner in
compliance with, and which does not require registration under, the Securities
Act of 1933, as amended, or the rules and regulations thereunder or the
securities laws, rules and regulations of any state.
(f) The Owner Participant and each of the Loan Participants agree
that, at any time after the Depreciation Period, as long as no Event of Default
or a Default of the type referred to in Section 14(a) or 14(e) of the Lease
shall have occurred and be continuing, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner Participant approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of
the Aircraft, and if the country of registry is Taiwan, the United States
maintains diplomatic relations at least as good as those in effect on the
Delivery Date; and (ii) the Owner Trustee and the Indenture Trustee shall have
received favorable opinions (subject to customary exceptions) addressed to each
such party, from counsel qualified in the laws of the relevant jurisdiction and
reasonably satisfactory to the Owner Participant, to the effect that:
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(A) the Owner Trustee's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of
Lessee, and the rights and remedies of the Owner Trustee, under the Lease
shall remain valid, binding and (subject to customary bankruptcy and
equitable remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction (or the
laws of the jurisdiction to which the laws of such jurisdiction would refer
as the applicable governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's right,
title and interest in and to the Aircraft and the Lease shall continue as a
valid and duly perfected first priority security interest and all filing,
recording or other action necessary to protect the same shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is not
yet effective, (1) the opinion shall detail what filing, recording or other
action is necessary and (2) the Owner Trustee and the Indenture Trustee
shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action shall
have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be delivered
to the Owner Trustee and the Indenture Trustee on or prior to the effective
date of such change in registration), (D) none of the Owner Trustee, the
Owner Participant or the Indenture Trustee will be required to register to
do business in the country in which the Aircraft is to be registered as a
result of such reregistration, after (1) taking into account any other
contacts of the Owner Trustee and the Owner Participant with such
jurisdiction (provided, that upon request by Lessee (such request having
been acknowledged by the Owner Participant's general counsel), the Owner
Trustee and the Owner Participant must respond within fourteen (14)
Business Days after receipt of such request describing its contacts in the
jurisdiction of reregistration, or else such party shall be deemed for
purposes of this clause (D) to have no such contacts) and (2) assuming that
the Indenture Trustee has no other contacts with such jurisdiction, (E)
there is no tort liability of the owner of an aircraft not in possession
thereof under the laws of such jurisdiction (it being agreed that, in the
event such latter opinion cannot be given in a form satisfactory to the
Owner Participant, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant is provided to cover such risk), and
(F) (unless Lessee shall have agreed to provide insurance covering the risk
of requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of such
jurisdiction) the laws of such jurisdiction require fair compensation by
the government of such jurisdiction payable in currency freely convertible
into Dollars for the loss of use of such Aircraft in the event of the
requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such
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change in registration after giving effect to such change in registration and
that the new country of registry imposes aircraft maintenance standards not
materially different from those of the United States, France, Germany, Japan,
the Netherlands or the United Kingdom and (b) the Owner Participant shall have
received assurances satisfactory to it that (i) the original indemnities in
favor of it under this Agreement afford it substantially the same protection as
provided prior to such change in registry, and (ii) such change will not result
in the risk of, or the imposition of, or increase the amount of, any Tax for
which Lessee is not required to indemnify under the Operative Documents, or is
not then willing to enter into a binding agreement to indemnify in a manner
satisfactory in form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant; provided, however, that
if (A) Lessee (or, so long as the Guarantee remains in full force and effect,
the Guarantor) has outstanding publicly issued or privately placed unsecured
indebtedness (excluding any short-term commercial paper) with a rating of "BBB"
or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides
the Owner Participant with cash collateral or a letter of credit reasonably
satisfactory in form and substance to Lessor, the amount of which is sufficient
(as determined by the Owner Participant in its reasonable judgment) to cover
any anticipated adverse tax consequences for which the Owner Participant has
been indemnified by Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such reregistration or (C)
the anticipated indemnified amount (as determined by the Owner Participant in
its reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to Lessee, the
Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity
as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties and to
enter into and perform its obligations under the Owner Participant
Documents;
(ii) the Owner Participant Documents have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do not
require any approval not already obtained of stockholders of the Owner
Participant or any approval or consent not already obtained of any trustee
or holders of any indebtedness or obligations of the Owner Participant, and
have been duly executed and delivered by the Owner Participant, and,
subject to and in reliance upon the representations made by the Loan
Participants and Lessee in Section 8(q) hereof, neither the execution and
delivery
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thereof, nor the consummation of the transactions contemplated thereby, nor
compliance by the Owner Participant with any of the terms and provisions
thereof will contravene any United States Federal or state law, judgment,
governmental rule, regulation or order applicable to or binding on the
Owner Participant (it being understood that no representation or warranty
is made with respect to laws, rules or regulations relating to aviation or
to the nature of the equipment owned by the Owner Trustee, other than such
laws, rules or regulations relating to financing or the citizenship
requirements of the Owner Participant under applicable aviation law) or
contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, corporate charter, by-law or other
agreement or instrument to which the Owner Participant is a party or by
which it or its properties may be bound or affected provided, that no
representation or warranty as to ERISA (as hereinafter defined) is made by
the Owner Participant except as set forth in Section 8(q)(A);
(iii) each of the Owner Participant Documents constitutes a legal,
valid and binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with the terms thereof (subject to the
qualifications set forth in clause (2) of the opinion of counsel to the
Owner Participant in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if determined
adversely to the Owner Participant, would materially adversely affect the
financial condition of the Owner Participant or the ability of the Owner
Participant to perform its obligations under the Owner Participant
Documents;
(v) upon the execution and delivery of the Trust Indenture, the Trust
Indenture Estate will be free and clear of Lessor Liens (including for this
purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to the Owner Participant;
(vi) neither the execution and delivery of the Owner Participant
Documents nor the performance by the Owner Participant of its obligations
thereunder require the consent or approval of, the giving of notice to, or
the registration with, or the taking of any other action in respect of any
Federal, state or foreign government authority or agency except for those
exceptions referred to in Section 7(a)(iii) which may be applicable to the
Owner Participant and the Owner Participant Documents (it being understood
that no representation or warranty is made with respect to the laws, rules
or regulations relating to aviation or to the nature of the equipment owned
by the Owner
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Trustee, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable aviation
law); and
(vii) the Owner Participant is not an "investment company" or a
company "controlled by an investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(h) Each of First Security Bank of Utah, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each of
First Security Bank of Utah, National Association, in its individual capacity,
and the Owner Participant agrees that it will promptly, at its own expense,
take such action as may be necessary duly to discharge such Lessor Lien
attributable to it. Each of First Security Bank of Utah, National Association,
in its individual capacity, and the Owner Participant agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Estate resulting from Lessor Liens (including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to it. The Owner Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from any Taxes or Expenses imposed on the Trust Estate against which
Lessee is not required to indemnify the Trust Estate pursuant to Section 7
hereof.
(i) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Indenture
Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not
permitted by, or failure of the Indenture Trustee to take any action required
by, the Operative Documents to the extent such acts arise or such failure
arises from or constitutes gross negligence or willful misconduct, (C) claims
against the Indenture Trustee relating to Taxes or Expenses which are excluded
from the indemnification provided by Section 7 pursuant to said Section 7, or
(D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than
a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or
Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9
hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while
an Event of Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants and agrees
as to itself: (i) that this Agreement has been duly authorized, executed and
delivered by such Loan Participant and this Agreement constitutes a legal,
valid and binding obligation of such Loan Participant enforceable against such
Loan Participant in accordance with its terms except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and general principles
of
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equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law); (ii) that such Loan Participant is duly organized and
validly existing under the laws of its jurisdiction of organization; and (iii)
that such Loan Participant has full power, authority and legal right to
execute, deliver and carry out the terms of this Agreement.
(k) Each Loan Participant represents and warrants that the Secured
Certificate to be issued to it pursuant to the Trust Indenture is being
acquired by it for investment and not with a view to resale or distribution (it
being understood that such Loan Participant may pledge or assign as security
its interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its
control, except that the Loan Participants may sell, transfer or otherwise
dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement and subject
to the provisions hereof.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to the
Trust Agreement shall be strictly limited to the Trust Estate (excluding the
Excluded Payments) and (ii) make (and hereby agree to make), with respect to
the Trust Indenture Estate, the election provided for in Section 1111(b)(2) of
Title 11 of the United States Code. It is hereby agreed by the Indenture
Trustee, and by the acceptance of the Secured Certificates the Certificate
Holders hereby agree, that if (i) all or any part of the Trust Estate becomes
the property of, or the Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision or any comparable proceeding, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Secured Certificates or to the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Owner Participant under
this Participation Agreement), to make payment on account of any amount payable
as principal or interest on the Secured Certificates and (iii) any holder(s) of
the Secured Certificates or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on account of
(ii) above, then such holder(s) or the Indenture Trustee, as the case may be,
shall promptly refund to the Owner Trustee or the Owner Participant (whichever
shall have made such payment) such Excess Payment. For purposes of this
Section 8(l), "EXCESS PAYMENT" means the amount by which such payment exceeds
the amount which would have been received by the holder(s) of the Secured
Certificates or the Indenture Trustee if the Owner Trustee (in its individual
capacity) or the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section 8(l)
shall prevent the holder of a Secured Certificate or the Indenture Trustee from
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<PAGE> 41
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) under this Agreement or the
Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant
under this Agreement.
(m) State Street Bank and Trust Company represents and warrants, in
its individual capacity, to Lessee, the Owner Trustee and each Participant as
follows:
(i) it is a Citizen of the United States without making use of any
voting trust, voting powers trust agreement or other similar arrangement,
will notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States without making use of
any voting trust, voting powers trust agreement or other similar
arrangement, is likely to change and that it will resign as Indenture
Trustee as provided in Section 8.02 of the Trust Indenture if it should
cease to be a Citizen of the United States without making use of any voting
trust, voting powers trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the requisite corporate power and authority to enter
into and perform its obligations under the Trust Indenture and this
Agreement and to authenticate the Secured Certificates to be delivered on
the Delivery Date;
(iii) the Indenture Trustee Documents and the authentication of the
Secured Certificates to be delivered on the Delivery Date have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or state law or governmental
rule or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its charter or
By-Laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may be
bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly executed
and delivered by State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, and, assuming that
each such agreement is the legal, valid and binding obligation of each
other party thereto, is the legal, valid and binding obligation of State
Street Bank and Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, enforceable against State Street Bank and
Trust Company, in its individual capacity or as Indenture Trustee, as the
case may be, in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights.
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<PAGE> 42
(n) So long as the Aircraft shall be subject to the Lease and at all
times prior to the release of the Lien of the Trust Indenture, the Owner
Participant will not, directly or indirectly, sell, assign, convey or otherwise
transfer any of its right, title or interest in and to the Aircraft, this
Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust
Agreement or any proceeds therefrom to any person or entity, unless the
proposed transferee is a "Transferee" (as defined below), and such sale,
assignment, conveyance or transfer is with respect to all, but not less than
all, of such Transferee's right, title and interest to a single entity (except
that the Owner Participant may transfer to one or more Transferees all or any
portion of its interest, if any, in the residual value of the Aircraft (which
interest shall not include any of the Owner Participant's right, title or
interest in any of the Operative Documents); provided that such transfer of
residual value shall result in no increase, decrease or change in any of
Lessee's, any Loan Participant's, or the Indenture Trustee's obligations,
rights or responsibilities under the Operative Documents and that such
Transferee or Transferees of residual value shall have no right to consent or
object to any matter or decision under, or relating to, the Aircraft or any of
the Operative Documents and provided, further, that no Lien shall result from
such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial
institution or insurance company with a combined capital, surplus and undivided
profits of at least $50,000,000 or a corporation whose tangible net worth is at
least $50,000,000, exclusive of goodwill, in either case as of the proposed
date of such transfer, as determined in accordance with generally accepted
accounting principles, or (B) any subsidiary of such a bank, financial
institution, insurance company, or corporation, provided that such bank,
financial institution, insurance company, or corporation furnishes to the Owner
Trustee, the Loan Participants, the Indenture Trustee and Lessee a guaranty
with respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Loan Participants,
the Indenture Trustee and Lessee, the Owner Participant's obligations
hereunder, including but not limited to, under Section 8(c) and Section 8(h)
hereof, in the form attached as Exhibit D hereto; provided, however, that any
Transferee shall not be (i) an airline, a commercial air carrier, an air
freight forwarder, an entity engaged in the business of parcel transport by air
or (ii) other similar person or a corporation or other entity controlling,
controlled by or under common control with such an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the business of parcel
transport by air or other similar person (unless such entity is General
Electric Company, International Lease Finance Corporation, any similar entity
or any of their respective Affiliates, provided, that (I) such entity is not
included within the immediately preceding clause (i) of this subsection (n) and
(II) no such entity has, through ownership of common or preferred stock,
effective voting control of an entity described in such immediately preceding
clause (I)). Each such transfer to a Transferee shall be subject to the
conditions that (M) upon giving effect to such transfer, the Transferee is a
Citizen of the United States (or has effected a voting trust agreement, voting
powers agreement or other similar arrangement so as not to affect the then
continued (if applicable) United States registration of the Aircraft), and has
full power and authority to enter into the transactions contemplated hereby,
(N) the Transferee has the requisite power and authority to enter into and
carry out the transactions contemplated hereby and such Transferee shall have
delivered to Lessee, the Owner Trustee, the Indenture Trustee and the
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Loan Participants an opinion of counsel in the form attached as Exhibit E
hereto, (O) the Transferee enters into (i) an agreement in the form attached as
Exhibit B hereto or (ii) such other form approved by Lessee and the Indenture
Trustee whereby the Transferee confirms that it shall be deemed a party to this
Agreement and a party to the Trust Agreement and each other Operative Document
to which the Owner Participant is a party and agrees to be bound by all the
terms of, and to undertake all of the obligations of the transferor Owner
Participant contained in, the Owner Participant Documents and makes the
representations and warranties comparable to those made by the Owner
Participant thereunder provided that with respect to ERISA, the Transferee
makes the representations and warranties contained in Section 7(h) of the
agreement in the form attached as Exhibit B hereto, (P) such transfer does not
affect registration of the Aircraft under the Federal Aviation Act, or any
rules or regulations promulgated thereunder or create a relationship which
would be in violation thereof or violate any provision of the Securities Act of
1933, as amended, or any other applicable Federal or state law (provided that
the term "applicable Federal law" shall not include ERISA), (Q) the transferor
Owner Participant assumes the risk of any loss of Interest Deductions,
Amortization Deductions and MACRS Deductions and the risk of any Inclusion
Event (each as defined in the Tax Indemnity Agreement) resulting from such
transfer, (R) the transferor Owner Participant pays all of the costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
in connection with such transfer, including the costs and expenses of the Owner
Trustee, the Indenture Trustee, Lessee and the Loan Participants in connection
therewith unless such transfer is effected in connection with the exercise of
remedies as a result of and during the continuance of an Event of Default in
which case any expenses incurred by Lessee in connection with such transfer
shall not be reimbursed, and (S) the terms of the Operative Documents and the
Overall Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents arising after the date of
such transfer except to the extent fully attributable to or arising out of acts
or events occurring prior thereto and not assumed by the Transferee (in each
case, to the extent of the participation so transferred). If the Owner
Participant intends to transfer any of its interests hereunder, it shall give
20 days' prior written notice thereof to the Loan Participants, the Indenture
Trustee, the Owner Trustee and Lessee, specifying the name and address of the
proposed Transferee.
Upon any such transfer, Lessee shall, at the Transferee's expense, use
its reasonable efforts promptly to cause to be obtained new insurance
certificates (consistent with the provisions of Section 11 of the Lease) that
reflect the interest of the Transferee in the Aircraft.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless
waived by the Loan Participants, Lessee shall not be entitled to assume the
Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of
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<PAGE> 44
Default shall have occurred and be continuing or any condition or event shall
exist which, with the passage of time or giving of notice or both, would become
such an Event of Default.
(p) First Security Bank of Utah, National Association, and State
Street Bank and Trust Company, each in its individual capacity, agrees for the
benefit of Lessee to comply with the terms of the Trust Indenture which it is
required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is not
acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code or of any entity the assets of which constitute "plan" assets under
ERISA. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section
2.14 of the Trust Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer as set forth in
the preceding sentence and a covenant as set forth in this sentence.
(B) Lessee represents and warrants that: none of (i) the execution and
delivery of this Agreement and the other Operative Documents, (ii) the initial
purchase by the Loan Participants of the Secured Certificates, and (iii) the
initial acquisition by the Owner Participant of its beneficial interest in the
Trust Estate will involve any non-exempt prohibited transaction within the
meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the
Code (such representation being made in reliance upon and subject to the
accuracy of the representations contained in subparagraph (A) of this Section
8(q)).
(r) Each Participant, the Owner Trustee and the Indenture Trustee
agrees for the benefit of the Manufacturer and Lessee that it will not disclose
or suffer to be disclosed the terms of the Purchase Agreement to any third
party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, or (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to the Owner Trustee under the
Purchase Agreement Assignment and not specifically reserved to Lessee under
Section 1 thereof, to bona fide potential purchasers of the Aircraft.
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<PAGE> 45
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the
Loan Participants pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve
System, assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not cause
or permit to exist a Loan Participant Lien attributable to it with respect to
the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it. Each Loan Participant agrees that Lessee
may, on behalf of the Owner Trustee and upon notice to the affected Certificate
Holder, arrange for another institution (which may be a Certificate Holder) to
purchase the Secured Certificates of the affected Certificate Holder by paying
the affected Certificate Holder an amount equal to the unpaid principal amount
of the Secured Certificates held by the affected Certificate Holder plus
accrued but unpaid interest thereon to the date of payment of such principal
amount plus all other amounts owed to such affected Certificate Holder under
the Operative Documents (including any Funding Loss Amount payable as a result
of the applicable purchase occurring on a day other than the last day of an
Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE
HOLDER" shall mean a Certificate Holder which has asserted claims against the
Owner Trustee or Lessee under or sought rights or remedies provided by Section
7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) First Security Bank of Utah, National Association, in its
individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant, each of the other
Owner
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<PAGE> 46
Trustee Documents has been duly executed and delivered by one of its
officers who is duly authorized to execute and deliver such instruments on
behalf of First Security Bank of Utah, National Association or the Owner
Trustee, as the case may be;
(ii) the Trust Estate is free and clear of Lessor Liens (including
for this purpose Liens that would be Lessor Liens but for the proviso in
the definition of Lessor Liens) attributable to First Security Bank of
Utah, National Association, in its individual capacity, and there are no
Liens affecting the title of the Owner Trustee to the Aircraft or any part
of the Trust Estate or the Trust Indenture Estate resulting from any act or
claim against First Security Bank of Utah, National Association, in its
individual capacity, arising out of any event or condition not related to
the ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the Operative
Documents, including any such Lien resulting from the nonpayment by First
Security Bank of Utah, National Association, in its individual capacity, of
any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes (or to the
best of its knowledge would, with the passage of time or the giving of
notice or both, constitute) an Event of Default as defined in the Trust
Indenture which has been caused by or relates to First Security Bank of
Utah, National Association, in its individual capacity, and which is
presently continuing;
(iv) it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has
the full corporate power, authority and legal right to enter into and
perform its obligations under each of the Owner Trustee Documents;
(v) each of the Owner Trustee Documents has been duly authorized by
all necessary corporate action on its part, and neither the execution and
delivery thereof nor its performance of any of the terms and provisions
thereof will violate any Federal law governing the banking and trust powers
of First Security Bank of Utah, National Association, or Utah law or
regulation or contravene or result in any breach of the provisions of its
articles of association or By-Laws or any indenture, mortgage, contract or
other agreement to which it is a party or by which it or its properties may
be bound or affected;
(vi) each of the Owner Trustee Documents has been duly executed and
delivered by First Security Bank of Utah, National Association, in its
individual capacity, as Owner Trustee, or both and, assuming that each such
agreement is the legal, valid and binding obligation of each other party
thereto, each thereof is the legal, valid and binding obligation of First
Security Bank of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, enforceable against First
Security Bank of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the
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<PAGE> 47
case may be, in accordance with its respective terms except as limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights; and
(vii) there are no Taxes payable by it (either in its individual
capacity or as Owner Trustee), the Trust Estate, the Owner Participant,
Lessee, the Indenture Trustee or the Loan Participants to the State of Utah
in connection with the execution, delivery and performance of the Operative
Documents solely because First Security Bank of Utah, National Association
is a national banking association with its principal office in the State of
Utah and will perform its obligations under the Operative Documents in the
State of Utah, other than franchise or other taxes based on or measured by
any fees or compensation received or accrued by First Security Bank of
Utah, National Association for services rendered in connection with the
transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if (i) Lessee has
elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by
causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii)
the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee
written notice of Lessor's election to retain title to the Aircraft and (iii)
the Owner Trustee has failed to make, on or before the Termination Date, any
payment required to be made by the Owner Trustee pursuant to Section 9(c) in
connection with its retention of title to the Aircraft, the Owner Participant
will indemnify Lessee for any losses, damages, costs or expenses of any kind
(including any additional rents paid by Lessee and any fees and expenses of
lawyers, appraisers, brokers or accountants) incurred as a consequence of such
failure by the Owner Trustee. The Owner Participant further covenants and
agrees to pay those costs and expenses specified to be paid by the Owner
Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee
elects (a) to purchase the Aircraft pursuant to Section 19(b) of the Lease or
(b) to terminate the Lease and purchase the Aircraft pursuant to Section 19(d)
of the Lease, then each of the parties will execute and deliver appropriate
documentation transferring all right, title and interest in the Aircraft to
Lessee (including, without limitation, such bills of sale and other instruments
and documents as Lessee shall reasonably request to evidence (on the public
record or otherwise) such transfer and the vesting of all right, title and
interest in and to the Aircraft in Lessee), and if Lessee, in connection with
such purchase, elects to assume the obligations of the Owner Trustee pursuant
to the Trust Indenture and the Secured Certificates each of the parties will
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing the Owner
Participant and the Owner Trustee from all future obligations in respect of the
Secured Certificates, the Trust Indenture and all other Operative Documents and
all such other actions as are reasonably necessary to permit such assumption by
Lessee.
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<PAGE> 48
(y) (A) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(i) the corporation formed by such consolidation or into which Lessee
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of Lessee as an entirety shall be a
Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall
execute and deliver to the Owner Trustee, the Indenture Trustee and each
Participant an agreement in form and substance reasonably satisfactory to
such Participant containing an assumption by such successor corporation or
Person of the due and punctual performance and observance of each covenant
and condition of this Agreement, the Lease, the Purchase Agreement
Assignment and the Tax Indemnity Agreement to be performed or observed by
Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or any
Vice President and by the Secretary or an Assistant Secretary of Lessee,
and an opinion of counsel reasonably satisfactory to the Participants, each
stating that such consolidation, merger, conveyance, transfer or lease and
the assumption agreement mentioned in clause (ii) above comply with this
subparagraph (A) of Section 8(y) and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(v) the corporation formed by such consolidation or into which Lessee
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of Lessee, shall make such filings and
recordings with the FAA pursuant to the Federal Aviation Act, as shall be
necessary or desirable to evidence such consolidation, merger, conveyance,
transfer or lease with or to such entity.
Upon any such consolidation or merger or any such conveyance, transfer
or lease of substantially all of the assets of Lessee as an entirety in
accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Lessee under
this Agreement with the same effect as if such successor corporation or Person
had been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
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<PAGE> 49
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its corporate existence
except as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the
Trust Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in
effect, the perfection of the security interests created by the Trust Indenture
and any security interest that may be claimed to have been created by the Lease
and the interest of the Owner Trustee in the Aircraft or will furnish to the
Owner Trustee and the Indenture Trustee timely notice of the necessity of such
action, together with such instruments, in execution form, and such other
information as may be required to enable them to take such action. Lessee will
notify the Owner Trustee, the Owner Participant and the Indenture Trustee of
any change in the location of its chief executive office (as such term is used
in Article 9 of the Uniform Commercial Code) promptly after making such change
or in any event within the period of time necessary under applicable law to
prevent the lapse of perfection (absent refiling) of financing statements filed
under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner
Participant hereby agrees to make such recalculations as and when contemplated
by the Lease and subject to all the terms and conditions of the Lease and
promptly to take such further actions as may be necessary or desirable to give
effect to and to cause the Owner Trustee to give effect to the provisions of
Section 3 of the Lease.
(bb) To the extent that any Excess Amount is due on the
Commencement Date, the Owner Participant shall have the right to prepay to the
Indenture Trustee all or a portion of such Excess Amount on the last Business
Day occurring in 1996, and the Indenture Trustee agrees that it shall invest
such amount in accordance with the terms set forth in the Trust Indenture. The
Owner Participant hereby agrees with Lessee, and only with Lessee, and not for
the benefit of any other party to this Participation Agreement, that it will
pay in full to Lessee upon termination of the Lease the Reimbursement Amount
for which Lessee has not previously received an offset pursuant to Section 3(g)
of the Lease.
(cc) The Owner Participant hereby agrees to notify Lessee or cause
Lessee to be notified by telecopier not later than 10:00 a.m. New York time on
the third Business Day prior to the day for which an Excess Amount is indicated
stating whether or not the Owner Participant intends to pay such Excess Amount
in full by 10:30 A.M. (New York time) on the due date.
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<PAGE> 50
(dd) [_________________] agrees to act as Administrative Agent
hereunder. The Administrative Agent agrees to notify each of the Indenture
Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual
interest expected to accrue on the Secured Certificates during each Interest
Period promptly after the commencement of such Interest Period and after the
occurrence of any event that would cause such actual interest expected to
accrue during such Interest Period to change from the amount previously
notified. The Administrative Agent further agrees to perform all of the
functions that are required to be performed by the Administrative Agent
pursuant to the terms of the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that it will
pay, or cause to be paid, all costs and expenses that are for the account of
the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner
Participant further agrees with Lessee that it will provide the information
contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of
the Lease within the time period contemplated therein.
(ff) Each Loan Participant hereby represents, warrants and agrees
that it shall not transfer any interest in any Secured Certificate unless and
until the transferee agrees in writing (copies of which shall be provided by
the Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant)
to make the representations contemplated to be made by a Loan Participant in
this Agreement and to be bound by the terms of this Agreement and the Trust
Indenture (including, without limitation, the representations and covenants set
forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this
Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(gg) [__________________] agrees to act as Documentation Agent
hereunder and to perform all of the functions that are required to be performed
by the Documentation Agent hereunder.
(hh) [__________________], [_________________] and [_____________]
each agrees to furnish to the Administrative Agent timely information for the
purpose of determining each Eurodollar Rate (as defined in the Trust
Indenture).
(ii) Lessee agrees and covenants that it shall not purchase or
guarantee or acquire any interest in any Secured Certificate or any other
certificate for which a Secured Certificate is security except as provided in
Section 8(x).
SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND
OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to
Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall,
pursuant to this Section 9 and in accordance with the requirements of Section
3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt
payment structures. Within forty-five Business Days after the need for an
adjustment to Rent has been established pursuant to Section 3 of the Lease, the
Owner Participant shall deliver to Lessee a certificate of an authorized
representative of the
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<PAGE> 51
Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed
revised schedules of debt amortization and Basic Rent, Excess Amounts, Special
Purchase Price, Stipulated Loss Value and Termination Value percentages.
Within forty-five days of its receipt of the Reoptimization Certificate, Lessee
may demand a verification, pursuant to Exhibit E of the Lease, of the
information set forth in the Reoptimization Certificate. Upon the acceptance
by Lessee of the accuracy of the information set forth in the Reoptimization
Certificate or the determination pursuant to such verification procedures of
such information, the Owner Participant will cause the Owner Trustee (M) to
execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess
Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages, and (N) to exchange new Secured Certificates containing
reoptimized amortization schedules for the Secured Certificates outstanding
immediately prior to such reoptimization.
(b) In connection with reoptimization adjustments of Basic Rent,
Stipulated Loss Value and Termination Value percentages pursuant to this
Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree
to changes in the amortization schedule of the Secured Certificates, and (N)
each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided that such changes do
not (X) change the final maturity of any Secured Certificates to beyond twenty
years from the Delivery Date or (Y) increase the weighted average lives of the
Secured Certificates as of the Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner
Trustee hereby (A) agrees with Lessee, the Loan Participants and the Indenture
Trustee not to amend, supplement or otherwise modify any provision of the Trust
Agreement in a manner adversely affecting such party without the prior written
consent of such party; and (B) agrees with Lessee and the Loan Participants not
to revoke the Trust Agreement without the prior written consent of Lessee and
the Loan Participants so long as the Lease or the Lien of the Trust Indenture
remain in effect. Notwithstanding the foregoing, so long as the Lease has not
been terminated, the Indenture Trustee and the Owner Trustee hereby agree for
the benefit of Lessee that without the consent of Lessee they will not (i)
amend or modify Article III or IX of the Trust Indenture, (ii) make any
amendment which will affect the stated principal amount or interest on the
Secured Certificates or (iii) amend or modify the provisions of Sections 2.05
or 10.05 of the Trust Indenture. The Indenture Trustee and the Owner Trustee
agree to promptly furnish to Lessee copies of any supplement, amendment, waiver
or modification of any of the Operative Documents to which Lessee is not a
party. Notwithstanding anything to the contrary contained herein, in the Trust
Agreement or in any other Operative Document, the Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without the
prior written consent of Lessee. Each Loan Participant agrees that it will not
take any action in respect of the Trust Indenture Estate except through the
Indenture Trustee pursuant to the Trust Indenture or as otherwise permitted by
the Trust Indenture.
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<PAGE> 52
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and agrees with
each of the Loan Participants, the Owner Participant, the Indenture Trustee and
the Owner Trustee, in its capacity as such and in its individual capacity as
follows:
(a) Lessee will cause to be done, executed, acknowledged and delivered
all and every such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of Lessee in
respect of the transactions contemplated by any Operative Documents. Lessee,
forthwith upon delivery of the Aircraft under the Lease, shall cause the
Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all amendments
to the Lease, the Trust Indenture, all supplements and amendments to the Trust
Indenture and this Agreement 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. Upon the execution and delivery of the FAA
Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Trust
Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; first, the
FAA Bill of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the
Trust Indenture, with the Trust Supplement attached.
(c) Lessee agrees that it will consummate, with Owner Participant, on
terms substantially identical to those set forth in the Operative Documents,
leveraged lease transactions in respect of the first two Boeing 757-251
aircraft delivered by the Manufacturer to Lessee subsequent to the date of this
Agreement.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among
Lessee, the Owner Participant and the Owner Trustee that for Federal income tax
purposes the Owner Participant will be the owner of the Aircraft to be
delivered under the Lease and Lessee will be the lessee thereof, and each party
hereto agrees to characterize the Lease as a lease for Federal income tax
purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a)
Except as otherwise defined in this Agreement, terms used herein in capitalized
form shall have the meanings attributed thereto in the Lease. The term "TRUST
OFFICE" shall have the meaning
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<PAGE> 53
set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall
have the meaning set forth in the Trust Indenture. Unless the context
otherwise requires, any reference herein to any of the Operative Documents
refers to such document as it may be amended from time to time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier (only if such
communication is also given or made by an additional method herein permitted),
or by prepaid courier service, and shall be deemed to be given for purposes of
this Agreement on the day that such writing is delivered or sent to the
intended recipient thereof in accordance with the provisions of this Section
13(b). Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section 13(b), 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 telecopier numbers) as follows: (A) if to Lessee, the Owner
Trustee, the Loan Participants, the Administrative Agent, the Documentation
Agent, the Indenture Trustee or the Owner Participant, to the respective
addresses set forth below the signatures of such parties at the foot of this
Agreement, or (B) if to a subsequent Owner Participant, addressed to such
subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Agreement, the Lease,
the Tax Indemnity Agreement or any other Operative Document, the subject matter
of any thereof or any of the transactions contemplated hereby or thereby
brought by any party or parties thereto, or their successors or assigns, and
(B) hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Agreement, the Lease, the Tax Indemnity Agreement or any
other Operative Document or the subject matter of any thereof or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts. Lessee hereby generally consents to service of process at Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention:
Managing Attorney, or such office of Lessee in New York City as from time to
time may be designated by Lessee in writing to the Owner Participant, the Owner
Trustee and the Indenture Trustee.
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SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees
that if, at any time, the Trust Estate becomes subject to any Taxes for which
it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the
situs of the trust may be moved with the written consent of the Owner
Participant (which consent shall not be unreasonably withheld) and the Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Loan Participants may
reasonably request in form and substance satisfactory to such parties, (B) the
rights and obligations under the Operative Documents of the Owner Participant
and the Loan Participants shall not be altered as a result of the taking of
such action, (C) the lien of the Trust Indenture on the Trust Indenture Estate
shall not be adversely affected by such action, and (D) the Owner Participant
and the Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner
Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to the Loan Participants and to the Owner
Participant covering the matters described in Section 4(a)(xiii) hereof and
such other matters as the Loan Participants and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner
Participant, the Indenture Trustee and the Loan Participants on an After-Tax
Basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred by the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Loan Participants in connection with such change of
situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the
Owner Participant covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as Lessor, or the
Indenture Trustee under the terms of
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<PAGE> 55
the Lease which by its terms is not to be unreasonably withheld by the Owner
Trustee, as Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the
Administrative Agent, the Documentation Agent and the Owner Participant
provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan
Participants', the Indenture Trustee's, the Administrative Agent's, the
Documentation Agent's and the Owner Participant's obligations under any and all
thereof, shall survive the making available of the respective Commitments by
the Loan Participants and the Owner Participant, the delivery or return of the
Aircraft, the transfer of any interest of the Owner Participant in the Trust
Estate or the Aircraft or any Engine or the transfer of any interest by any
Loan Participant in any Secured Certificate or the Trust Indenture Estate and
the expiration or other termination of this Agreement or any other Operative
Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, and shall be enforceable by, Lessee
and its successors and assigns, each Loan Participant and its successors and
assigns, the Owner Participant and its successors and assigns, each Certificate
Holder and its successors and registered assigns, the Indenture Trustee and its
successors as Indenture Trustee under the Trust Indenture, the Owner Trustee
and its successors as Owner Trustee under the Trust Agreement, the
Administrative Agent and the Documentation Agent. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer,
- 55 -
<PAGE> 56
director, trustee, servant or direct or indirect parent or controlling person
or persons of any of them; provided, however, that this Section 15(d) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable; and provided, further, that nothing contained in this
Section 15(d) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this
Section 15(d) shall survive the termination of this Agreement and the other
Operative Documents.
(e) It is the intention of the parties hereto that the Owner Trustee,
as Lessor under the Lease, and the Indenture Trustee, as assignee of such Owner
Trustee's rights under the Lease pursuant to the Trust Indenture, will be
entitled to the benefits of 11 U.S.C. Section 1110 in the event of any
reorganization of Lessee under such Section.
SECTION 16. EXPENSES. Each of the Owner Trustee, the Indenture Trustee,
the Owner Participant, Lessee and the Loan Participants shall promptly submit
to the Owner Trustee and Lessee for their review copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (but in no event later than July 15,
1996). The Owner Participant agrees to transfer to the Owner Trustee promptly
but in any event no later than August 15, 1996 such amount as shall be
necessary in order to enable the Owner Trustee to pay Transaction Expenses. To
the extent of funds received by it, the Owner Trustee agrees to pay all
invoices of Transaction Expenses that have been approved by it and Lessee
promptly upon receipt thereof. Notwithstanding the foregoing, to the extent
that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option
shall have the right to pay directly its special counsel fees and the fee and
reasonable disbursements of Babcock and Brown Financial Corporation.
- 56 -
<PAGE> 57
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default or a Default of the type referred
to in Section 14(a) or 14(e) of the Lease shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates with Dollar denominated debt no more than
three times by giving written notice to the Owner Participant and the Owner
Trustee that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refinancing (including the terms of any debt to be issued in
connection with such refinancing); provided that no such refinancing shall
subject the Owner Participant to any adverse, or the risk of any adverse, tax
consequence unless Lessee agrees to indemnify the Owner Participant for such
unindemnified adverse tax consequence (any such indemnity to be satisfactory in
form and substance, which may include consideration of the creditworthiness of
Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so
long as the Guarantee remains in full force and effect, the Guarantor) has
outstanding publicly issued or privately placed unsecured indebtedness
(excluding any short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner
Participant with cash collateral or a letter of credit reasonably satisfactory
in form and substance to Lessor, the amount of which is sufficient (as
determined by the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner Participant has been
indemnified by Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such refinancing or (3) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee); provided further that (x) the Owner Participant
agrees that it will not be entitled to any indemnity from Lessee for any
failure of the debt in such refinancing to constitute "qualified nonrecourse
indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b)
with respect to the first refinancing described in the next paragraph, provided
it is satisfactory to, or has no adverse tax consequences for, the Owner
Participant and (y) no offering material related to any public refinancing
shall disclose the identity of the Owner Participant.
The Owner Participant has been informed by Lessee that the debt to be
issued in connection with such refinancing may be issued in several classes,
each of which may have a different interest rate, final maturity date and
priority of payment. The Owner Participant acknowledges that it has been
informed that one or more of such classes may be entitled to the benefit of a
liquidity facility which shall not be provided by Lessee or a Person who is an
Affiliate of Lessee, and which will entitle the Indenture Trustee (or a
collateral agent therefor) to make drawings thereunder to pay interest on a
current basis on the enhanced classes of debt for up to three semi-annual
interest payments following a payment default with respect to such enhanced
classes. The Owner Participant acknowledges being informed that under such a
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<PAGE> 58
structure drawings of the entire amount available under the liquidity facility
for any class (and the deposit of the proceeds thereof into a cash collateral
account) will be required in the event of a ratings decline with respect to the
related liquidity provider or in the event that the liquidity facility is not
extended or replaced prior to its scheduled expiration and that amounts owed to
the liquidity facility provider for both drawings and interest thereon will
generally be senior to all Loan Participant claims. The Owner Participant
agrees that in any refinancing operation it will consider in good faith these
and any other conditions which do not impair the customary rights of an owner
participant in a leveraged lease transaction.
In the event that any such agreement is concluded:
(1) within ten Business Days after the reaching of such agreement, the
Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting
forth the following information calculated pursuant to the provisions of
paragraph (6) of this Section 17(a): (A) subject to the limitations set forth
in this Section 17, the proposed adjusted debt/equity ratio, (B) the principal
amount of debt to be issued by the Owner Trustee on the proposed date on which
the outstanding Secured Certificates will be redeemed (such date, the
"REFINANCING DATE"), (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
increased or decreased and (D) the proposed revised schedules of Basic Rent
percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages. The Refinancing Certificate shall not provide
for a debt/equity ratio of more than 4:1. Within fourteen days of its receipt
of the Refinancing Certificate, Lessee may demand a verification pursuant to
Exhibit E to the Lease of the information set forth in the Refinancing
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refinancing Certificate (or the determination pursuant to such
verification procedures), as to the debt/equity ratio, the principal amount of
debt to be issued by the Owner Trustee on the Refinancing Date and the revised
Basic Rent percentages, debt amortization, Stipulated Loss Value percentages
and Termination Value percentages (such information, whether as set forth or as
so determined, the "REFINANCING INFORMATION") the appropriate parties will take
the actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate documentation
(which may involve an underwriting agreement in connection with such sale with
the institution or institutions to be named therein providing for (i) the
issuance and sale by the Owner Trustee to such institution or institutions on
the Refinancing Date of debt securities in an aggregate principal amount
specified in the Refinancing Information (such debt securities, the "NEW DEBT")
except that the principal amount of New Debt may exceed by no more than 105%
the principal amount of all outstanding Secured Certificates in connection with
the first refinancing under this Section 17, (ii) the application of the
proceeds of the sale of the New Debt to the redemption of all such Secured
Certificates on the Refinancing Date and (iii) the payment of the excess, if
any, of such proceeds over the amounts necessary to effect such redemption to
the Owner Trustee;
- 58 -
<PAGE> 59
(3) Lessee shall give the notice to the Indenture Trustee pursuant to
Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the period
from and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of Stipulated Loss Value and
Termination Value from and after the Refinancing Date shall be as provided in
the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the New Debt in like manner as the Secured Certificates
and will enter into such amendments and supplements to the Trust Indenture (or
such new indenture or other security agreement) as may be necessary to effect
such refinancing;
(5) the Owner Participant shall pay all of the expenses of the first
refinancing (including, but not limited to, the fees, expenses and
disbursements of counsel and any placement or underwriting fees) and such
expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set forth
in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions and constraints referred
to in the definition of "Net Economic Return" have been altered since the
Delivery Date in connection with an adjustment to Rents pursuant to Section
3(d) of the Lease or such assumptions and constraints are the subject of the
recalculations being conducted by the Owner Participant), and (B) minimizes the
Net Present Value of Rents to Lessee to the extent possible consistent with
clause (A). All adjustments to Basic Rent shall also be in compliance with the
tests of Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28
(provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied
on a prospective basis from the date of such adjustment) and Section 467 of the
Code as then in effect as long as the Schedule of Basic Rent was in compliance
with Section 467 of the Code as in effect on the Closing Date, it being
understood that, to the extent that any grandfather, effective date, or similar
provisions in any regulations under Section 467 or other administrative
pronouncement interpreting Section 467 promulgated or issued after the Closing
Date causes such regulations or pronouncement not to be applicable to the
Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be
deemed to be in compliance with Section 467 as in effect on the Closing Date.
(b) The final maturity and weighted average life of the New Debt on an
aggregate basis shall not exceed by more than six months those of the Secured
Certificates.
(c) The Secured Certificates shall not be subject to voluntary
redemption by the Owner Trustee without the consent of Lessee except as set
forth in Section 2.14 of the Trust Indenture.
(d) The Owner Participant, at the time of the closing of the second or
third refinancing pursuant to this Section 17, if any, shall be paid a fee of
$25,000 in respect of each
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<PAGE> 60
such refinancing provided, that in the event that a similar refinancing is
concurrently being effected on identical terms under any of the other
transactions entered into in 1996 by the Owner Participant and Lessee for the
lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to
the corresponding provisions of the applicable participation agreement, Lessee
shall not be required to pay a separate fee of $25,000 for each such
refinancing, it being the intent of the parties that a total fee of $50,000
shall be paid by Lessee for all such concurrent refinancings on identical terms
for which a fee is otherwise payable pursuant to the corresponding provisions
of the applicable participation agreement.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes each of the
Administrative Agent and the Documentation Agent (each, an "AGENT") to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement and the other Operative Documents as are delegated to such
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. Each Agent shall have no duties or
responsibilities except those expressly set forth in the Operative Documents.
As to any matters not expressly provided for hereby or by the Trust Indenture,
each Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority in Interest of Certificate Holders (as defined in the Trust
Indenture), and such instructions shall be binding upon all Loan Participants
and all Certificate Holders; provided, however, that such Agent shall not be
required to take any action that exposes such Agent to personal liability or
that is contrary to the Operative Documents or applicable law. Each Agent
agrees to give to each Loan Participant prompt notice of each notice given to
it by the Owner Trustee pursuant to the terms of the Operative Documents with
respect to which such Loan Participant has not otherwise received such notice.
(b) No Agent nor such Agent's directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the Trust Indenture, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, each Agent: (i) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to any Loan Participant and shall not be
responsible to any Loan Participant for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Operative Documents on the part of any party thereto or to
inspect the property (including the books and records) of any such party; (iv)
shall not be responsible to any Loan Participant for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or
- 60 -
<PAGE> 61
in connection with, the Operative Documents or any other instrument or document
furnished pursuant thereto; and (v) shall incur no liability under or in
respect of the Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
(c) With respect to their Loans and any Secured Certificates issued to
them, [________________________] and [____________________________] shall have
the same rights and powers under the Operative Documents as any other Loan
Participant and may exercise the same as though they were not Agents and the
term "Loan Participant" or "Certificate Holder" shall, unless otherwise
expressly indicated, include[___] and [___] in their individual capacity. [___]
and its Affiliates and [____] and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the Owner
Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any
Person who may do business with or own securities of any of such Persons, all as
if [___] and [____] were not Agents and without any duty to account therefor to
the Loan Participants.
(d) Each Loan Participant acknowledges that it has, independently and
without reliance upon the Agents or any other Loan Participant and based on the
financial statements referred to in Section 7(a)(ix) of this Agreement and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Loan
Participant also acknowledges that it will, independently and without reliance
upon the Agents or any other Loan Participant and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a successor agent as
provided below, any Agent may resign at any time by giving written notice
thereof to the Loan Participants, the Owner Trustee and Lessee and may be
removed at any time with or without cause by the Majority in Interest of
Certificate Holders (as defined in the Trust Indenture). Upon any such
resignation or removal, the Majority in Interest of Certificate Holders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority in Interest of Certificate Holders, and shall
have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Trust Indenture. After any retiring
Agent's resignation or removal hereunder as Agent, the
- 61 -
<PAGE> 62
provisions of this Section 18 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the Trust Indenture. Notwithstanding anything contrary herein, the
Administrative Agent and the Documentation Agent hereunder and under the Trust
Indenture shall be the same institution, respectively, as the Administrative
Agent and the Documentation Agent under (and as defined in) the Credit
Agreement.
- 62 -
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------------
Title: Sr. Vice President-Finance and Treasurer
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[______________]
Owner Participant
By:
--------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 64
[Insert bridge lenders]
- Signature Page -
<PAGE> 65
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant:
<PAGE> 66
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 E
Owner Trustee: First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 E
SCHEDULE I- PAGE 2
<PAGE> 67
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
- ----------------- -------------
<S> <C>
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
Owner Participant:
- -----------------
<S> <C>
-------------
Total Commitments: 100%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 69
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1996 E]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
<TABLE>
<S> <C>
Argentina Japan
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Brazil Netherlands
Canada New Zealand
Chile Norway
Denmark People's Republic of China
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Hungary South Korea
Iceland Spain
India Sweden
Indonesia Switzerland
Ireland Thailand
Italy United Kingdom
</TABLE>
<PAGE> 70
EXHIBIT B - PAGE 1
EXHIBIT B
TO PARTICIPATION
AGREEMENT
[NW 1996 E]
ASSIGNMENT AND ASSUMPTION AGREEMENT
[NW 1996 E]
ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 E], dated as of __________, ____,
between ____________________________________, a _____________ corporation (the
"ASSIGNOR"), and __________________________, a __________ corporation (the
"ASSIGNEE").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect (a) the transfer by the
Assignor to the Assignee of all of the right, title and interest of the
Assignor (except as reserved below) in, under and with respect to, among other
things, (i) the Participation Agreement [NW 1996 E], dated as of April 29,
1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named
therein, First Security Bank of Utah, National Association, and State Street
Bank and Trust Company (as amended, modified or supplemented from time to time,
the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity
payments payable to the Assignee directly or indirectly thereunder, (ii) the
Trust Agreement identified in the Participation Agreement (the "TRUST
AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv)
the Tax Indemnity Agreement identified in the Participation Agreement, and (v)
the proceeds therefrom and (b) the assumption by the Assignee of the
obligations of the Assignor accruing from and after the Effective Time; and
WHEREAS, such documents permit such transfer upon satisfaction of
certain conditions heretofore or concurrently herewith being complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Participation Agreement):
<PAGE> 71
1. ASSIGNMENT. The Assignor has sold, assigned, conveyed,
transferred and set over, and does hereby sell, assign, convey, transfer and
set over, unto the Assignee as of the date hereof all of its present and future
right, title and interest in, under and with respect to the Trust Estate, the
Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity
Agreement and all other Operative Documents to which the Assignor is a party or
any other contract, agreement, document or instrument relating to the Trust
Estate by which the Assignor is bound, and any proceeds therefrom, together
with all other documents and instruments evidencing any of such right, title
and interest, except such rights of the Assignor as have accrued to the
Assignor prior to the Effective Time (as subsequently defined) (including
specifically, but without limitation, the right to receive any amounts due or
accrued to the Assignor under the Trust Agreement prior to the Effective Time
and the right to receive any indemnity payment pursuant to the Participation
Agreement or the Tax Indemnity Agreement with respect to events ccurring prior
to the Effective Time).
2. ASSUMPTION. The Assignee hereby undertakes all of the duties and
obligations of the "Owner Participant" accruing on or subsequent for the
Effective Time (for the avoidance of doubt, excluding any duties, obligations
and liabilities of the Assignor required to be performed by it on or prior to
the date hereof under the Participation Agreement, the Trust Agreement, any of
the other Operative Documents to which the Assignor is a party or by which it
is bound or any other contract, agreement, document or other instrument
relating to the Trust Estate to which the Assignor is a party or by which the
Assignor is bound), pursuant to the Participation Agreement, the Trust
Agreement, and each other Operative Document to which the Assignor is a party,
each contract, agreement, document or instrument hereby assigned and each other
contract, agreement, document or instrument relating to the Trust Estate by
which the Assignor is bound, and hereby confirms that it shall be deemed a
party to the Participation Agreement, the Trust Agreement and each other
Operative Document to which the Assignor is a party or by which it is bound and
each such other contract, agreement, document and instrument, and shall be
bound by all the terms thereof (including the agreements and obligations of the
Assignor set forth therein) as if therein named as the Owner Participant. The
assignment and assumption contemplated hereby shall not release the Assignor
from its obligations under the Participation Agreement or the Trust Agreement
except to the extent expressly assumed by the Assignee pursuant to this Section
2, provided, that Assignor's rights under Section 7 of the Participation
Agreement and under the Tax Indemnity Agreement to the extent relating to acts,
conditions or events occurring or existing prior to the date hereof shall be
retained in full by Assignor.
3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within
assignment, the Assignor hereby constitutes and appoints the Assignee, and its
successors and assigns, the true and lawful attorneys of the Assignor, with
full power of substitution, in the name of the Assignee or in the name of the
Assignor but on behalf of and for the benefit of and at the expense of the
Assignee, to collect for the account of the Assignee all items sold,
transferred or assigned to the Assignee pursuant hereto; to institute and
prosecute, in the name of the Assignor or otherwise, but at the expense of the
Assignee, all proceedings that the Assignee may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
items sold,
EXHIBIT B - PAGE 2
<PAGE> 72
transferred or assigned; to defend and compromise at the expense of the
Assignee any and all actions, suits or proceedings as to title to or interest
in any of the property acquired by the Assignee; and to do all such acts and
things in relation thereto at the expense of the Assignee as the Assignee shall
reasonably deem advisable. The Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by the Assignor in
any manner or for any reason or by virtue of any dissolution of the Assignor.
4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee,
and the Assignee hereby covenants and agrees to pay over to the Assignor, if
and when received following the date hereof, any amounts (including any sums
payable as interest in respect thereof) paid to or for the benefit of the
Assignee that, under Section 1 hereof, belong to the Assignor.
5. FURTHER ASSURANCES. Each party hereto shall, at any time and from
time to time, upon the request of any other party hereto, promptly and duly
execute and deliver any and all such further instruments and documents and take
such further action as the other party may reasonably request to obtain the
full benefits of this Assignment and of the right and powers herein granted.
6. INVESTMENT PURPOSE. The Assignee hereby represents that it is
acquiring the trust and other interests hereby assigned to it for its own
account for the purpose of investment and not with a view to the distribution
or resale of either thereof.
7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and
warrants that:
(a) it is duly organized and validly existing in good standing
under the laws of its jurisdiction of organization, and has the power
and authority to carry on its business as now conducted, to own or
hold under lease its properties and to enter into and perform its
obligations and the obligations of the Owner Participant under the
Operative Documents to which it is or will be a party;
(b) this Assignment and Assumption Agreement has been duly
authorized by all necessary action on its part, does not require any
approval not already obtained of its stockholders or any approval or
consent not already obtained of any trustee or holders of any of its
indebtedness or obligations, and has been duly executed and delivered
by the Assignee, and neither the execution and delivery thereof, nor
the consummation of the transactions contemplated hereby, nor
compliance by the Assignee with any of the terms and provisions hereof
or of any of the Operative Documents to which it will become a party
or by which it will be bound, will contravene any United States
Federal or state law, judgment,
EXHIBIT B - PAGE 3
<PAGE> 73
governmental rule, regulation or order applicable to or binding on the
Assignee (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to ERISA
(except as set forth in subsection 7(h) below) or aviation or to the
nature of the equipment to be owned by the Owner Trustee, other than
such laws, rules, or regulations relating to lease transactions
generally or to the citizenship requirements of the Assignee under the
Federal Aviation Act) or contravene or result in any breach of or
constitute any default under, or result in the creation of any Lien
(other than Liens provided for in the Operative Documents) upon any
property of the Assignee or, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement, corporate charter, by-law or other agreement or
instrument to which the Assignee is a party or by which it or its
properties may be bound or affected;
(c) each of the Operative Documents to which it will become a
party, assuming such document is the legal, valid and binding
obligation of each other party thereto, will constitute the legal,
valid and binding obligation of the Assignee, enforceable in
accordance with its terms;
(d) there are no pending or, to the knowledge of the Assignee,
threatened actions or proceedings against the Assignee before any
court or administrative agency which, if determined adversely to the
Assignee, would materially adversely affect the ability of the
Assignee to perform its obligations under any Operative Document to
which it will become a party;
(e) upon the execution and delivery of this Assignment and
Assumption Agreement, the Trust Estate and the Trust Indenture Estate
will be free and clear of Lessor Liens (including for the this purpose
Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) attributable to the Assignee;
(f) neither the execution and delivery by the Assignee of this
Assignment and Assumption Agreement, nor the consummation by it of any
of the transactions contemplated hereby, requires the consent or
approval of, the giving of notice to, the registration with, the
recording or filing of any document with, or the taking of any other
action in respect of, any Federal or other governmental authority or
agency (it being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to aviation or to
the nature of the equipment owned by the Owner Trustee, other than
such laws, rules or regulations relating to lease transactions
generally or to the citizenship requirements of the Assignee under
applicable aviation law);
(g) the Assignee is not an "investment company" or a company
controlled by an "investment company" required to register as such
under the Investment Company Act of 1940, as amended;
EXHIBIT B - PAGE 4
<PAGE> 74
(h) either (x) no part of the funds to be used by it to acquire
any right, title or interest in the Trust Estate, or in this
Agreement, the Trust Agreement, the Tax Indemnity Agreement or any
other of the Operative Documents to which the Assignee is a party or
by which the Owner Participant is bound, directly or indirectly
constitutes, or may be deemed under the Code, ERISA or any applicable
state law or any rulings or regulations thereunder to be, the assets
of any "employee benefit plan" as defined in Section 3(3) of ERISA or
of any "plan" within the meaning of Section 4975(e)(1) of the Code or
of any entity the assets of which constitute "plan" assets under
ERISA, or
(y) the transfer to and ownership of such right, title and
interest by the Assignee is and will continue to be covered by
Prohibited Transaction Class Exemption 91-38 or 95-60.
(i) on the date hereof [it is a Citizen of the United States
(without use of a voting trust agreement or voting powers agreement)]
[it has entered into a voting powers or voting trust agreement which
has been approved by the FAA (to the extent required by the Federal
Aviation Act or the FAA)];
(j) the transfer to it of all of the Assignor's right, title and
interest as Owner Participant will not adversely affect the continued
registration of the Aircraft in the name of the Owner Trustee or
violate any provision of the Federal Aviation Act or any rules or
regulations promulgated thereunder, or violate any provisions of the
Securities Act of 1933, as amended, or any other applicable Federal or
state law (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to ERISA
(except as set forth in subsection 7(h) above)); and
(k) [it is a "Transferee" satisfying the conditions set forth in
Section 8(n) of the Participation Agreement] [alternatively, guaranty
meeting the requirements of Section 8(n) of the Participation
Agreement to be provided]; and
(1) such Transferee is not (i) an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the business
of parcel transport by air or (ii) other similar person or a
corporation or other entity controlling, controlled by or under common
control with such an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by
air or other similar person (unless such entity is General Electric
Company, International Lease Finance Corporation, any similar entity
or any of their respective Affiliates, provided, that (I) such entity
is not included within the immediately preceding clause (i) of this
subsection (l) and (II) no such entity has,
EXHIBIT B - PAGE 5
<PAGE> 75
through ownership of common or preferred stock, effective voting
control of an entity described in such immediately preceding clause
(i).
8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents
and warrants that:
(a) it is a corporation duly organized and validly existing in
good standing under the laws of the State of ____________ and has the
requisite power, authority and legal right to enter into and carry out
the transactions contemplated hereby;
(b) this Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding
obligation of Assignor, enforceable against it in accordance with its
terms;
(c) no action or proceeding is pending, has been instituted or, to
the knowledge of Assignor, is threatened, before any court or
governmental agency, nor has any order, judgment or decree been issued
or, to the knowledge of Assignor, is threatened, by any court or
governmental agency which would materially adversely affect the
ability of Assignor to complete and consummate its obligations
contemplated hereby;
(d) the Trust Estate is free of Lessor Liens (including for this
purpose Liens that would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to it;
(e) it has fully performed all of its obligations under the
Participation Agreement and under each other Operative Document to
which it is a party or by which it is bound, which obligations by
their terms are required to be satisfied or performed prior to the
Effective Time or prior to the consummation of the transactions
contemplated hereby;
(f) neither the execution, delivery and performance by it of this
Agreement, nor compliance by it with any of the provisions thereof
requires or will require any approval of its stockholders, or approval
or consent of any trustees or holders of any indebtedness obligations
of it or contravenes or will contravene any law or any order of any
court or governmental authority of agency applicable to or binding on
it (it being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to ERISA) or
contravenes or will contravene the provisions of, or constitute a
default under, its [Certificate of Incorporation] or [By-Laws] or any
indenture, mortgage, contract or any agreement or instrument to which
it is a party or by which it or any of its property may be bound or
affected;
EXHIBIT B - PAGE 6
<PAGE> 76
(g) the transfer to Assignee of all of the Assignor's right, title
and interest as Owner Participant will not violate, or affect
registration of the Aircraft under, any provision of the Federal
Aviation Act (or any rules or regulations promulgated thereunder),
violate the Securities Act of 1933, as amended (and no registration
pursuant to such Act or the rules and regulations thereunder shall be
required in connection with such transfer), or violate any other
applicable Federal or state law (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to ERISA); and
(h) Assignor has assumed the risk of any loss of Interest
Deductions, Amortization Deductions and MACRS Deductions and the risk
of any Inclusion Event (each as defined in the Tax Indemnity
Agreement) resulting from the transfer to Assignee pursuant to the
Assignment.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF ANOTHER STATE.
10. COUNTERPARTS. This Assignment may be executed in any number of
counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by both parties so long
as each party shall sign at least one counterpart.
11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the
benefit of the Owner Trustee, each Loan Participant, each Certificate Holder,
the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the
representations, warranties and covenants of such party contained herein are
also intended to be for the benefit of each Beneficiary, and each Beneficiary
shall be deemed to be an express third party beneficiary with respect thereto,
entitled to enforce directly and in its own name any rights or claims it may
have against such party as such beneficiary.
12. EFFECTIVENESS. This Agreement shall be effective upon its
execution and delivery by each of Assignor and Assignee, the exact time of
occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed
by Assignor and Assignee addressed to Lessee, the Owner Trustee and the
Indenture Trustee.
EXHIBIT B - PAGE 7
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment as of
the day and year first above written.
[ASSIGNOR]
By
--------------------------------------
Title
[ASSIGNEE]
By
--------------------------------------
Title
EXHIBIT B - PAGE 8
<PAGE> 78
EXHIBIT C
TO
PARTICIPATION AGREEMENT
[NW 1996 E]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
<PAGE> 79
** Argentina
* Australia
* Austria
* Belgium
** Brazil
* Canada
** Chile
* Denmark
* Finland
* France
* Germany
** Greece
** Hungary
* Iceland
** India
** Indonesia
* Ireland
* Italy
* Japan
* Luxembourg
** Malaysia
** Mexico
* Netherlands
* New Zealand
* Norway
** People's Republic of China
Portugal
** Republic of China (Taiwan)***
Singapore
** South Africa
South Korea
Spain
* Sweden
* Switzerland
** Thailand
* United Kingdom
. . . . . . . . . . . . . . . . . . . . . . . . .
* Designates "Specified Country"
** Designates "Restricted Country"
EXHIBIT C - PAGE 1
<PAGE> 80
*** So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those in
effect on the Delivery Date.
<PAGE> 81
EXHIBIT D TO
PARTICIPATION
AGREEMENT
FORM OF GUARANTY
[LETTERHEAD OF GUARANTOR]
PARENT GUARANTY
Dated as of ____________ ____, ______
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ]
Ladies and Gentlemen:
Reference is hereby made to the Participation Agreement [NW 1996 E] (as
from time to time amended or supplemented, the "Participation Agreement"), dated
as of April 29, 1996, among Northwest Airlines, Inc. ("Lessee"), [
] (the "Owner Participant"), First Security Bank of Utah, National Association,
not in its individual capacity, except as expressly provided therein, but solely
as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated
as of April 29, 1996, between the Trustee and the Owner Participant (the "Trust
Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and
the Loan Participants listed on Schedule I thereto. Capitalized terms used
herein without definition have the respective meanings ascribed thereto in the
Participation Agreement.
Pursuant to Section 8 of the Participation Agreement and in connection
with the transfer of the Interest (as defined in the Assignment and Assumption
Agreement dated as of the date hereof between [Transferor], a ____________
corporation ("Transferor") and [Transferee], a ____________ corporation
("Transferee") (the "Assumption Agreement'')) to be consummated as of the date
hereof from Transferor to Transferee, the wholly-owned subsidiary of
_________________________ ("Guarantor"), and the execution by Guarantor of the
guaranty of Transferee's obligations as contemplated by the Assumption
Agreement (this "Guaranty"), Guarantor represents and warrants to, and
covenants with, Lessee, First Security Bank of Utah, National Association, in
its individual capacity ("Trust Company"), Indenture Trustee and Loan
Participants, as follows:
EXHIBIT D - PAGE 1
<PAGE> 82
1. Ownership of Transferee. Guarantor directly or indirectly owns
and holds all of the issued and outstanding shares of capital stock of
Transferee.
2. Additional Representations and Warranties.
(i) Guarantor is a corporation duly organized and validly existing
pursuant to the laws of ___________________, and has the corporate power and
authority to enter into and perform this Guaranty.
(ii) The execution, delivery and performance by Guarantor of this
Guaranty has been duly authorized by all necessary corporate action on the part
of Guarantor, does not require any stockholder approval, or approval or consent
of any trustee or holders of any indebtedness or obligations of Guarantor
except such as have been duly obtained, and this Guaranty will not contravene
any applicable law or corporate charter or by-law, or contravene the provisions
of, or constitute a default under, or result in the creation of any Lien upon
the property of Guarantor under, any indenture, mortgage, contract or other
agreement to which Guarantor is a party or by which it may be bound or
affected.
(iii) Neither the execution and delivery by Guarantor of this
Guaranty, nor the consummation of the transactions by Guarantor contemplated
hereby, nor the performance of the obligations hereunder or under any other
documents contemplated hereby or thereby by Guarantor requires the consent or
approval of, the giving of notice to, or the registration with, or the taking
of any other action in respect of, United States Federal, state, or foreign
governmental authority or agency.
(iv) This Guaranty has been duly executed and validly delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms except as the
enforcement of this Guaranty may be affected by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally.
(v) There are no pending or, to Guarantor's knowledge, threatened
actions or proceedings before any court or administrative agency which might
materially adversely affect the consolidated financial condition, business or
operations of Guarantor, or the ability of Guarantor to perform its obligations
under this Guaranty.
(vi) No broker's or finder's fees or commissions or advisory fees
are or may become payable in connection with this Guaranty or the Assumption
Agreement or, if any such fee is payable, such fee will be the responsibility
of Guarantor.
(vii) On the date hereof the Trust Estate will be free of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to Guarantor.
EXHIBIT D - PAGE 2
<PAGE> 83
(viii) Guarantor is (A) a Citizen of the United States (or has
effected a voting trust agreement, voting powers agreement or other similar
arrangement) and (B) a bank, insurance company, financial institution or
domestic corporation the net worth of which is at least $50,000,000.
3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably
guarantees, not merely as surety but as obligor:
(i) the due and punctual payment of any and all sums which are
payable by Transferee pursuant to any provision of the Assumption
Agreement (and in particular, Section 4 thereof) and the Participation
Agreement, the Tax Indemnity Agreement and any other Operative
Document assumed by Transferee pursuant to the Assumption Agreement
(collectively, the "Guaranteed Agreements"), and
(ii) the due and punctual performance of and compliance with
and observance of all other obligations, covenants, warranties and
undertakings of or conditions contained in or arising under the
Guaranteed Agreements binding upon or made by Transferor and assumed
by Transferee under the Assumption Agreement,
in each case, whether or not Guarantor shall have contributed funds to Lessor
or Transferee, as the case may be, for such payment or performance by Lessor or
Transferee (such payments and other obligations guaranteed hereunder
hereinafter referred to as the "Obligations").
(b) Guarantor agrees that this Guaranty is an unconditional and
absolute guaranty of payment and performance (not merely enforceability) and
that its undertakings hereunder are not contingent upon your bringing any
action against Transferee or resorting to any security and hereby expressly
waives any claim that its undertakings hereunder are so contingent.
(c) Guarantor hereby waives promptness, diligence, demand and all
notices whatsoever as to the obligations and covenants guaranteed hereby and
acceptance of this Guaranty, and waives any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the
undersigned, and agrees that it shall not be required to consent to, or receive
any notice of, any amendment or modification of, or waiver, consent or
extension with respect to, the Guaranteed Agreements that may be made or given
as provided therein.
(d) Guarantor agrees to pay any costs and expenses (including
reasonable fees and disbursements of counsel) that may be paid or incurred by
the beneficiaries hereof in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, Guarantor under this Guaranty.
EXHIBIT D - PAGE 3
<PAGE> 84
(e) Guarantor understands and agrees that its obligations hereunder
shall be construed as continuing, absolute and unconditional without regard to
(i) the validity, regularity or enforceability of any Operative Document, any
of the Obligations or any collateral security therefor or guaranty or right of
offset with respect thereto at any time or from time to time held by any
beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a
defense of payment or performance) that may at any time be available to or be
asserted by Transferee against any beneficiary hereof or (iii) any other
circumstances whatsoever (with or without notice to or knowledge of Transferee
or Guarantor) that constitutes, or might be construed to constitute, an
equitable or legal discharge of Transferee for the Obligations, or of Guarantor
under this Guaranty, in bankruptcy or in any other instance.
4. Quiet Enjoyment. So long as no Event of Default shall have
occurred and be continuing, Guarantor will not permit Transferee or Lessor to
take or cause to be taken any action contrary to Lessee's rights under the
Lease, including, without limitation, Lessee's rights to possession and use of
the Aircraft.
5. No Discharge. The obligations of Guarantor hereunder are
absolute, unconditional and irrevocable and will not be discharged by, and this
Guaranty shall remain in full force and effect notwithstanding: (a) the
assignment, conveyance or other transfer by Guarantor of any or all of its
interest in or capital stock of Transferee, unless such assignment, conveyance
or transfer of all of its interest is to a transferee meeting the requirements
set forth in Section 8(n) of the Participation Agreement and otherwise complies
with the requirements for a transfer as set forth in Section 8(n) of the
Participation Agreement, in which event Guarantor shall be discharged from any
and all liabilities arising hereunder (to the extent such liabilities arise
after such transfer); (b) the assignment, conveyance or other transfer by
Transferee of any or all of its interest in the Trust Estate (as defined in the
Trust Agreement), unless such assignment, conveyance or transfer of all of its
interest is to a transferee meeting the requirements set forth in Section 8(n)
of the Participation Agreement and otherwise complies with the requirements for
a transfer as set forth in Section 8(n) of the Participation Agreement, in
which event Guarantor shall be discharged from any and all liabilities arising
hereunder (to the extent such liabilities arise after such transfer) unless
Guarantor guarantees the obligations of the transferee under Section 8(n) of
the Participation Agreement; (c) the assignment, conveyance or other transfer
by Lessor of any or all of its interest in the Aircraft; (d) any extension or
renewal with respect to any obligation of Transferee or Lessor under the
Guaranteed Agreements; (e) any modification of, or amendment or supplement to,
any of the Guaranteed Agreements; (f) any furnishing or acceptance of
additional security or any release of any security; (g) any waiver, consent or
other action or inaction or any exercise or non-exercise of any right, remedy
or power with respect to Transferee or Lessor, or any change in the structure
of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization,
arrangement, composition, liquidation, dissolution, or similar proceedings with
respect to the Trustee or Transferee; or any other occurrence whatsoever,
except payment in full of all amounts payable by Transferee under the
Guaranteed Agreements and performance in full of all Obligations of Transferee
in accordance with the terms and conditions of the Guaranteed Agreements.
EXHIBIT D - PAGE 4
<PAGE> 85
6. Reinstatement. Guarantor agrees that this Guaranty shall be
automatically reinstated with respect to any payment made prior to any
termination of the Guaranty by or on behalf of Transferee pursuant to the
Participation Agreement or the other Operative Documents to which Transferee is
a party if and to the extent that such payment is rescinded or must be
otherwise restored, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.
7. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any set-off or application of funds of Guarantor by any
beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of
the rights of any beneficiary hereof against Transferee or any collateral,
security or guarantee or right of set-off held by any beneficiary hereof for
the payment of the Obligations, nor shall Guarantor seek or be entitled to seek
any reimbursement from Transferee in respect of payment made by Guarantor
hereunder, until all amounts and performance owing to the beneficiaries hereof
by Transferee on account of the Obligations are paid and performed in full.
8. Severability. Any provision of this Guaranty Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Miscellaneous. This Guaranty shall: (a) be binding upon
Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan
Participants, and their respective successors and assigns and each other holder
from time to time of any interest in the Aircraft or the Operative Documents,
but shall not, and is not intended to, create rights in any other third
parties; (c) not be waived, amended or modified without the written consent of
Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; and (e) subject to Section 6 hereof, remain in full force and effect
until, and shall be terminated upon (1) the payment in full of all sums payable
by Transferee, as the case may be, under the Guaranteed Agreements, and by
Guarantor hereunder, and performance in full of Transferee, in accordance with
the terms and provisions of the Guaranteed Agreements and Guarantor in
accordance with the terms of this Guaranty or (2) the date on which Transferee
shall meet the requirements set forth in Section 8 of the Participation
Agreement without benefit of this Guaranty; provided that Guarantor hereby
covenants and agrees that if Transferee shall at any time thereafter (while
Transferee shall be Owner Participant under the Participation Agreement) fail
to meet such requirements, Guarantor shall immediately reinstate this Guaranty
or execute and deliver to the addressees of this Guaranty a guaranty
substantially identical hereto. All notices to, or requests of, demands on and
other communications with Guarantor shall be made as set forth in the
Participation Agreement.
EXHIBIT D - PAGE 5
<PAGE> 86
[rest of page intentionally left blank]
EXHIBIT D - PAGE 6
<PAGE> 87
Very truly yours,
[GUARANTOR]
By: ______________________________
Name:
Title:
[SIGNATURE PAGE]
EXHIBIT D - PAGE 7
<PAGE> 88
EXHIBIT E TO
PARTICIPATION
AGREEMENT
FORM OF OPINION OF TRANSFEREE COUNSEL
_____________ ___, _______
To Each of the Persons Named on
Schedule A Attached Hereto
Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and
Operative Documents related to Acquisition Thereof on
__________ ____, ______
Ladies and Gentlemen:
We have acted as [special][internal] counsel to [Transferee], a
_____________ corporation (the "Transferee"), in connection with the transfer
by [Transferor], a __________________ corporation (the "Transferor") to
Transferee, of all of its right, title and interest in and to the Aircraft and
the Operative Documents to which the Transferor is a party or by which it is
bound (collectively, the "Transferee Documents") and the assumption by the
Transferee of the Transferor's obligations thereunder. The transfer is being
accomplished by an Assignment and Assumption Agreement, dated as of
____________ ____, _____ made by the Transferee and agreed to and acknowledged
by the Transferor (the "Assumption Agreement"). Capitalized terms used but not
otherwise defined herein are defined as set forth in or by reference in the
Participation Agreement referred to in the Assumption Agreement.
In connection with the opinions expressed herein, we have examined
executed counterparts of the Transferee Documents. We have also examined and
relied upon the accuracy of the originals or certified, conformed, photocopied
or telecopied copies of such corporate records, certificates, instruments and
other documents as we have deemed necessary or appropriate to enable us to
render the opinions expressed herein. In all such examinations, we have
assumed the genuineness of signatures (other than those of the Transferee) on
original documents and the conformity to such original documents of all copies
submitted to us as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by public
officials, we have assumed the same to have been properly given and to be
accurate. As to all matters of fact material to our opinions, we have, when
relevant facts were not independently established, relied upon representations
and warranties contained in the Operative Documents and upon the statements and
certificates furnished to us.
EXHIBIT E - PAGE 1
<PAGE> 89
Based upon and subject to the foregoing and the matters hereinafter
set forth, we are of the opinion that:
1. The Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of ______________.
2. The Transferee has full corporate power, authority and legal right
to carry on its business as now conducted and is duly authorized and empowered
to [execute and deliver] the Transferee Documents and to perform its
obligations thereunder in accordance with the conditions and provisions
thereof.
3. The execution, delivery and performance by the Transferee of the
Transferee Documents have been duly authorized by the Transferee[, and each of
the Transferee Documents has been duly executed and delivered by it].
4. No filing with, notice to or authorization or approval from any
governmental or public body or authority of the United States of America or the
State of ____________ is required in connection with the execution, delivery
and performance by the Transferee of the Transferee Documents.
5. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Transferee) pending or, to our knowledge,
threatened against or affecting the Transferee or any property rights of the
Transferee at law or in equity or before any court, commission or other
administrative agency or instrumentality, which, either individually or in the
aggregate, if determined adversely would materially affect the condition,
financial or otherwise, of the Transferee or its ability to perform its
obligations under the Transferee Documents; and, to our knowledge, the
Transferee is not in default with respect to any order or decree of any court
or governmental commission, agency or instrumentality which would materially
affect the condition, financial or otherwise, of the Transferee or its ability
to perform its obligations under the Transferee Documents.
6. Neither the execution and delivery by the Transferee of the
Transferee Documents nor the consummation of the transactions therein
contemplated or the fulfillment of or compliance with, the terms and provisions
thereof will conflict with or result in a breach of, any of the terms,
conditions or provisions of (i) any law or regulation of the United States of
America or the State of ____________, or (ii) to the best of our knowledge, any
order, injunction or decree of any court or governmental instrumentality
binding upon the Transferee, or (iii) the Certificate of Incorporation or the
By-Laws of the Transferee or (iv) to the best of our knowledge, any bond,
debenture, note, mortgage, indenture, agreement or other instrument to which
the Transferee is now a party or by which it or its property may be bound, or
would constitute (with the giving of notice or the passage of time or both) a
default thereunder or result in the creation or imposition of any lien, charge,
security interest or other encumbrance (except
EXHIBIT E - PAGE 2
<PAGE> 90
as expressly contemplated by the Operative Documents) or any nature whatsoever
upon the Aircraft pursuant to the terms of any such agreement or instrument.
7. Each of the Transferee Documents constitutes a legal, valid and
binding obligation of the Transferee, enforceable against the Transferee in
accordance with the terms thereof, except as the enforceability thereof may be
limited by (a) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (b)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
8. Neither the execution and delivery by the Transferee of the
Transferee Documents, nor the consummation by the Transferee of any of the
transactions contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration or filing with, or the taking of any
other action with respect to, any governmental authority or agency of the
United States of the State of _______________.
We express no opinion as to the laws of any jurisdiction other than
the laws of the State of ______________ and the federal laws of the United
States of America. We note that the Trust Agreement is governed by the laws of
the State of Utah. Insofar as the foregoing opinions relate to the legality,
validity, binding effect and enforceability of the Trust Agreement, we have
assumed for purposes of such opinions (notwithstanding the express provisions
of such agreements to the contrary) that such agreement is governed by the laws
of the State of ______________ and we express no opinion as to the
enforceability of the choice of law provisions in such agreement. In addition,
we express no opinion herein as to (i) any federal or state securities laws,
(ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or
regulations applicable to the particular nature of the equipment acquired by
the Owner Trustee pursuant to the Participation Agreement or the Purchase
Agreement Assignment and (v) ERISA or any other pension and employee benefit
laws, rules or regulations. In addition, we express no opinion as to title in
or to the Trust Estate on the part of any Person.
Insofar as our opinions expressed herein relate to the Tax Indemnity
Agreement, such opinions are addressed and are being rendered solely to Lessee.
In rendering the opinions expressed herein, we have assumed that (a)
each of the Transferee Documents has been duly authorized, executed and
delivered by the respective parties thereto (other than the Transferee) and
constitutes a legal, valid and binding obligation of each of such parties
(other than the Transferee) enforceable against each of such parties in
accordance with the terms thereof, (b) each of such parties (other than the
Transferee) has the requisite power, authority and legal right to enter into
and perform its respective obligations under the Transferee Documents and (c)
the transactions provided for in the Transferee Documents are not within the
prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended.
EXHIBIT E - PAGE 3
<PAGE> 91
This opinion is furnished by us at the request of the Transferee, with
their consent for the sole benefit of the addressees hereof, each of whom we
understand and agree may rely upon the opinions set forth herein. No other
person or entity is entitled to rely on this opinion without our express
written consent. This opinion is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
Very truly yours,
EXHIBIT E - PAGE 4
<PAGE> 92
SCHEDULE A
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
SCHEDULE A - PAGE - 1 -
<PAGE> 1
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
[NW 1996 E]
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 E],
dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "LESSEE"), (ii) [_____________], a [______] corporation (the
"OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as
defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate
Pass Through Trust Agreements (as defined below), (v) STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as subordination agent and trustee (in such capacity, the
"SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below),
and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and
as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and
the Indenture (as defined below).
Except as otherwise defined in this Amendment, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease;
W I T N E S S E T H:
WHEREAS, Lessee, the Owner Participant, the Owner Trustee,
[___________________________], as the loan participants (collectively, the
"ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the
Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 E], dated as
of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement
[NW 1996 E], dated April 30, 1996
<PAGE> 2
(collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee
issued to the Original Loan Participants secured certificates substantially in
the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES")
as evidence of the loan then being made by the Original Loan Participants in
participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29,
1996, as supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30,
1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set
forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into a Tax
Indemnity Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29,
1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Guarantor entered into the Guarantee [NW
1996 E] dated as of April 29, 1996 (the "GUARANTEE"), pursuant to which the
Guarantor guaranteed certain obligations of Lessee;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant Guarantor entered into
the Owner Participant Guaranty [NW 1996 E] dated as of April 29, 1996 (the
"OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant
Guarantor guaranteed certain obligations of the Owner Participant under the
Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and Lessee has given its written notice
to the Owner Participant and the Owner Trustee pursuant to such Section 17 of
its desire to implement such a refinancing operation;
WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent have entered into the Refunding Agreement [NW 1996 E],
dated as of June 3, 1996 (the "REFUNDING AGREEMENT");
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<PAGE> 3
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and
restated the Original Indenture as the Amended and Restated Trust Indenture and
Security Agreement [NW 1996 E], dated as of the date hereof (the "INDENTURE"),
under which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 E], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE");
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Participant and Lessee entered into the First
Amendment to Tax Indemnity Agreement [NW 1996 E] dated as of June 3, 1996 (the
"TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the
TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Participant and the Owner Trustee have entered into the
First Amendment to Trust Agreement [NW 1996 E] dated as of the date hereof (the
"TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by
the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date
(as defined in Section 1 of the Refunding Agreement), three separate grantor
trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS
THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied in part by the Pass
Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of
each Pass Through Trust, all of the Refinancing Secured Certificates bearing
the same interest rate as the Certificates issued by such Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New
York branch (the "LIQUIDITY PROVIDER") entered into three revolving credit
agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders
of Certificates of each Pass Through Trust, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the
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<PAGE> 4
Subordination Agent entered into the Intercreditor Agreement, dated as of the
date hereof (the "INTERCREDITOR AGREEMENT"); and
WHEREAS, the Refinancing Secured Certificates will be held by
the Subordination Agent pursuant to the Intercreditor Agreement on behalf of
the Pass Through Trusts;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree that the Original Participation
Agreement is amended as follows:
SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation
Agreement is hereby amended by (i) adding the words "or the Pass Through
Certificates" (1) before and after the clause "or transfer of the Secured
Certificates" in clause (E) thereof and (2) after the clause "the Secured
Certificates" in clause (F) thereof and (ii) adding the words and punctuation
"(including any Make-Whole Amount)" after the word "premium" in clause (F)
thereof.
SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation
Agreement is hereby amended by (i) deleting the words "other than a Loan
Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and
(4) thereof in their entirety and substituting therefor "Intentionally
Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof
and substituting therefor the words "the Indenture Trustee or the Trust
Indenture Estate", (iv) deleting the words "any Loan Participant or any
Certificate Holder" from clause (9) thereof and substituting therefor the words
"the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B)
in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in
clause (10) thereof and substituting therefor "(B)", and (vii) deleting the
parenthetical clause and the proviso from clause (12) thereof.
SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE
ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original
Participation Agreement is hereby amended by (i) deleting the words "U.S.
Withholding Taxes" where such words first appear in the second sentence of the
first paragraph thereof and substituting therefor "any Income Tax imposed by
the Unites States Federal government required to be withheld from payments on
the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING
TAX")" and (ii) deleting the second sentence in the last paragraph thereof.
SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation
Agreement is hereby amended by (i) deleting the third and fourth sentences
thereof and (ii) deleting the words "other than a Loan Participant" in the
first sentence thereof.
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<PAGE> 5
SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement
is hereby amended by (i) deleting the word "and" between the words "expenses"
and "Transaction Expenses" in the second parenthetical phrase of the first
paragraph thereof and substituting a comma therefor, (ii) inserting after the
phrase "to Section 16 hereof" in such second parenthetical phrase the words
"and Refinancing Expenses to the extent not required to be paid by the Owner
Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding
Agreement", (iii) adding the words and punctuation "and, only in the case of an
Indemnitee who is the Owner Participant and its Affiliates, successors,
permitted assigns, directors, officers, employees, servants and agents, the
Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust
Agreements and, only in the case of an Indemnitee who is the Subordination
Agent, the Intercreditor Agreement and the Liquidity Facilities" after the
words "respect thereof" in the first clause (A) thereof, and (iv) adding the
words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or
the Pass Through Trust Agreements" after the words "Operative Documents" in the
second clause (A) thereof and in the second clause (B) thereof.
SECTION 7. [Reserved]
SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement
is hereby amended by deleting the words "each of the Loan Participants" and
substituting therefor the words "the Indenture Trustee" in the first line
thereof.
SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement
is hereby amended by (i) deleting the words and punctuation ", any Loan
Participant's," from the first sentence thereof, (ii) deleting the words and
punctuation "the Loan Participants," each time they appear in the second
sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and
"the Indenture Trustee" in clause (N) of the third sentence thereof and
substituting therefor "and", (iv) deleting the words "and the Loan
Participants" from clause (N) of the third sentence thereof, and (v) deleting
the words and punctuation "the Loan Participants," from the fifth sentence
thereof.
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<PAGE> 6
SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation
Agreement is hereby amended by (i) deleting the word "Each" in the first
sentence thereof and substituting therefor the words "The Owner" and (ii)
adding a new sentence to the end thereof to read as follows: "The Pass Through
Trustee agrees that it will not agree to any amendment, modification or waiver
of Section 1.01(e)(i) of the initial supplement (other than the initial
supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to
each Pass Through Trust Agreement without the prior written consent of the
Owner Participant.".
SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement
is hereby amended by deleting the fourth and fifth sentences thereof.
SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement
is hereby amended by (i) deleting the words and punctuation ", each Loan
Participant" therefrom and (ii) adding a new second paragraph thereto at the
end thereof:
Notwithstanding the foregoing, Lessee shall not be
entitled to assume the obligations of the Owner Trustee in
respect of the Secured Certificates unless Lessee causes to be
delivered to the Indenture Trustee an opinion of counsel to
the effect that (i) the Lien of the Trust Indenture continues
to be a valid and duly perfected first priority security
interest in and to the Aircraft and (ii) the Indenture Trustee
should be entitled to the benefits of 11 U.S.C. Section 1110;
provided that the opinion required by subclause (ii) need only
be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C.
Section 1110.
SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation
Agreement is hereby amended by (i) deleting the words "each" the first time it
appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner",
(ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii)
and substituting therefor the words "the Indenture Trustee and the Owner",
(iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement
Assignment", the words and punctuation ", the Refunding Agreement", (iv)
deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and
substituting therefor the words "the Owner", and (v) deleting the word
"Participants" from Section 8(y)(A)(iv) and substituting therefor the words
"the Indenture Trustee and the Owner Participant".
SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
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<PAGE> 7
SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
(ii) Lessee agrees and covenants that it shall not
purchase, guarantee or acquire any interest in (i) any Secured Certificate
(except as provided in Section 8(x)) or Pass Through Certificate or (ii) any
Advance by the Liquidity Provider.
SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and
all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is
hereby amended by (i) deleting the words and punctuation ", the Loan
Participants" from clause (A) thereof, (ii) deleting the words "Loan
Participants" the second time they appear in clause (B) thereof and
substituting therefor the words "Indenture Trustee", and (iii) deleting the
words "or 10.05" from clause (iii) of the second sentence thereof.
SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement
is hereby amended by deleting the words "at the foot of this Agreement" in
clause (A) of the second sentence thereof and substituting therefor the words
"on the signature pages to the Refunding Agreement".
SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is
hereby amended by (i) deleting the words "Loan Participants" each time they
appear in clauses (A), (B), and (D) thereof and substituting therefor the words
"Indenture Trustee", (ii) deleting the "," both times it appears between the
words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and
substituting therefor "and", and (iii) deleting the words "and the Loan
Participants" both times they appear in clause (E) thereof.
SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement
is hereby amended to read in its entirety as follows:
Section 15. Miscellaneous. (a) The Owner
Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent
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<PAGE> 8
requested of the Owner Trustee, as Lessor, under the terms of
the Lease which by its terms is not to be unreasonably
withheld by the Owner Trustee, as Lessor.
SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is
hereby amended by adding the following new subclause (7) to clause (a) thereof:
(7) in connection with any proposed refinancing,
if, on the date which is two Business Days prior to the last
date on which notice of revocation of redemption may be given
pursuant to Section 2.12(b) of the Trust Indenture, the Owner
Participant is not satisfied in its sole discretion that such
refinancing will occur on the date specified for such
refinancing in the notice provided pursuant to Section 2.11 of
the Trust Indenture, then Lessee shall not effect such
proposed refinancing and shall provide notice to such effect
to the Indenture Trustee pursuant to Section 2.12(b) of the
Trust Indenture.
SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL
PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement
and all references thereto in the Original Participation Agreement are hereby
deleted.
SECTION 25. RATIFICATION. Except as hereby modified, the
Original Participation Agreement shall continue in full force and effect as
originally executed. From and after the date of this Amendment, each and every
reference in the Participation Agreement, as amended hereby, to "this
Agreement", "herein", "hereof" or similar words or phrases referring to the
Participation Agreement or any word or phrase referring to a section or
provision of the Participation Agreement is deemed for all purposes to be a
reference to the Participation Agreement or such section or provision as
amended pursuant to this Amendment.
SECTION 26. MISCELLANEOUS. (a) Without in any way
affecting the provisions of the letter agreement dated April 30, 1996 between
the Owner Participant and Lessee (which letter agreement shall remain in full
force and effect) relating to future financings, each of the parties hereto
agrees that the transactions contemplated hereby shall constitute one of the
three refinancing operations permitted in Section 17 of the Participation
Agreement.
(b) Each party hereto acknowledges and agrees that the
Purchaser is a Loan Participant under the Participation Agreement, the Lease
and the other Operative Documents, and is entitled to the benefits of the
covenants and other provisions therein running in favor of the Loan
Participants, and to the security purported to be afforded by the Trust
Indenture, but that (i) the Purchaser has no liability arising out of any
actions or inactions of the Original Loan Participants or any prior Certificate
Holder or any event or condition which occurred or existed prior to the
Closing, (ii) the Purchaser is making no representations or warranties other
than those set forth in the Refunding Agreement, and (iii) the Purchaser has no
liability or obligation under any covenant in any of such agreements for any
period prior to the Closing.
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<PAGE> 9
(c) This Amendment may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument. Neither this Amendment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Amendment shall be
binding upon, and inure to the benefit of, Lessee and its successors and
assigns, each Loan Participant and its successors and assigns, the Owner
Participant and its successors and assigns, each Certificate Holder and its
successors and registered assigns, the Indenture Trustee and its successors as
Indenture Trustee under the Trust Indenture and the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement. THIS AMENDMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By:
-----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
By:
-----------------------------------
Name:
Title:
[_______________],
as Owner Participant
By:
-----------------------------------
Name:
Title:
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<PAGE> 11
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
By:
-----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
in its individual capacity and as
Indenture Trustee
By:
-----------------------------------
Name:
Title
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<PAGE> 12
SCHEDULE I TO
PARTICIPATION AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A, dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B, dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C, dated as of June 12, 1996.
-12-
<PAGE> 1
REFUNDING AGREEMENT
[NW 1996 E]
This REFUNDING AGREEMENT [NW 1996 E], dated as of June 3, 1996, among
(i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii)
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii)
[____________________] (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the
Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of
the three separate Pass Through Trust Agreements (as defined below), (vi) STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as subordination agent and trustee (in such
capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as
defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE")
under the Original Indenture and the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Participation
Agreement (as defined below) as if the Closing Date had occurred.
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [INSERT
BRIDGE LENDERS] as the loan participants (collectively, the "ORIGINAL LOAN
PARTICIPANTS") and the Indenture Trustee entered into the Participation
Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION
AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft
(the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust
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Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, as
supplemented by Trust Agreement and Indenture Supplement [NW 1996 E], dated
April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the
Owner Trustee issued to the Original Loan Participants secured certificates
substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED
CERTIFICATES") as evidence of the loan then being made by the Original Loan
Participants in participating in the payment of Lessor's Cost;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the Lease
Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996, as
supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30, 1996 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed
to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant and the Owner Trustee entered
into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL
TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into a Tax Indemnity
Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996 (the
"ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 E]
dated as of April 29, 1996 (the "GUARANTEE") pursuant to which the Guarantor
guaranteed certain obligations of the Lessee under the Operative Documents;
WHEREAS, Section 17 of the Original Participation Agreement
contemplates the redemption of the Original Secured Certificates pursuant to
Section 2.10 of the Original Indenture as part of a refinancing operation,
Section 3(d) of the Original Lease contemplates the adjustment of Rent in the
event of such a refinancing operation, and the Lessee has given its written
notice to the Owner Participant and the Owner Trustee pursuant to such Section
17 of its desire to implement such a refinancing operation;
WHEREAS, at the Closing (as defined below), the Owner Trustee and the
Indenture Trustee will amend and restate the Original Indenture as the Amended
and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of the
Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will
issue new secured certificates substantially in the form set forth in Section
2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series;
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WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Trustee and the Lessee entered into the First Amendment to
Lease Agreement [NW 1996 E], dated as of the date hereof (the "LEASE AMENDMENT
NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the
"LEASE"), containing amendments, modifications and additions necessary to give
effect to the transactions described herein;
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into the First Amendment to Trust Agreement [NW 1996 E], dated as of
the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust
Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST
AGREEMENT");
WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass
Through Trustee, the Owner Participant, the Indenture Trustee and the
Subordination Agent will enter into the First Amendment to Participation
Agreement [NW 1996 E], dated as of the Refinancing Date (the "PA AMENDMENT NO.
1"; the Original Participation Agreement, as amended by the PA Amendment No. 1,
the "PARTICIPATION AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this Refunding
Agreement, the Owner Participant and Lessee entered into the First Amendment to
Tax Indemnity Agreement [NW 1996 E] dated as of the date hereof (the "TIA
AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA
Amendment No. 1, the "TAX INDEMNITY AGREEMENT");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the
"PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, three separate
grantor trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a
"PASS THROUGH TRUST") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust will be applied in part by the Pass Through Trustee at
the Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refinancing Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale,
acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into
three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the
benefit of the holders of Certificates of each Pass Through Trust, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity
Provider and the Subordination Agent will enter into the Intercreditor
Agreement, dated as of the Refinancing Date (the "INTERCREDITOR AGREEMENT"); and
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WHEREAS, the Refinancing Secured Certificates will be held by the
Subordination Agent pursuant to the Intercreditor Agreement on behalf of the
Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June 12, 1996 or on such other date agreed to by the parties hereto (the
"REFINANCING DATE"):
(i) immediately prior to the Closing, the Owner Participant
shall pay to the Owner Trustee an amount equal to the unpaid interest
on the Original Secured Certificates accrued up to but not including
the Refinancing Date;
(ii) the Pass Through Trustee for each Pass Through Trust shall
pay to the Owner Trustee the aggregate purchase price of the
Refinancing Secured Certificates being issued to such Pass Through
Trustee as set forth in clause (vii) below;
(iii) the Owner Trustee shall pay to the Indenture Trustee for
the benefit of the holders of the Original Secured Certificates an
amount equal to the aggregate principal amount of Original Secured
Certificates outstanding on the Refinancing Date, together with accrued
and unpaid interest on the Original Secured Certificates up to but not
including the Refinancing Date, and all other amounts payable to such
holders by the Owner Trustee under the Original Indenture and the
Original Participation Agreement;
(iv) pursuant to the Indenture, the Indenture Trustee shall
disburse to the holders of the Original Secured Certificates the
amounts of principal and interest, and other amounts, if any, described
in clause (iii) above, owing to them on the Refinancing Date with
respect to the Original Secured Certificates as a prepayment of the
Original Secured Certificates;
(v) simultaneously with the disbursement by the Indenture
Trustee of amounts described in clause (iv) above to the holders of the
Original Secured Certificates, the Indenture Trustee shall receive the
Original Secured Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture;
(vii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Refinancing Secured
Certificates of the
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<PAGE> 5
maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust; and
(viii) the Owner Trustee shall disburse to the Owner Participant
the excess of the amounts received by it pursuant to clauses (i) and
(ii) above over the amount paid by it pursuant to clause (iii) above.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) In case any Pass Through Trustee shall for any reason fail to
purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on
or prior to June 12, 1996 or such other date as shall be agreed in writing by
the parties hereto, the written notice given by the Lessee pursuant to Section
17 of the Original Participation Agreement shall be deemed never to have been
given, none of the Owner Participant, the Owner Trustee nor the Lessee shall
have any obligation to pay to the holders of the Original Secured Certificates
or the Indenture Trustee any amount in respect of the prepayment of the Original
Secured Certificates, the Original Secured Certificates shall remain outstanding
and in full force and effect, and the actions contemplated by Sections 1(a), 5,
6 and 7 hereof shall not take place.
(d) The closing (the "CLOSING") of the transactions described in this
Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such
other place as the parties hereto may agree.
(e) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Refinancing Date.
(f) In order to facilitate the transactions contemplated hereby, the
Lessee and the Guarantor have entered into the Underwriting Agreement, dated the
date hereof, among the Lessee, the Guarantor and the several underwriters (the
"UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to
the terms and conditions hereof, the Lessee and the Guarantor will enter into
each of the Pass Through Trust Agreements and will undertake to perform certain
administrative and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured
Certificates shall be payable as to principal in accordance with the terms of
the Indenture, and the Refinancing Secured Certificates shall provide for a
fixed rate of interest per annum and shall contain the terms and provisions
provided for the Refinancing Secured Certificates in the Indenture. The Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and deliver
to the Pass Through Trustee for each Pass Through Trust, a principal amount of
Refinancing Secured Certificates bearing the interest rate set forth opposite
the name of such
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<PAGE> 6
Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates
in the aggregate shall be in the principal amounts set forth on Schedule II
hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of
the other Operative Documents, all such Refinancing Secured Certificates shall
be dated and authenticated as of the Refinancing Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee and the Owner Participant to make the payments and
participate in the transactions contemplated by this Agreement on the
Refinancing Date are subject to the fulfillment, prior to or on the Refinancing
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder, and paragraph (r) shall not be a
condition precedent to the obligations of the Pass Through Trustee hereunder):
(a) The Owner Trustee shall have tendered the Refinancing Secured
Certificates to the Indenture Trustee for authentication, and the Indenture
Trustee shall have authenticated such Refinancing Secured Certificates and shall
have tendered the Refinancing Secured Certificates to the Subordination Agent on
behalf of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(1) this Agreement;
(2) the Lease Amendment No. 1;
(3) the Indenture;
(4) the PA Amendment No. L;
(5) the Trust Agreement Amendment No. 1;
(6) each of the Pass Through Trust Agreements;
(7) the Intercreditor Agreement; and
(8) the Liquidity Facility for each of the Class A, Class B and
Class C Trusts.
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(c) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Lessee and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Lease
Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust
Agreements, the TIA Amendment No. 1 and any other documents to be
executed on behalf of the Lessee or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Lessee
and the Guarantor (as the case may be), 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 Lessee or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Lessee
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Lessee and certified by the
Secretary of State of the State of Delaware in the case of the
Guarantor, a copy of the by-laws of the Lessee and the Guarantor,
certified by the Secretary or Assistant Secretary of the Lessee and
the Guarantor (as the case may be), and a certificate or other
evidence from the Secretary of State of the State of Minnesota in
the case of the Lessee and from the Secretary of State of the State
of Delaware in the case of the Guarantor, dated as of a date
reasonably near the Refinancing Date, as to the due incorporation
and good standing of the Lessee or the Guarantor (as the case may
be) in such state.
(d) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee (and, with respect to the matters set forth in clauses (4)
and (5) below, of the Guarantor), dated the Refinancing Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Original
Lease and has a current, valid certificate of airworthiness;
(2) the FAA Bill of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Original Trust
Agreement
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<PAGE> 8
has been duly filed, with the FAA pursuant to the sections of Title
49, United States Code, relating to aviation (the "FEDERAL AVIATION
ACT");
(3) the Aircraft has been registered with the FAA in the
name of the Owner Trustee and the Lessee has authority to operate
the Aircraft;
(4) the representations and warranties contained herein of
the Lessee and the Guarantor are correct as though made on and as
of the Refinancing Date, except to the extent that such
representations and warranties (other than those contained in
clause (v) of Section 8(d)) relate solely to an earlier date (in
which case such representations and warranties were correct on and
as of such earlier date); and
(5) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as
a whole, since December 31, 1995.
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Indenture, the PA Amendment No. 1, the Pass Through
Trust Agreements and any other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture 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 Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
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(f) The Pass Through Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any
other documents to be executed on behalf of the Owner Trustee in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
the Owner Trustee, certified by the Secretary or an Assistant
Secretary of the Owner 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
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Refinancing Date, certifying that the
representations and warranties contained herein of the Owner
Trustee are correct as though made on and as of the Refinancing
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such
earlier date).
(g) The Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Refinancing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Refinancing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report as
to the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(i) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Simpson
Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion
addressed to it from Cadwalader, Wickersham & Taft, special counsel for the
Lessee and the Guarantor, and an
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opinion addressed to it from the Lessee's legal department, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Bingham,
Dana & Gould LLP, special counsel for the Indenture Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Dewey Ballantine, special counsel for
the Owner Participant, and an opinion addressed to it from corporate counsel to
the Owner Participant, in each case in form and substance satisfactory to each
of them.
(m) The Pass Through Trustee shall have received an opinion of White &
Case, special counsel for the Liquidity Provider, and in-house German counsel
for the Liquidity Provider, each in form and substance satisfactory to the Pass
Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance
satisfactory to each of them.
(o) The Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall have
transferred to the Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Refinancing Secured
Certificates to be purchased from the Owner Trustee.
(p) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
the Pass Through Trustees to make the payments described in Section 1(a)(ii) or
for the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refinancing Date.
(q) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee or the Guarantor which are required in
connection with the Pass Through Trustee's making of the payments described in
Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation
in the transactions contemplated by this Agreement on the Refinancing Date shall
have been duly obtained.
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(r) The Lessee and the Owner Participant shall each have executed and
delivered to the other the TIA Amendment No. 1.
Promptly following the recording of the Lease Amendment No. 1 and the
Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the
Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Lease Amendment
No. 1 and the Indenture.
SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH
TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in
the transactions contemplated by this Agreement and to execute and deliver each
of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to
the receipt by the Lessee and the Guarantor of (i) each opinion referred to in
subsections (j) through (n) of Section 3, addressed to the Lessee and the
Guarantor or accompanied by a letter from counsel rendering such opinion
authorizing the Lessee and the Guarantor to rely on such opinion as if it were
addressed to the Lessee and the Guarantor, (ii) each certificate referred to in
subsections (e) through (g) of Section 3, (iii) executed counterparts or
conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment
No. 1 and (iv) such other documents and evidence with respect to each other
party hereto as the Lessee, the Guarantor or their counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement, the taking of all necessary corporate action in
connection therewith and compliance with the conditions herein set forth.
(b) The respective obligation of each of the Lessee, the Guarantor, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate in
the transactions contemplated hereby is subject to the receipt by each of them
of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Refinancing Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are correct as though
made on and as of the Refinancing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the Indenture, and the Owner
Trustee and the Indenture Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture. The
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Lessee and the Guarantor, by execution and delivery hereof, consent to such
execution and delivery of the Indenture. The Indenture shall be effective as of
the Refinancing Date.
SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction
or waiver of the conditions precedent set forth herein, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant, by execution and delivery
hereof, consent to the amendment to the Original Lease effected by, and request
and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1,
and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to
execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall
be effective as provided therein.
SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Owner Participant, by execution and delivery hereof, requests, authorizes and
directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the
Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree
to execute and deliver the PA Amendment No. 1. Upon the execution and delivery
of the PA Amendment No. 1 by each of the parties thereto, the Original
Participation Agreement shall be amended as set forth in the PA Amendment No. 1,
and the Subordination Agent and each Pass Through Trustee shall be a party
thereto from and after the Refinancing Date to the extent set forth in such PA
Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing
Date.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE
GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass
Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity
Provider and the Indenture Trustee that:
(a) each of the Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had on the respective
dates of execution thereof, the corporate power and authority to enter
into and perform its obligations under (i) in the case of the Lessee,
this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the
Pass Through Trust Agreements, the Underwriting Agreement, the TIA
Amendment No. 1 and the other Operative Documents to which it is a
party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations
or the nature of its business requires other than failures to so
qualify which would not have a material adverse effect on the condition
(financial or otherwise), consolidated business or properties of it and
its subsidiaries considered as one enterprise;
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(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(c) the execution and delivery by the Lessee or the Guarantor (as
the case may be) of this Agreement, the Lease Amendment No. 1, the PA
Amendment No. 1, the Pass Through Trust Agreements, the Underwriting
Agreement, the TIA Amendment No. 1 and each other Operative Document to
which the Lessee or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Lessee or the Guarantor (as
the case may be) under this Agreement, the Participation Agreement, the
Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
the Lessee or the Guarantor (as the case may be) is a party, have been
duly authorized by all necessary corporate action on the part of the
Lessee or the Guarantor, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material
indebtedness or material obligations of the Lessee or the Guarantor,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation or
order binding on the Lessee or the Guarantor (as the case may be) or
the certificate of incorporation or by-laws of the Lessee or the
Guarantor (as the case may be), or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of the Lessee or the
Guarantor (as the case may be) under, any indenture, mortgage, contract
or other agreement to which the Lessee or the Guarantor (as the case
may be) is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate, would
be reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the Guarantor and
its subsidiaries considered as one enterprise;
(d) neither the execution and delivery by the Lessee or the
Guarantor (as the case may be) of this Agreement, the Lease Amendment
No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the
Underwriting Agreement, the TIA Amendment No. 1 or any other Operative
Document to which the Lessee or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Lessee or the
Guarantor (as the case may be) hereunder or under the Participation
Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Lessee or the Guarantor (as the case may be) is
a party, nor the consummation by the Lessee or the Guarantor (as the
case may be) of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state or
foreign
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<PAGE> 14
governmental authority having jurisdiction, other than (i) the
registration of the Certificates under the Securities Act of 1933, as
amended, and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, pursuant
to an order of the Securities and Exchange Commission, (iii) the
consents, approvals, notices, registrations and other actions referred
to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement,
(iv) the registrations and filings referred to in Section 8(f), and (v)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the
date hereof or the failure of which to obtain, take, give or make would
not be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(e) this Agreement constitutes, and each of the Participation
Agreement, the Pass Through Trust Agreements, the Tax Indemnity
Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment
No. 1 and the Lease Amendment No. 1 shall have been executed and
delivered by each of the parties thereto, will constitute, the legal,
valid and binding obligations of the Lessee or the Guarantor (as the
case may be) enforceable against the Lessee or the Guarantor (as the
case may be) in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as limited by applicable laws which
may affect the remedies provided in the Lease, which laws, however, do
not make the remedies provided in the Lease inadequate for practical
realization of the benefits intended to be afforded thereby;
(f) except for the filings and registrations referred to in
Section 7(a)(vi) of the Participation Agreement, such filings and
registrations as shall have been made or effected subsequent thereto
and the filing for recording pursuant to the Federal Aviation Act of
the Indenture and the Lease Amendment No. 1, no further 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 under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States other than
the taking of possession by the Indenture Trustee of the original
counterparts of
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<PAGE> 15
the Original Lease and the Lease Amendment No. 1 (to the extent the
Lease constitutes chattel paper) and the filing of continuation
statements at periodic intervals with respect to the Uniform Commercial
Code financing statements in effect on the Refinancing Date covering
the security interests created by the Original Indenture or describing
the Lease as a lease;
(g) neither the Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(h) neither the Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(i) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both; and
(j) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
parties below represents, warrants and covenants to each of the other parties to
this Agreement and to the Liquidity Provider as follows:
(a) The Indenture Trustee in its individual capacity represents,
warrants and covenants that:
(1) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of any voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture Trustee
as provided in Section 8.02 of the Indenture promptly after it obtains
actual knowledge that it has ceased to be such a Citizen of the United
States (without making use of a voting trust, voting powers agreement
or similar arrangement), and has the full corporate power, authority
and legal right under the laws of the Commonwealth of Massachusetts and
the United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the PA Amendment No. 1,
the Indenture and each other Operative Document to which it is a party
and to carry out its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party;
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<PAGE> 16
(2) the execution and delivery by the Indenture Trustee of this
Agreement, the Indenture, the PA Amendment No. 1 and each other
Operative Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Participation Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by the
Indenture Trustee and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Participation Agreement,
when the PA Amendment No. 1 has been executed and delivered by the
Indenture Trustee, and the Indenture, when executed and delivered by
the Indenture Trustee, will constitute, the legal, valid and binding
obligations of the Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a proceeding
at law or in equity;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(5) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(b) The Owner Trustee, in its individual capacity (except as provided
in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7)
and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and
(11) below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good
standing under the laws of the United States, has full corporate power
and authority to carry on its business as now conducted, has, or had on
the respective dates of execution thereof, the corporate power and
authority to execute and deliver the Original Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has, or had on the respective dates of execution thereof
(assuming the authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and to the
extent expressly provided herein or therein, in its individual
capacity, the corporate
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<PAGE> 17
power and authority to execute and deliver and to carry out the terms
of this Agreement, the Indenture, the Refinancing Secured Certificates,
the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1
and each other Operative Document (other than the Trust Agreement) to
which it is a party;
(2) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement constitutes, and each of the
Participation Agreement, when the PA Amendment No. 1 shall have been
entered into, the Indenture, when entered into, the Lease, when the
Lease Amendment No. 1 shall have been entered into, and the Trust
Agreement, when the Trust Agreement Amendment No. 1 shall have been
entered into, will constitute, a legal, valid and binding obligation of
the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, enforceable against it in its individual capacity or
as Owner Trustee, as the case may be, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Refinancing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Refinancing Secured Certificates pursuant to the terms and provisions
hereof and of the Indenture, and each Refinancing Secured Certificate
on the Refinancing Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms of
such Refinancing Secured Certificate and the Indenture;
(4) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Original Participation Agreement, the PA Amendment
No. 1, the Original Trust Agreement, the Trust Agreement Amendment No.
1, the Original Indenture, the Indenture, the Original Lease, the Lease
Amendment No. 1, the Refinancing Secured Certificates or any other
Operative Document to which it is a party, nor the consummation by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or thereby,
nor the compliance by the Owner Trustee, in its individual capacity or
as Owner Trustee, as the case may be, 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 it, or (B) violates or
will violate its articles of association or by-laws, or contravenes or
will contravene any provision of, or
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<PAGE> 18
constitutes or will constitute a default under, or results or will
result in any breach of, or results or will result in the creation of
any Lien (other than as permitted under the Operative Documents) upon
its property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement,
license or other agreement or instrument to which it is a party or by
which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the
State of Utah governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of, or the carrying out by, the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or by the
Trust Agreement, the Participation Agreement, the Indenture, the Lease,
the Refinancing Secured Certificates, or any other Operative Document
to which it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor Lien (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere in any
way with the use or operation of the Aircraft by the Lessee (or any
Sublessee), (C) the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the Indenture, (D)
which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(7) there exists no Lessor Lien (including for this purpose
Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease, other than any Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of
Lessor Liens) (A) the existence of which poses no material risk of the
sale, forfeiture or loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not interfere
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<PAGE> 19
in any way with the use or operation of the Aircraft by the Lessee (or
any Sublessee), (C) the existence of which does not affect the priority
or perfection of, or otherwise jeopardize, the Lien of the Indenture,
(D) which the Owner Trustee is diligently contesting by appropriate
proceedings and (E) the existence of which does not result in actual
interruption in the receipt and distribution by the Indenture Trustee
in accordance with the Indenture of Rent assigned to the Indenture
Trustee for the benefit of the Certificate Holders;
(8) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
redemption of the Original Secured Certificates or the issuance of the
Refinancing Secured Certificates, or the execution and delivery in its
individual capacity or as Owner Trustee, as the case may be, of any of
the instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were not located in the State of Utah and First Security Bank of Utah,
National Association had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner Trustee) any
or all of its duties under the Operative Documents in, and (c) engaged
in any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses
(1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(11) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Refinancing Secured
Certificate or Certificate or any interest in or to the Trust Estate,
the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Pass
Through Trustee, the Original Loan Participants and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on
its behalf (it being understood that in arranging and proposing the
refinancing contemplated hereby and agreed to herein by the Owner
Trustee, the Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Refinancing Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest
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for sale to, or to solicit any offer to acquire any of the same from,
any person; and
(12) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) The Owner Participant is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
[__________] and has the corporate power and authority to carry on its
present business and operations and to own or lease its properties,
has, or had on the respective dates of execution thereof, as the case
may be, the corporate power and authority to enter into and to perform
its obligations under this Agreement, the Original Participation
Agreement, the Original Trust Agreement, the Tax Indemnity Agreement,
the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1
and the Trust Agreement Amendment No. 1; this Agreement has been duly
authorized, executed and delivered by the Owner Participant; and this
Agreement constitutes, and the Participation Agreement when the PA
Amendment No. 1 shall have been entered into, the Tax Indemnity
Agreement when the TIA Amendment No. 1 shall have been entered into,
and the Trust Agreement when the Trust Agreement Amendment No. 1 shall
have been entered into, will constitute, the legal, valid and binding
obligations of the Owner Participant enforceable against it in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at law
or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the PA Amendment No. 1, the TIA
Amendment No. 1, the Trust Agreement Amendment No. 1 or any other
Operative Document to which it is a party nor (B) compliance by the
Owner Participant with all of the provisions hereof or thereof, (x)
will contravene any law or order of any court or governmental authority
or agency applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect to
laws, rules or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws, rules or
regulations relating to the citizenship requirements of the Owner
Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
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(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
(other than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by the Owner Participant of this
Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the
Trust Agreement Amendment No. 1;
(4) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating
and otherwise taking any action in connection with the refinancing
contemplated hereby and agreed to herein by the Owner Participant, the
Lessee has not acted as agent of the Owner Participant) has directly or
indirectly offered any Refinancing Secured Certificate or Certificate
or any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person; the Owner Participant's interest in the
Trust Estate and the Trust Agreement was acquired for its own account
and was purchased for investment and not with a view to any resale or
distribution thereof;
(6) on the Refinancing Date, the Trust Estate shall be free of
Lessor Liens attributable to the Owner Participant other than any
Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens) (A) the
existence of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way with the use
or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which the Owner
Participant is diligently contesting by appropriate proceedings and (E)
the existence of which does not result in actual interruption in the
receipt and distribution by the Indenture Trustee in accordance with
the Indenture of Rent assigned to the Indenture Trustee for the benefit
of the Certificate Holders; and
(7) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangement).
(d) The Pass Through Trustee represents, warrants and covenants that:
(1) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts,
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and has the full corporate power, authority and legal right under the
laws of the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Pass Through Trust Agreements,
the Intercreditor Agreement and the Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Pass Through Trustee, each of the Pass Through Trust Agreements,
the Intercreditor Agreement and the PA Amendment No. 1 will have been,
duly authorized, executed and delivered by the Pass Through Trustee;
this Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements, the
Intercreditor Agreement, the PA Amendment No. 1, and (upon execution
and delivery of the PA Amendment No. 1), the Participation Agreement,
will constitute, the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the
performance by the Pass Through Trustee of the Participation Agreement,
the purchase by the Pass Through Trustee of the Refinancing Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under,
the Pass Through Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the Intercreditor
Agreement, the PA Amendment No. 1 or this Agreement, nor the
consummation by the Pass Through Trustee of any of the transactions
contemplated hereby or thereby or by the Participation Agreement,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any Massachusetts governmental authority or agency or any federal
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<PAGE> 23
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements, the Intercreditor
Agreement or the Participation Agreement (other than franchise or other
taxes based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee imposed by
the Commonwealth of Massachusetts or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Refinancing Secured Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under subpart E,
Part I of Subchapter J of the Code, such trusts will not be subject to
any Taxes imposed by the Commonwealth of Massachusetts or any political
subdivision thereof;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under this Agreement, the
Participation Agreement, the Intercreditor Agreement or any Pass
Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Refinancing Secured Certificate for sale to any
Person or solicited any offer to acquire any Refinancing Secured
Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Refinancing Secured Certificate for sale to any Person, or to
solicit any offer to acquire any Refinancing Secured Certificate from
any Person; and the Pass Through Trustee is not in default under any
Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
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<PAGE> 24
(e) The Subordination Agent represents, warrants and covenants that:
(1) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has the full
corporate power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement and, when the PA Amendment No. 1 has been
executed and delivered by each of the parties thereto, the
Participation Agreement;
(2) this Agreement has been, and when executed and delivered by
the Subordination Agent, each of the Liquidity Facilities, the
Intercreditor Agreement and the PA Amendment No. 1 will have been, duly
authorized, executed and delivered by the Subordination Agent; this
Agreement constitutes, and when executed and delivered by the
Subordination Agent each of the Liquidity Facilities, the Intercreditor
Agreement, the PA Amendment No. 1 and (upon execution and delivery by
the Subordination Agent of the PA Amendment No. 1), the Participation
Agreement will constitute, the legal, valid and binding obligations of
the Subordination Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the
Participation Agreement, or the performance by the Subordination Agent
of the Participation Agreement, contravenes any law, rule or regulation
of the State of Connecticut or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles
of association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(4) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment No. 1 or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby or by the Participation Agreement requires the consent or
approval of, the giving of notice to, the
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<PAGE> 25
registration with, or the taking of any other action with respect to,
any Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No.
1 or the Participation Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Refinancing Secured Certificates (other than franchise or other taxes
based on or measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement,
the PA Amendment No. 1, the Participation Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Refinancing Secured Certificate for sale to any Person or
solicited any offer to acquire any Refinancing Secured Certificates
from any Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any Refinancing
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Refinancing Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, the Lessee or the
Guarantor.
SECTION 10. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being deposited
in the United States
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<PAGE> 26
mail, with proper postage for first-class registered or certified mail prepaid,
or when delivered personally or, if promptly confirmed by mail as provided
above, when dispatched by facsimile or other written telecommunication,
addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture
Trustee, at their respective addresses or facsimile numbers set forth below the
signatures of such parties at the foot of this Agreement.
SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Indenture Trustee and the Original Loan Participants in
connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the Intercreditor
Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in
each case, as otherwise provided therein) shall be paid promptly by the Owner
Participant, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to
the Refinancing Secured Certificates issued under the Indenture of (A)
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for
the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special
counsel for the Original Loan Participants;
(2) the fees, expenses and disbursements of Dewey Ballantine,
special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United
States; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section
11 and the agreements referred to herein are not consummated, the Lessee shall
bear and pay all costs, expenses and fees referred to in this Section 11 at no
after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant;
provided that if the transactions fail to be consummated
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<PAGE> 27
as a result of the failure of the Owner Participant to act in good faith in
consummating the transactions, or to otherwise comply with the terms hereof, the
Owner Participant shall bear and pay its own fees, costs and expenses
(including, without limitation, the fees and expenses of its special counsel)
and the Lessee shall pay all other reasonable fees, costs and expenses as
aforesaid.
SECTION 12. RELIANCE OF LIQUIDITY PROVIDER. Each of the parties hereto
agrees and acknowledges that the Liquidity Provider shall be a third party
beneficiary of each of the representations and warranties made herein by such
party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly.
SECTION 13. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Lessee, the
Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Subordination Agent and the Pass Through Trustee, and the Lessee's, the
Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Lessee and, subject to the terms of the Participation Agreement, its successors
and permitted assigns, the Guarantor, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Indenture Trustee and its
successors as Indenture Trustee (and any additional Indenture Trustee appointed)
under the Indenture, the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement, the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject
to the provisions of the Participation Agreement, its successors and permitted
assigns. The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. No purchaser or holder of any
Refinancing Secured Certificates shall be deemed to be a successor or assign of
any holder of the Original Secured Certificates.
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<PAGE> 28
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers there unto duly authorized as of the
day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 30
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: __________________________________________
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -
Finance and Treasurer
Facsimile: (612) 726-0665
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<PAGE> 31
[______________________]
Owner Participant
By: _______________________________________
Title:
Address:
Attn:
Telecopy No.:
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<PAGE> 32
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Pass Through Trustee,
Pass Through Trustee
By: ___________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 33
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By: ___________________________________
Title:
Address: c/o State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 34
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but solely
as Indenture Trustee
Indenture Trustee
By: _____________________________________
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Facsimile: (617) 664-5371
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<PAGE> 35
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee,
Owner Trustee
By: __________________________________
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Facsimile: (801) 246-5053
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<PAGE> 36
SCHEDULE I TO
REFUNDING AGREEMENT
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1A dated as of the Closing Date.
2. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1B dated as of the Closing Date.
3. Pass Through Trust Agreement dated as of the Closing Date, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement No.
1996-1C dated as of the Closing Date.
<PAGE> 37
SCHEDULE II TO
REFUNDING AGREEMENT
REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate
Purchaser and Maturity
--------- -------------
Northwest Airlines Principal Purchase
Pass Through Trust Amount Price
--------- --------
<S> <C> <C> <C>
1996-1A [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1B [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
1996-1C [ _ ]% Refinancing Secured
Certificates due [ ] $[ ]
</TABLE>
<PAGE> 1
TRUST AGREEMENT
[NW 1996 F]
This TRUST AGREEMENT [NW 1996 F] dated as of May 14, 1996 between
[_________] a [_________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking
association (in its individual capacity, "FSBU") and otherwise not in its
individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms used
herein shall have the respective meanings assigned thereto in the Lease (as
hereinafter defined) for all purposes hereof. All definitions contained in this
Section 1.01 shall be equally applicable to both the singular and plural forms
of the terms defined. For all purposes of this Trust Agreement the following
terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the Trust
Indenture.
"Indenture Event of Default" has the meaning which the term "Event of
Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1996 F], to be dated as
of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and
its permitted successors and assigns.
<PAGE> 2
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant, the
percentage of its undivided beneficial interest in the Trust Estate created by
this Trust Agreement.
"Participation Agreement" has the meaning ascribed to such term in the
Lease.
"Replacement Airframe" has the meaning ascribed to such term in the
Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the Trust
Indenture.
"Subsequent Owner Participant" means any Person to which the Original
Owner Participant or any transferee from the Original Owner Participant or any
Subsequent Owner Participant shall have transferred at any time after the
Delivery Date its undivided right, title and interest originally held by the
Original Owner Participant in this Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.1 of this Trust
Agreement and Section 8 of the Participation Agreement; provided that in the
event of any such transfer so long as the Lease shall be in effect or any
Secured Certificates remain unpaid, such transferee and its transferor shall
have complied with all of the terms of Section 8(n) of the Participation
Agreement.
"Trust Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill
of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its
individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in the
Trust Indenture.
2
<PAGE> 3
"Trust Office" shall mean the principal corporate trust office of the
Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or the principal corporate trust office of any
successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee
agrees for the benefit of the Owner Participant that it will on or before the
Delivery Date, execute and deliver the Operative Documents and any other
agreements, instruments or documents to which the Owner Trustee is a party in
the respective forms thereof in which delivered from time to time by the Owner
Participant to the Owner Trustee for execution and delivery and, subject to the
terms hereof, to perform its duties and, upon instructions from the Owner
Participant, exercise its rights under said Operative Documents in accordance
with the terms thereof.
SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Estate upon the trusts hereinafter set forth for the
use and benefit of the Owner Participant, subject, however, to the provisions of
and the Lien created by the Trust Indenture and to the provisions of the Lease
and the Participation Agreement.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees
for the benefit of the Owner Participant that it will, on the Delivery Date,
subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
3
<PAGE> 4
(b) accept from Lessee the delivery of the Bill of Sale and
the FAA Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease,
and in furtherance thereof execute and deliver a Lease
Supplement covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the
Participation Agreement;
(f) execute and deliver the financing statements referred to
in Section 4(a)(vi) of the Participation Agreement,
together with all other agreements, documents and
instruments referred to in Section 4 of the Participation
Agreement to which the Owner Trustee is a party;
(g) effect the registration of the Aircraft in the name of the
Owner Trustee by filing or causing to be filed with the
FAA: (i) the FAA Bill of Sale; (ii) an application for
registration of the Aircraft in the name of the Owner
Trustee (including without limitation an affidavit from
the Owner Trustee in compliance with the provisions of 14
C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this
Trust Agreement; and
(h) execute and deliver all such other instruments, documents
or certificates and take all such other actions in
accordance with the directions of the Owner Participant,
as the Owner Participant may deem necessary or advisable
in connection with the transactions contemplated hereby.
SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full
amount of its Commitment set forth in Schedule II of the
Participation Agreement available to the Owner Trustee, in
immediately available funds, in accordance with Section 1
of the Participation Agreement; and
(b) the Owner Participant shall have notified the Owner
Trustee that the terms and conditions of Section 4 of the
Participation Agreement, insofar as they relate to the
Aircraft, shall have been
4
<PAGE> 5
complied with in a manner satisfactory to the Original
Owner Participant.
SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE
AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified to
be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and
upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in
accordance with the provisions of such Section 8(x) provided Lessee shall have
paid all amounts required by such Section 19(d) and 8(x).
SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR
REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, in the event of a Replacement Airframe and Replacement
Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a
Replacement Engine being substituted pursuant to Section 10(b) of the Lease,
subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease,
as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or
representatives of the Owner Trustee (who shall be an
employee or employees of Lessee) to accept delivery of the
Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement
Airframe and Replacement Engines, if any, or the
Replacement Engine a bill of sale or bills of sale (if
tendered), and the invoice, if any, with respect to the
Replacement Airframe and Replacement Engines, if any, or
the Replacement Engine being furnished pursuant to Section
10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make application to
the Federal Aviation Administration for the registration
in the name of the Owner Trustee of the Aircraft of which
such Replacement Airframe is a part;
(d) execute and deliver a Lease Supplement and a Trust
Supplement covering (i) the Aircraft of which such
Replacement Airframe is part or (ii) such Replacement
Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this
purpose Liens that
5
<PAGE> 6
would be Lessor Liens but for the proviso in the
definition of Lessor Liens) the Airframe and Engines (if
any) or the Engine being replaced to Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the
Airframe and Engines or engines (if any) or the Engine or
engine being replaced from the lien created under the
Trust Indenture and release the Purchase Agreement and the
Purchase Agreement Assignment (solely with respect to such
replaced Airframe and Engines, if any, or Engine) from the
assignment and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take such
further action as may be contemplated by clauses (A) and
(B) of the third paragraph of Section 10(a) of the Lease
or clauses (ii) and (iii) of Section 10(b) of the Lease,
as the case may be.
SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe or engine as the Airframe or Engine being replaced but for the
Event of Loss with respect to such Airframe or Engine.
SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such
engine contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) and to an
Engine to Lessee as contemplated by such Section 5(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the
Engine being transferred to Lessee pursuant to such
Section 5(b) from the lien of the Trust Indenture and to
release the Purchase Agreement and
6
<PAGE> 7
the Purchase Agreement Assignment (solely with respect to
such Engine) from the assignment and pledge under the
Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust Indenture
shall have been discharged pursuant to Section 10.01 thereof, any payment of the
type referred to in Section 4.01(a) hereof (other than Excluded Payments)
received by the Owner Trustee, any payments received from the Indenture Trustee
other than as specified in Section 4.01(d) hereof and any other amount received
as part of the Trust Estate and for the application or distribution of which no
provision is made herein, shall be distributed forthwith upon receipt by the
Owner Trustee in the following order of priority: first, so much of such payment
as shall be required to reimburse the Owner Trustee for any expenses not
otherwise reimbursed as to which the Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustee; second, so much of the remainder for which provision as to the
application thereof is contained in the Lease or any of the other Operative
Documents shall be applied and distributed in accordance with the terms of the
Lease or such other Operative Document; and third, the balance, if any, shall be
paid to the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from time
to time distributable by the Indenture Trustee to the Owner Participant pursuant
to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by
the Owner Trustee to the Owner Participant in accordance with the provisions of
Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement, the Lease and the Operative Documents on the day
received (or on the next succeeding Business Day if the funds to be so
distributed shall not have been received by the Owner Trustee by 12:00 noon, New
York City time).
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(e) Multiple Owner Participants. If as a result of a transfer by an
Owner Participant under Section 8.01 of this Trust Agreement, there is more than
one Owner Participant hereunder, each such Owner Participant shall hold in
proportion to its respective beneficial interest in the Trust Estate, an
undivided beneficial interest in the entire Trust Estate and is entitled to
receive ratably with any other Owner Participant payments distributable by the
Owner Trustee hereunder. No Owner Participant shall have legal title to the
Aircraft or any other portion of the Trust Estate.
SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make
distributions or cause distributions to be made to the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds on the day received (or the next succeeding Business Day if the
funds to be so distributed shall not have been received by the Owner Trustee by
12:00 noon, New York time, the amount to be distributed to such account or
accounts of the Owner Participant as the Owner Participant may designate from
time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the
Owner Trustee will, if so requested by the Owner Participant in writing, pay any
or all amounts payable to the Owner Participant pursuant to this Article IV
either (i) by crediting such amount or amounts to an account or accounts
maintained by the Owner Participant with the Owner Trustee in its individual
capacity in immediately available funds, (ii) by payment at the Trust Office of
the Owner Trustee, in immediately available funds, or (iii) by mailing an
official bank check or checks in such amount or amounts payable to the Owner
Participant at such address as the Owner Participant shall have designated in
writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall
have knowledge of a Lease Event of Default or Indenture Event of Default (or an
event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the Owner Participant prompt telephonic or telecopy notice
thereof followed by prompt confirmation thereof by certified mail, postage
prepaid, provided that (i) in the case of an event which with the passage of
time would constitute an Indenture Event of Default referred to in paragraph (c)
of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten (10) days after the Owner Trustee shall first have
knowledge of such event and (ii) in the case of a misrepresentation by the Owner
Trustee which with the passage of time would constitute an Indenture Event of
Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture,
such notice shall in no event be furnished later than ten (10) days after the
Owner Trustee shall first have knowledge of such event. The notice shall set
forth in reasonable detail the facts and circumstances known to it with respect
to such Lease Event of Default or Indenture Event of Default. Subject to the
terms of Section 5.03 hereof, the Owner Trustee shall take such action or
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shall refrain from taking such action, not inconsistent with the provisions of
the Trust Indenture, with respect to such Lease Event of Default, Indenture
Event of Default or other event as the Owner Trustee shall be directed in
writing by the Owner Participant. If the Owner Trustee shall not have received
instructions as above provided within thirty (30) days after the mailing of such
notice to the Owner Participant, the Owner Trustee until instructed otherwise in
accordance with the preceding sentence may, but shall be under no duty to, take
or refrain from taking such action with respect to such Lease Event of Default,
Indenture Event of Default or other event, not inconsistent with the provisions
of the Trust Indenture, as it shall deem advisable in the best interests of the
Owner Participant. For all purposes of this Trust Agreement, the Lease and the
other Operative Documents, in the absence of actual knowledge by an officer of
FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to
have knowledge of a Lease Event of Default, Indenture Event of Default or other
event referred to in this Section 5.01 unless notified in writing by the
Indenture Trustee, the Owner Participant or Lessee.
SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of
Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of the Owner Participant, the Owner Trustee will take such of
the following actions, not inconsistent with the provisions of the Trust
Indenture, as may be specified in such instructions:
(i) give such notice or direction or exercise such right,
remedy or power hereunder or under any of the Operative
Documents to which the Owner Trustee is a party or in
respect of all or any part of the Trust Estate as shall
be specified in such instructions;
(ii) take such action to preserve or protect the Trust Estate
(including the discharge of Liens) as may be specified
in such instructions;
(iii) approve as satisfactory to it all matters required by
the terms of the Lease or the other Operative Documents
to be satisfactory to the Owner Trustee, it being
understood that without written instructions of the
Owner Participant, the Owner Trustee shall not approve
any such matter as satisfactory to it (it being
understood that the provisions of Sections 3.03, 3.04
and 3.06 hereof do not constitute instructions by the
Owner Participant for the Owner Trustee to approve of or
consent to the matters to be approved of or consented to
by the Owner Trustee in the sections of the Lease
referred to in Sections 3.03, 3.04 or 3.06 hereof); and
(iv) subject to the rights of Lessee under the Operative
Documents, after the expiration or earlier termination
of the Lease, deliver the Aircraft to the Owner
Participant in accordance with such instructions, convey
all of the Owner Trustee's right, title and
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interest in and to the Aircraft for such amount, on such
terms and to such purchaser or purchasers as shall be
designated in such instructions, or net lease the
Aircraft on such terms and to such lessee or lessees as
shall be designated in such instructions.
SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required
to take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless the Owner Trustee shall have been
indemnified by the Owner Participant, in manner and form satisfactory to the
Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or of the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
reasonable fees and disbursements of counsel or agents employed by the Owner
Trustee in connection therewith. The Owner Trustee shall not be required to take
any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall
reasonably determine, or shall have been advised by counsel, that such action is
contrary to the terms of any of the Operative Documents to which the Owner
Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with any of the Operative Documents to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Documents to which the Owner Trustee is a party, or (to the extent not
inconsistent with the provisions of the Trust Indenture) as expressly provided
by the terms hereof or in written instructions from the Owner Participant
received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or
obligations shall be read into this Trust Agreement against the Owner Trustee.
FSBU agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof) promptly take such action as may be necessary
to duly discharge and satisfy in full all Lessor Liens attributable to it in its
individual capacity which it is required to discharge pursuant to Section 8(h)
of the Participation Agreement and otherwise comply with the terms of said
Section binding on it.
SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to
the contrary notwithstanding, the Owner Trustee shall comply with the provisions
of Section 3.01 hereof upon the satisfaction, to the satisfaction of special
counsel for the Owner Trustee, of all the applicable conditions precedent
specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
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SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts
hereby created and agrees to perform the same but only upon the terms hereof
applicable to it. The Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. FSBU shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof and the
first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's
failure to use ordinary care to disburse funds, (d) for liabilities that may
result from the inaccuracy of any representation or warranty of it (or from the
failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03
of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and
8(v) of the Participation Agreement and (e) for any Tax based on or measured by
any fees, commissions or compensation received by it for acting as trustee in
connection with any of the transactions contemplated by the Operative Documents.
SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Sections 3.01 and 5.04
hereof and the last sentence of Section 9.01(b) hereof, neither the Owner
Trustee nor FSBU shall have any duty (i) to see to any recording or filing of
any Operative Document or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the Federal Aviation Administration or other governmental agencies, except that
FSBU, in its individual capacity, shall comply with the reporting requirements
set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner
Trustee shall, to the extent that information for that purpose is supplied by
Lessee pursuant to any of the Operative Documents, complete and timely submit
(and furnish the Owner Participant with a copy of) any and all reports relating
to the Aircraft which may from time to time be required by the Federal Aviation
Administration or any government or governmental authority having jurisdiction,
(ii) to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto, other
than to forward to the Owner Participant copies of
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all reports and other written information which the Owner Trustee receives from
Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust Indenture Estate or the Trust Estate, except as provided in
Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and
records with respect to the Aircraft at any time permitted pursuant to the
Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the
Indenture Trustee and the Owner Participant, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Owner Trustee under
the Lease or any other Operative Document.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS.
NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that
on the Delivery Date the Owner Trustee shall have received whatever title was
conveyed to it by Lessee and that the Aircraft shall during the Term be free of
Lessor Liens attributable to it, or (b) any representation or warranty as to the
validity, legality or enforceability of this Trust Agreement or any Operative
Document to which the Owner Trustee is a party, or any other document or
instrument, or as to the correctness of any statement contained in any thereof
except to the extent that any such statement is expressly made herein or therein
as a representation by FSBU in its individual capacity or by the Owner Trustee
and except that FSBU in its individual capacity hereby represents and warrants
that this Trust Agreement has been, and (assuming due authorization, execution
and delivery by the Original Owner Participant of this Trust Agreement) the
Operative Documents to which it or the Owner Trustee is a party have been (or at
the time of execution and delivery of any such instrument by it or the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of itself or the Owner Trustee, as the case may be
and that this Trust Agreement constitutes the legal, valid and binding
obligation of FSBU or the Owner Trustee, as the case may be, enforceable against
FSBU or the Owner Trustee, as the case may be, in accordance with its terms.
SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as
provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
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SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner
Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant or
Lessee mentioned herein or in any of the Operative Documents to which the Owner
Trustee is a party shall be sufficiently evidenced by written instruments signed
by a person purporting to be the chairman of the board, the president, any
executive vice president, any senior vice president or any vice president or a
managing director and in the name of the Owner Participant or Lessee, as the
case may be. The Owner Trustee may accept a copy of a resolution of the Board of
Directors or Executive Committee of Lessee, certified by the secretary or any
assistant secretary of Lessee as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president or
a managing director of Lessee, as to such fact or matter, and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of trusts hereunder, the Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons and the Owner Trustee shall not be
liable for the negligence of any such agent, attorney, counsel, accountant or
other skilled person appointed by it with due care hereunder.
SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder,
the Owner Trustee acts solely as trustee and not in its individual capacity
except as otherwise expressly provided herein; and, subject to the terms of the
Participation Agreement and the Trust Indenture, all persons, other than the
Owner Participant, as provided herein, having any claim against the Owner
Trustee by reason of the transactions contemplated hereby shall look only to the
Trust Estate for payment or satisfaction thereof.
SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or
7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not paid
by Lessee as contemplated by the last
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paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section
7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee
shall be required to pay the reasonable fees and expenses of the Owner Trustee
comprising the compensation and reimbursement of expenses to which the Owner
Trustee is entitled under this Section 6.07.
SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for
the keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Participant shall be responsible for causing to
be prepared and filed all income tax returns required to be filed by the Owner
Participant. The Owner Trustee shall be responsible for causing to be prepared,
at the request and expense of the Owner Participant, all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns. The Owner Participant or the Owner Trustee, as the case
may be, upon request, will furnish the Owner Trustee or the Owner Participant,
as the case may be, with all such information as may be reasonably required from
the Owner Participant or the Owner Trustee, as the case may be, in connection
with the preparation of such income tax returns. The Owner Trustee will give to
the Owner Participant, upon request, such periodic information concerning
receipts and disbursements by it with respect to the Trust Estate as would be
helpful to the Owner Participant in preparing its tax returns.
SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein
to the contrary, the Owner Trustee shall not be authorized and shall have no
power to "vary the investment" of the Owner Participant within the meaning of
Treasury Regulations Section 301.7701-4(c)(1).
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner
Participant hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless FSBU in its individual capacity and its
successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by FSBU in its individual capacity on or measured
by any compensation received by FSBU in its individual capacity for its services
hereunder or in connection with the transactions contemplated by the Operative
Documents or otherwise excluded in subclause (e) below), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and
including, without limitation, any liability of an owner, any strict liability
and any liability without fault) of any kind and nature whatsoever which may be
imposed on, incurred by or
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asserted against FSBU in its individual capacity (whether or not also
indemnified against by Lessee under the Lease or under the Participation
Agreement or also indemnified against by any other person but only to the extent
not otherwise paid or reimbursed by Lessee or such other person) in any way
relating to or arising out of this Trust Agreement or any of the Operative
Documents or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust Estate
or the action or inaction of the Owner Trustee or FSBU in its individual
capacity hereunder, except (a) in the case of willful misconduct or gross
negligence on the part of the Owner Trustee or FSBU in its individual capacity
in the performance or non-performance of its duties hereunder or under any of
the other Operative Documents to which the Owner Trustee is a party or (b) those
resulting from the inaccuracy of any representation or warranty of FSBU in its
individual capacity (or from the failure of FSBU in its individual capacity to
perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust
Indenture or, with respect to representations or warranties of FSBU in its
individual capacity only, in Section 4 of the Lease, in Section 8(c), Section
8(d) or Section 8(v) of the Participation Agreement or in any of the other
Operative Documents or (c) as may result from a breach by FSBU in its individual
capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in
the case of the failure to use ordinary care on the part of the Owner Trustee or
FSBU in its individual capacity in the disbursement of funds or (e) those claims
arising under any circumstances or upon any terms where Lessee would not have
been required to indemnify the Owner Trustee in its individual capacity pursuant
to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this
purpose, Sections 7(b)(ii)(3) (to the extent that such disposition referred to
therein results from the Owner Trustee acting in accordance with written
instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it
results from the willful misconduct or gross negligence of the Owner Participant
to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent
that such failure referred to therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7 (c)(D) (to the
extent such disposition therein results from the Owner Trustee's acting in
accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H),
7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this
purpose, those claims arising or resulting from any action taken by or inaction
of the Owner Trustee in accordance with written instructions of the Owner
Participant). The indemnities contained in this Section 7.01 extend to FSBU only
in its individual capacity and shall not be construed as indemnities of the
Trust Indenture Estate or the Trust Estate (except to the extent, if any, that
FSBU in its individual capacity has been reimbursed by the Trust Indenture
Estate or the Trust Estate for amounts covered by the indemnities contained in
this Section 7.01). The indemnities contained in this Section 7.01 shall survive
the termination of this Trust Agreement. In addition, if necessary, FSBU in its
individual capacity shall be entitled to indemnification from the Trust Estate,
subject to the Lien of the Trust Indenture, for any liability,
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obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee, the Owner Participant or others, but without releasing any
of them from their respective agreements of reimbursement; and to secure the
same FSBU in its individual capacity shall have a Lien on the Trust Estate,
subject to the Lien of the Trust Indenture, which shall be prior to any interest
therein of the Owner Participant. The payor of any indemnity under this Article
VII shall be subrogated to any right of the person indemnified in respect of the
matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of
the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement. If there is more than one Owner Participant, no
assignment, conveyance or other transfer by an Owner Participant of any of its
right, title or interest in and to this Trust Agreement or the Trust Estate
shall be valid unless each other Owner Participant's prior written consent
(which consent may be withheld in the sole discretion of such other Owner
Participants) is given to such assignment, conveyance or other transfer.
SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior
to the termination of this Trust Agreement there is more than one Owner
Participant, then during such time, if any action is required to be taken by all
Owner Participants and whenever any direction, authorization, approval, consent,
instruction, or other action is permitted to be given or taken by the Owner
Participant it shall be given or taken only upon unanimous agreement of all
Owner Participants; provided, however, that the termination of this Trust
Agreement pursuant to Section 11.01 hereof may be effected upon the election of
any Owner Participant.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60)
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days' prior written notice to the Owner Participant, the Indenture Trustee (so
long as the Lien of the Trust Indenture has not been fully discharged) and
Lessee (so long as the Lease is in effect), such resignation to be effective
upon the acceptance of appointment by the successor Owner Trustee under Section
9.01(b) hereof. In addition, the Owner Participant may at any time remove the
Owner Trustee without cause by a notice in writing delivered to the Owner
Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has
not been fully discharged) and Lessee (so long as the Lease is in effect), such
removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or
removal of the Owner Trustee, the Owner Participant may appoint a successor
Owner Trustee by an instrument signed by the Owner Participant. If a successor
Owner Trustee shall not have been appointed within thirty (30) days after such
notice of resignation or removal, the Owner Trustee, the Owner Participant,
Lessee or the Indenture Trustee may apply to any court of competent jurisdiction
to appoint a successor Owner Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Owner Participant an instrument accepting such appointment, and
thereupon such successor Owner Trustee, without further act, shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named the Owner Trustee herein; but nevertheless, upon the written
request of such successor Owner Trustee, such predecessor Owner Trustee shall
execute and deliver an instrument transferring to such successor Owner Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers
and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee
shall duly assign, transfer, deliver and pay over to such successor Owner
Trustee all monies or other property then held by such predecessor Owner Trustee
upon the trusts herein expressed. Upon the appointment of any successor Owner
Trustee hereunder, the predecessor Owner Trustee will execute such documents as
are provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are reasonably
required to cause registration of the Aircraft included in the Trust Estate to
be transferred upon the records of the Federal Aviation Administration, or other
governmental authority having jurisdiction, into the name of the successor Owner
Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
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<PAGE> 18
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without
further act.
SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee
shall have been directed to do so by the Owner Participant, the Owner Trustee
and the Owner Participant shall execute and deliver an agreement supplemental
hereto and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons (any and all of
which shall be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement) approved by the Owner
Trustee and the Owner Participant, either to act as co-trustee, jointly with the
Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or
separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE").
In the event an Indenture Event of Default not arising from a Lease Event of
Default shall occur and be continuing, the Owner Trustee may act under the
foregoing provisions of this Section 9.02 without the concurrence of the Owner
Participant; and the Owner Participant hereby appoints the Owner Trustee its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred
upon the Owner Trustee in respect of the custody,
control and management of monies, the Aircraft or
documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by
the Owner Trustee;
(B) all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred or imposed upon and exercised or performed by
the Owner Trustee and such additional trustee jointly,
except to the extent that under any law of any
jurisdiction in which any particular act or acts are to
be performed (including the holding of title to the
Trust Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event
such rights, powers, duties and
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<PAGE> 19
obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be
exercised hereunder by such additional trustee, except
jointly with, or with the consent in writing of, the
Owner Trustee;
(D) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee
hereunder;
(E) the Owner Participant, at any time, by an instrument in
writing may remove any such additional trustee unless
such additional trustee was appointed by the Owner
Trustee without the concurrence of the Owner Participant
during the occurrence of an Indenture Event of Default
not arising from a Lease Event of Default, in which case
the Owner Trustee shall have the power to remove any
such additional trustee without the concurrence of the
Owner Participant; and the Owner Participant hereby
appoints the Owner Trustee its agent and
attorney-in-fact for it in such connection in such
contingency; and
(F) no appointment of, or action by, any additional trustee
will relieve the Owner Trustee of any of its obligations
under, or otherwise affect any of the terms of, the
Trust Indenture or affect the interests of the Indenture
Trustee or the holders of the Secured Certificates in
the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. SUPPLEMENTS AND AMENDMENTS.
(a) Supplements and Amendments. This Trust Agreement may not be
amended, supplemented or otherwise modified except by an instrument in writing
signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02
hereof and the first sentence of Section 10 of the Participation Agreement, the
Owner Trustee will execute any amendment, supplement or other modification of
this Trust Agreement or of any other Operative Document to which the Owner
Trustee is a party which it is requested to execute by the Owner Participant,
except that the Owner Trustee shall not execute any such amendment, supplement
or other modification which, by the express
19
<PAGE> 20
provisions of any of the above documents, requires the consent of any other
party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A signed
copy of each amendment or supplement referred to in Section 10.01(a) hereof
shall be delivered by the Owner Trustee to the Indenture Trustee and each holder
of a Secured Certificate.
SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution
by the Owner Trustee of any document entered into pursuant to Section 10.01
hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST
SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01
hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and
Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and
the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in
20
<PAGE> 21
accordance with Article IV hereof, provided that at such time Lessee shall have
fully complied with all of the terms of the Lease and the Participation
Agreement or (b) twenty-one years less one day after the death of the last
survivor of all of the descendants of the grandparents of David Rockefeller
living on the date of the earliest execution of this Trust Agreement by any
party hereto, but if this Trust Agreement and the trusts created hereby shall be
or become authorized under applicable law to be valid for a period commencing on
the 21st anniversary of the death of such last survivor (or, without limiting
the generality of the foregoing, if legislation shall become effective providing
for the validity of this Trust Agreement and the trusts created hereby for a
period in gross exceeding the period for which this Trust Agreement and the
trusts created hereby are hereinabove stated to extend and be valid), then this
Trust Agreement and the trust created hereby shall not terminate under this
subsection (b) but shall extend to and continue in effect, but only if such
nontermination and extension shall then be valid under applicable law, until the
day preceding such date as the same shall, under applicable law, cease to be
valid; otherwise this Trust Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof, subject
to the Owner Participant's right to revoke such trusts and cause the Trust
Estate (subject to the Lien of the Trust Indenture) to be distributed.
SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE.
The Owner Participant shall not have legal title to any part of the Trust
Estate. [No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate] this Trust Agreement or the trusts hereunder or entitle
any successors or transferees of the Owner Participant to an accounting or to
the transfer of legal title to any part of the Trust Estate.
SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY.
Except for the terms of Section 8(n) of the Participation Agreement incorporated
in Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing herein, whether expressed or implied, shall be construed to give
any Person other than the Owner Trustee and the Owner Participant any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement;
but this Trust Agreement shall be held to be for the sole and exclusive benefit
of the Owner Trustee and the Owner Participant.
21
<PAGE> 22
SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) 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
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this Section
11.05(a). Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section 11.05(a), notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee,
the Loan Participants, the Indenture Trustee or the Owner Participant, to the
respective addresses set forth below the signatures of such parties on the
signature page of the Participation Agreement, or (B) if to a Subsequent Owner
Participant, addressed to such Subsequent Owner Participant at such address as
such Subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the secured certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that the Participation Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of any
thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
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<PAGE> 23
SECTION 11.08. COUNTERPARTS. This Trust 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.
SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII hereof, its assigns. Any
request, notice, direction, consent, waiver or other instrument or action by the
Owner Participant shall bind its successors and assigns. Any Owner Participant
which shall cease to have any Ownership Interest shall thereupon cease to be a
party hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
SECTION 11.10. HEADINGS; REFERENCES. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of
the Owner Trustee in its individual capacity or as Owner Trustee hereunder or
under any other Operative Document or other document contemplated herein, may be
performed by the Owner Participant and any such performance shall not be
construed as a revocation of the trust created hereby.
23
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
[ ],
Owner Participant
By
-------------------------------------
Title:
----------------------------------
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By
--------------------------------------
Title:
----------------------------------
24
<PAGE> 1
FIRST AMENDMENT TO TRUST AGREEMENT
[NW 1996 F]
This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 F], dated as of
June 12, 1996, between [ ], a [ ] corporation (the "OWNER
PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "FSBU") and otherwise not in
its individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "OWNER TRUSTEE");
Except as otherwise defined in this Amendment, the terms used herein
in capitalized form shall have the meanings attributed thereto in the Trust
Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner
Participant, the Owner Trustee, [ ], as the loan participants
(collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and
Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the
Participation Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL
PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing
757-251 aircraft (the "AIRCRAFT");
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant and the Owner Trustee
entered into the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (the
"ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.01 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and Lessee entered into the
Lease Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996,
as supplemented by Lease Supplement No. 1 [NW 1996 F] dated May 14, 1996 (the
"ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agreed to lease to
<PAGE> 2
Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft
commencing on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 F], dated as of
May 14, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW
1996 F], dated May 14, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant
to which the Owner Trustee issued to the Original Loan Participants secured
certificates substantially in the form set forth in Article II thereof (the
"ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the
Original Loan Participants in participating in the payment of Lessor's Cost;
WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the
Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the
Owner Participant, the Indenture Trustee and State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent, have entered into
the Refunding Agreement [NW 1996 F], dated as of June 3, 1996 (the "REFUNDING
AGREEMENT"), providing for a refinancing operation as contemplated by Section 17
of the Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery of this
Amendment, the Owner Trustee and the Indenture Trustee have amended and restated
the Original Indenture as the Amended and Restated Trust Indenture and Security
Agreement [NW 1996 F], dated as of the date hereof (the " INDENTURE"), under
which Indenture the Owner Trustee shall issue new secured certificates
substantially in the form set forth in Section 2.01 thereof (the "REFINANCING
SECURED CERTIFICATES ") in three series;
WHEREAS, concurrently with the execution and delivery of the
Refunding Agreement, the Owner Trustee and Lessee entered into the First
Amendment to Lease Agreement [NW 1996 F], dated as of June 3, 1996 (the "LEASE
AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1,
the "LEASE"); and
WHEREAS, the Owner Participant and the Owner Trustee wish to amend
the Original Trust Agreement as set forth herein to give effect to the
transactions contemplated by the Refunding Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree that the Original Trust Agreement is amended as
follows:
SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST
AGREEMENT . Section 11.01 of the Original Trust Agreement is hereby amended by
adding the following clause to the end thereof after the word "distributed":
"provided, however, such right is subject to the provisions of Section 10 of the
Participation Agreement."
SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST
AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by
deleting
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<PAGE> 3
the word "Participation" in clause (A) of the second sentence thereof and
substituting therefor the word "Refunding".
SECTION 3. DIRECTION. Pursuant to and in conformity with Section
10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner
Trustee to execute this Amendment.
SECTION 4. RATIFICATION. Except as hereby modified, the Original
Trust Agreement shall continue in full force and effect as originally executed.
From and after the date of this Amendment, each and every reference in the Trust
Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar
words or phrases referring to the Trust Agreement or any word or phrase
referring to a section or provision of the Trust Agreement is deemed for all
purposes to be a reference to the Trust Agreement or such section or provision
as amended pursuant to this Amendment.
SECTION 5. MISCELLANEOUS. This Amendment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. The terms of this Amendment shall be
binding upon, and inure to the benefit of, the Owner Trustee and its successors
and assigns, and the Owner Participant, its successors and, to the extent
permitted by Article VIII of the Original Trust Agreement as amended hereby, its
assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
[Owner Participant]
By: __________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
By: __________________________
Name:
Title:
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<PAGE> 1
AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[NW 1996 F]
AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW
1996 F], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY
BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly stated herein, but solely as Indenture Trustee
hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee have
entered into the Trust Agreement whereby, among other things, (i) the Owner
Trustee has established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Trust Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [NW 1996 F] dated as of
May 14, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the
Trust Agreement and Indenture Supplement [NW 1996 F] (the "SUPPLEMENT") dated
May 14, 1996 to the Original Indenture, (iii) the Original Indenture and the
Supplement were recorded by the Federal Aviation Administration on May 16, 1996
and were assigned Conveyance No. I56073 and (iv) the Lease Agreement [NW 1996 F]
dated as of even date with the Original Indenture between the Owner Trustee and
Lessee and the Lease Supplement No. 1 [NW 1996 F] were recorded by the Federal
Aviation Administration on May 16, 1996 and were assigned Conveyance No. I56072
and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Loan Participants Secured Certificates (as defined in the Original
Indenture);
WHEREAS, the parties have agreed that subject to certain
conditions, Lessee shall have the right to cause the implementation of the
Refinancing Transaction pursuant to which, among other things, the Secured
Certificates issued to the Loan Participants pursuant to the Original Indenture
shall be redeemed and new Secured Certificates (the "REFINANCING SECURED
CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Trust Indenture, among other
things, (i) to amend and restate in its entirety the Original Indenture, (ii) to
provide for the issuance by the Owner Trustee of the Refinancing Secured
Certificates and (iii) to provide for the assignment, mortgage and pledge by the
Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Certificate Holders, subject to Section 2.15
and Article III hereof;
<PAGE> 2
WHEREAS, all things have been done to make the Secured
Certificates, when executed by the Owner Trustee and authenticated and delivered
by the Indenture Trustee hereunder, the valid, binding and enforceable
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
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<PAGE> 3
GRANTING CLAUSE
NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Secured Certificates from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions herein and in the Participation
Agreement and the Secured Certificates contained, for the benefit of the
Certificate Holders and the prompt payment of all amounts from time to time
owing under the Participation Agreement to the Certificate Holders by the Owner
Trustee and for the uses and purposes and subject to the terms and provisions
hereof, and in consideration of the premises and of the covenants herein
contained, and of the acceptance of the Secured Certificates by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, a first priority security
interest in and mortgage lien on all right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges, other than Excluded Payments (which collectively, excluding Excluded
Payments but including all property hereafter specifically subjected to the Lien
of this Trust Indenture by the Trust Agreement and Indenture Supplement or any
mortgage supplemental hereto, are included within the Trust Indenture Estate),
to wit:
(1) the Aircraft (including the Airframe and the Engines and
all replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire title as provided herein and in the Lease), all
as more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Interim Rent, Basic Rent,
Supplemental Rent and payments of any kind thereunder (excluding any Excluded
Payments)), and the Guarantee;
(3) the Purchase Agreement (to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the lien of this
Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE> 4
(6) all rights of the Owner Trustee to amounts paid or payable
by Lessee to the Owner Trustee under the Participation Agreement and all rights
of the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding all Excluded Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee has delivered to the Indenture Trustee the original executed
counterpart of the Lease and the Lease Supplement No. 1 (to each of which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, and the Purchase Agreement Assignment with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, and its successors and assigns, in trust for the
benefit and security of the Loan Participants and the Certificate Holders,
except as provided in Section 2.15 and Article III hereof without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in paragraphs (1)
through (8) inclusive above, subject to the terms and provisions set forth in
this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Agreements to perform all of the obligations assumed by it thereunder,
except to the extent prohibited or excluded from doing so pursuant to the terms
and provisions thereof, and the Indenture Trustee and the Certificate Holders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Indenture Trustee
or the Certificate Holders be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Subject to the terms hereof, the Owner Trustee does hereby
constitute the Indenture Trustee the true and lawful attorney of the Owner
Trustee, irrevocably, granted for good and valuable consideration and coupled
with an interest and with full power of substitution, and with full power (in
the name of the Owner Trustee or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or arising out of
the Indenture Agreements, and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or
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appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents (other than Excluded Payments) and other
sums and the security intended to be afforded hereby; provided, however, that no
action of the Indenture Trustee pursuant to this paragraph shall increase the
obligations or liabilities of the Owner Trustee to any Person beyond those
obligations and liabilities specifically set forth in this Trust Indenture and
in the other Operative Documents. Under the Lease, Lessee is directed, so long
as this Trust Indenture shall not have been fully discharged, to make all
payments of Rent (other than Excluded Payments) and all other amounts which are
required to be paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by, the Indenture
Trustee at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Trust Indenture. The Owner Trustee agrees that
promptly upon receipt thereof, it will transfer to the Indenture Trustee any and
all monies from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Indenture Trustee pursuant to this
Trust Indenture, except that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants and agrees that it will not assign
or pledge, so long as the assignment hereunder shall remain in effect, and the
Lien hereof shall not have been released pursuant to Section 10.01 hereof, any
of its right, title or interest hereby assigned, to anyone other than the
Indenture Trustee, and that it will not, except as otherwise provided in this
Trust Indenture and except with respect to Excluded Payments, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim (other than those relating to an Excluded Payment) arising under any
Indenture Agreement or (v) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby further agree that it will not
without the written consent of the Indenture Trustee:
(a) except as set forth in Section 8(bb) of the
Participation Agreement, collect or agree to the receipt
or collection of any payment of Rent, including Interim
Rent, Basic Rent, Stipulated Loss Value, Termination
Value or any other payment to be made pursuant to
Section 9 or 10 of the Lease but excluding any Excluded
Payment prior to the due date for the payment thereof
provided for by the Lease or assign, transfer or
hypothecate (other than to the Indenture Trustee
hereunder) any payment of Rent, including Interim Rent,
Basic Rent, Stipulated Loss Value, Termination Value or
any other payment to be made pursuant to Section 9 or 10
of the Lease but excluding any Excluded Payment, then
due or to accrue in the future under the Lease in
respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor owner
trustee, sell, mortgage, transfer, assign or hypothecate
(other than to the Indenture Trustee hereunder) its
interest in the Airframe and Engines or any part
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thereof or in any amount to be received by it from the
use or disposition of the Airframe and Engines, other
than amounts distributed to it pursuant to Article III
hereof.
It is hereby further agreed that any and all property described
or referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "REMAINING WEIGHTED AVERAGE LIFE" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in
Section 22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of
one or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Continuous Stay Period" shall have the meaning specified in
Section 4.04(a) hereof.
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<PAGE> 7
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of the Owner Trustee located at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or
such other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee and each Certificate Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by bonds,
debentures, notes or other similar instruments or for the deferred purchase
price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest Rate" in
Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
"Event of Default" shall have the meaning specified in Section
4.02 hereof.
"Excess Amount" shall have the meaning specified in Section
2.03(b) hereof.
"Excluded Payments" shall mean (i)(A) indemnity payments paid
or payable by Lessee to or in respect of the Owner Participant or the Owner
Trustee in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "OWNER INDEMNITEES") pursuant to Sections 7(b) and 7(c) of
the Participation Agreement and (B) any other payment to the Owner Participant
pursuant to any provision of any Operative Document, (ii) proceeds of public
liability insurance (or proceeds of governmental indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims made, or losses
suffered, by the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by any of the Owner Indemnitees, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) and permitted under Section
11(e) of the Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee and all payments of Supplemental Rent by Lessee in
respect of any amounts payable under the Tax Indemnity Agreement, (v) all
Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the
Indenture Trustee pursuant to the last sentence of Section 7(c) of the
Participation Agreement, (vii) provided that the Secured Certificates shall have
been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable
to the Owner Trustee pursuant to the third sentence of Section 19(d) of the
Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest
accrued on any of the above, and (x) any right to enforce the payment of any
amount described in clauses (i) through (ix) above.
"Government Entity" means (a) 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 (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
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<PAGE> 8
"Indenture Agreements" means the Participation Agreement, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Guarantee, the Bills of Sale and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee Event" means either (i) the Secured
Certificates shall have become due and payable pursuant to Section 4.04(b) of
the Trust Indenture or (ii) the Indenture Trustee has taken action or notified
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1996 F],
dated as of May 14, 1996, entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of the Original Trust Indenture, as
said Lease Agreement has been, or may from time to time be, supplemented or
amended, or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of this Indenture. The term "Lease" shall also
include each Lease Supplement from time to time entered into pursuant to the
terms of the Lease.
"Lease Default" shall mean any event or condition that with the
giving of notice or the lapse of time or both would become a Lease Event of
Default.
"Lease Event of Default" shall mean an "Event of Default" as
defined in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation Agreement,
the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment and each other agreement between Lessee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than a majority
in aggregate unpaid Principal Amount of all Secured Certificates outstanding as
of such date (excluding any Secured Certificates held by the Owner Trustee or
the Owner Participant or any interests of the Owner Participant therein by
reason of subrogation pursuant to Section 4.03 hereof (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any Affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment banker
selected by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of such
Secured Certificate computed by discounting each such payment on a semiannual
basis from its respective Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield (plus, in the case of
Series C Secured Certificates, 75 basis points) exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "TREASURY YIELD" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States
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<PAGE> 9
Treasury securities maturing on the Average Life Date of such Secured
Certificate and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Secured Certificate and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Secured Certificate,
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "MOST RECENT
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [ ], so
long as such party shall have any interest in the Trust Estate, and transferees
thereof as permitted by Section 8 of the Participation Agreement.
"Participants" shall mean and include the Loan Participants and
the Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1996 F], dated as of May 14, 1996, among the Owner Trustee, the
Indenture Trustee, Lessee and the Participants, as the same may from time to
time be supplemented or amended, or the terms thereof waived or modified, to the
extent permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each January 2 and July 2, commencing
on January 2, 1997 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in accordance
with the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee,
a responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in
Section 4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
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"Secured Obligations" shall have the meaning specified in
Section 2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Holder" shall have the meaning specified in Section
2.15(c) hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a
supplement to the Trust Agreement and to this Indenture, in substantially the
form of Exhibit A hereto, which shall particularly describe the Aircraft, and
any Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust
Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this
Amended and Restated Trust Indenture and Security Agreement [NW 1996 F] as it
may from time to time be supplemented or amended as herein provided, including
supplementing by the Trust Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties referred to in
the Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of
this Trust Indenture the terms used but not defined herein are used as defined
in the Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED
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UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1996 F] DATED AS OF MAY 14, 1996.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N542US.
No.____ Date: [______,__]
$_________________
INTEREST RATE MATURITY DATE
[________] [______,______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 F], dated as of
May 14, 1996, between the Owner Participant named therein and the Owner Trustee
(herein as such Trust Agreement may be supplemented or amended from time to time
called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the
registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL
AMOUNT"), together with interest on the amount of the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Interest Rate indicated above. The Principal Amount
of this Secured Certificate shall be payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the
Principal Amount of this Secured Certificate set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing January 2, 1997, and thereafter on July 2 and January 2 of each year,
to and including _______, _____. Notwithstanding the foregoing, the final
payment made on this Secured Certificate shall be in an amount sufficient to
discharge in full the unpaid Principal Amount and all accrued and unpaid
interest on, and any other amounts due under, this Secured Certificate.
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Secured Certificate becomes due and payable is not a
Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "TRUST INDENTURE" means the
Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated
as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust
Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented
from time to time. All other capitalized terms used in this Secured Certificate
and not defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on
demand, at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest and any other amounts payable hereunder which are overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount,
if any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such
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<PAGE> 12
payments in accordance with the terms of Section 2.03 and Article III of the
Trust Indenture and each holder hereof, by its acceptance of this Secured
Certificate, agrees that (A) it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture
Trustee is personally liable or liable in any manner to the holder hereof for
any amounts payable or any liability under this Secured Certificate or, except
as provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement, and (C) the
Owner Participant is not personally liable or liable in any manner to the holder
hereof for any amounts payable or any liability under this Secured Certificate
or, except as provided in the Participation Agreement, for any liability under
the Participation Agreement; provided, however, that nothing herein contained
shall limit, restrict or impair the right of the Indenture Trustee, subject
always to the terms and provisions of the Trust Indenture, to accelerate the
maturity of this Secured Certificate upon occurrence of an Event of Default
under the Trust Indenture in accordance with Section 4.04(b) of the Trust
Indenture, to bring suit and obtain a judgment against the Owner Trustee on this
Secured Certificate for purposes of realizing upon the Trust Indenture Estate
and to exercise all rights and remedies provided under the Trust Indenture or
otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for
the purpose of registering transfers and exchanges of Secured Certificates at
the Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at the
Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the
Trust Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Secured Certificate, except
that in the case of any final payment with respect to this Secured Certificate,
the Secured Certificate shall be surrendered promptly thereafter by the
Indenture Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured
Certificate, agrees that, except as provided in the Trust Indenture, each
payment received by it hereunder shall be applied, first, to the payment
of accrued interest on this Secured Certificate (as well as any interest on any
overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, second, to the payment of the Principal Amount
of this Secured Certificate then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the
payment of Principal Amount of this Secured Certificate remaining unpaid in the
inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates
referred to in the Trust Indenture which have been or are to be issued by the
Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Secured Certificate is registered as the
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<PAGE> 13
owner hereof for all purposes whether or not this Secured Certificate be
overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be
affected by notice to the contrary.
This Secured Certificate is subject to redemption as provided
in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to
the extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1) [Series A and Series B Secured Certificates](2), and this
Secured Certificate is issued subject to such provisions. The Certificate Holder
of this Secured Certificate, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Trust Indenture and (c) appoints the
Indenture Trustee his attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Secured Certificate shall not be entitled to any benefit under the Trust
Indenture or be valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ---------------------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE> 14
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity but solely
as Owner Trustee
By
------------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
By
------------------------------------------
Name:
Title:
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<PAGE> 15
SCHEDULE I
SECURED CERTIFICATE AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series A, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date of the consummation of
the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith and (ii)
the Secured Certificates issued under the Original Indenture shall be
concurrently redeemed. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as
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<PAGE> 16
defined in the Liquidity Facilities) under any Liquidity Facility except to the
extent included in Net Interest and Related Charges, and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (c) or
(d) of the definition of Supplemental Rent. As used in this Section, "Owner
Trustee's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a
fraction, the numerator of which is the aggregate principal balance
then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any Series D Secured Certificates or Series
D Equipment Notes. As used in this Section, "Net Interest and Related Charges"
means the sum of (i) the amount, if any, by which interest payable to the
Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied
Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount
which would be payable if such drawings bore interest at the Designated Interest
Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3
or Section 7.7 of each Liquidity Facility (or similar provisions of any
succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities).
As used in this Section "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) except with respect to
that portion of any Final Drawing (or Applied Downgrade Advance which becomes a
Final Drawing) which remains in a Cash Collateral Account, Designated Interest
Rate means the weighted average Investment Earnings of funds in the Cash
Collateral Accounts. As used in this Section, a Payment Default when used in
connection with a Secured Certificate or Equipment Note means a default in the
payment of principal thereof or interest thereon other than a default in the
payment of principal or interest on a Series D Equipment Note which has not been
cured other than solely because of acceleration. The following terms are used in
this Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest
Drawing, Investment Earnings and Series D Equipment Notes.
The Secured Certificates shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Secured
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Owner Trustee shall bind the Owner Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Secured Certificates or
did not hold such offices at the respective dates of such Secured Certificates.
The Owner Trustee may from time to time execute and deliver Secured Certificates
with respect to the Aircraft to the Indenture Trustee for authentication upon
original issue and such Secured Certificates shall thereupon be authenticated
and delivered by the Indenture Trustee upon the written request of the Owner
Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Secured Certificates
to be authenticated hereunder on original issue with respect to the Aircraft. No
Secured Certificate shall be secured by or entitled to any benefit under this
Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Secured Certificate a certificate of authentication in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized officers and such certificate upon any Secured Certificates shall
be conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
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<PAGE> 17
SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Certificate Holders
under this Trust Indenture, each Certificate Holder, by its acceptance of a
Secured Certificate, agrees that as between it and the Owner Trustee, except as
expressly provided in this Trust Indenture, the Participation Agreement or any
other Operative Document, (i) the obligation to make all payments of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to the Secured Certificates, and the performance by the
Owner Trustee of every obligation or covenant contained in this Trust Indenture
and in the Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Article III
hereof, and all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the Trust Agreement,
unless expressly otherwise stated, are made and intended only for the purpose of
binding the Trust Estate and establishing the existence of rights and remedies
which can be exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other agreements to the
contrary notwithstanding (except for any express provisions or representations
that the Owner Trustee is responsible for, or is making, in its individual
capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the Participation Agreement
or any of the other Operative Documents or under the Secured Certificates except
as expressly provided herein or in the Participation Agreement; provided,
however, that nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms of this Trust
Indenture or such other agreements of rights and remedies against the Trust
Estate. These provisions are not intended as any release or discharge of the
indebtedness represented by the Secured Certificates and the Trust Indenture,
but are intended only as a covenant not to sue the Owner Trustee or the
Indenture Trustee in their individual capacities, except as expressly provided
herein or in the Participation Agreement, or the Owner Participant, except as
expressly provided in the Participation Agreement, for a deficiency with respect
to such indebtedness, the indebtedness represented by this Trust Indenture and
the Secured Certificates to remain in full force and effect as fully as though
these provisions were not contained in this Trust Indenture. The Owner Trustee
hereby acknowledges that the Certificate Holders have expressly reserved all
their rights and remedies against the Trust Indenture Estate, including the
right, in the event of a default in the payment of all or part of the Principal
Amount of, interest on, Make-Whole Amount, if any, or any other amount due with
respect to any Secured Certificate within the periods provided for in Section
4.02(b) hereof, or upon the occurrence and continuation of any other Event of
Default under this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate and otherwise to
enforce any other right under this Trust Indenture. Nothing in this Section
2.03(a) shall (x) release the Owner Participant from personal liability, or
constitute a covenant not to sue the Owner Participant, for any breach by it of
any of its covenants, representations or warranties contained in the
Participation Agreement for the benefit of the Indenture Trustee or the
Certificate Holders or for any of the payments it has agreed to make to the
Indemnitee Trustee or the Certificate Holders pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders or (z) release the
Owner Trustee in its individual capacity from personal liability, or constitute
a covenant not to sue the Owner Trustee in its individual capacity for any
breach by it of any representations, warranties or covenants of the Owner
Trustee made in its individual capacity in the Operative Documents for the
benefit of the Indenture Trustee or the Certificate Holders.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant
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<PAGE> 18
to such reorganization provisions, including Section 1111(b) of the Bankruptcy
Code, the Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to any Certificate
Holder or the Indenture Trustee, directly or indirectly (other than the recourse
liability of (x) the Owner Trustee (in its individual capacity) under the
Participation Agreement or this Trust Indenture or by separate agreement or (y)
the recourse liability of the Owner Participant under the Participation
Agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Secured
Certificates, (iii) the Certificate Holders shall have or shall have been
permitted to foreclose the Lien of this Trust Indenture, and (iv) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. METHOD OF PAYMENT.
(a) The Principal Amount of, interest on, Make-Whole Amount, if
any, and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:00 noon,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Secured Certificate, the Owner Trustee and the
Indenture Trustee shall deem and treat the Person in whose name any Secured
Certificate is registered on the Secured Certificate Register as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable with respect to such Secured Certificate and for
all other purposes, and none of the Owner Trustee or the Indenture Trustee shall
be affected by any notice to the contrary. So long as any signatory to the
Participation Agreement or nominee thereof shall be a
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<PAGE> 19
registered Certificate Holder, all payments to it shall be made to the account
of such Certificate Holder specified in Schedule I thereto and otherwise in the
manner provided in or pursuant to the Participation Agreement (or, upon
consummation of the Refinancing Transaction, the Refunding Agreement) unless it
shall have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Secured Certificate (and such exclusion and
withholding shall constitute payment in respect of such Secured Certificate) any
and all United States withholding taxes applicable thereto as required by Law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificate Holders, that it will file any necessary United States withholding
tax returns or statements when due, and that as promptly as possible after the
payment thereof it will deliver to each Certificate Holder (with a copy to the
Owner Trustee and Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such Certificate
Holder may reasonably request from time to time. The Indenture Trustee and each
Certificate Holder agree that (i) no such withholding or action with respect
thereto shall constitute or give rise to any Event of Default and (ii) in the
event of the failure of the Indenture Trustee to withhold and pay over any such
taxes to the appropriate taxing authority, no indemnity will be sought from the
Owner Trustee, the Owner Participant or the Trust Estate.
If a Certificate Holder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Secured Certificate(s) held by
such holder is made (but prior to the making of such payment), or in either of
the two preceding calendar years, and has not notified the Indenture Trustee of
the withdrawal or inaccuracy of such form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate), the Indenture Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law. The Indenture Trustee and each Certificate Holder agree that (i)
no such withholding or action with respect thereto shall constitute or give rise
to any Event of Default and (ii) in the event of the failure of the Indenture
Trustee to withhold and pay over any such taxes to the appropriate taxing
authority, no indemnity will be sought from the Owner Trustee, the Owner
Participant or the Trust Estate.
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<PAGE> 20
SECTION 2.05. APPLICATION OF PAYMENTS.
In the case of each Secured Certificate, each payment of
Principal Amount, Make-Whole Amount, if any, and interest or other amounts due
thereon shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, and to the extent permitted by
Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Secured Certificate remaining
unpaid (provided that such Secured Certificate shall not be subject to
redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE
ESTATE.
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture Estate when and
if the Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "SECURED
OBLIGATIONS") shall have been paid in full.
SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED
CERTIFICATES.
The Indenture Trustee shall keep a register (the "SECURED
CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture,
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as the Secured Certificates surrendered upon such registration of transfer or
exchange. Every Secured Certificate presented or surrendered for registration of
transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee and Lessee of each registration
of a transfer of a Secured Certificate. Any such transferee of a Secured
Certificate, by its acceptance of a Secured Certificate, agrees to the
provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t),
8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have
represented and warranted (except as provided above), and covenanted, to the
parties to the Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participants in the Participation Agreement.
Subject to compliance by the Certificate Holder and its transferee (if any) of
the requirements set forth in this Section 2.07, the Indenture Trustee and the
Owner Trustee shall use all reasonable efforts to issue new Secured Certificates
upon transfer or exchange within 10 Business Days of the date a Secured
Certificate is surrendered for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED
CERTIFICATES.
If any Secured Certificate shall become mutilated, destroyed,
lost or stolen, the Owner Trustee shall, upon the written request of the holder
of such Secured Certificate, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new Secured Certificate,
payable in the same Principal Amount dated the same date and captioned as issued
in connection with the Aircraft. The Indenture Trustee shall authenticate each
replacement Secured Certificate on request by the Owner Trustee and shall make a
notation on each replacement Secured Certificate of the aggregate amount of all
payments of Principal Amount previously made on the mutilated, destroyed, lost
or stolen Secured Certificate with respect to which the replacement Secured
Certificate is issued and the date to which interest on such mutilated,
destroyed, lost or stolen Secured Certificate has been paid. If the Secured
Certificate being replaced has become mutilated, such Secured Certificate shall
be surrendered to the Indenture Trustee and a photocopy thereof shall be
furnished to the Owner Trustee. If the Secured Certificate being replaced has
been destroyed, lost or stolen, the holder of such Secured Certificate shall
furnish to the Owner Trustee and the Indenture Trustee such security or
indemnity as may be required by them to save the Owner Trustee and the Indenture
Trustee harmless and evidence satisfactory to the Owner Trustee and the
Indenture Trustee of the destruction, loss or theft of such Secured Certificate
and of the ownership thereof. If a "qualified institutional buyer" of the type
referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the
Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen
Secured Certificate, then the written indemnity of such QIB, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a condition to the execution and delivery of such
new Secured Certificate. Subject to compliance by the Certificate Holder of the
requirements set forth in this Section 2.08, the Indenture Trustee and the Owner
Trustee shall use all reasonable efforts to issue new Secured Certificates
within 10 Business Days of the date of the written request therefor from the
Certificate Holder.
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SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.
(a) No service charge shall be made to a Certificate Holder for
any registration of transfer or exchange of Secured Certificates, but the
Indenture Trustee, as Secured Certificate Registrar, may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Secured
Certificates; provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear any such costs of registration, transfer or exchange
including, without limitation, in connection with the consummation of the
Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the
date the Lease is so terminated all the Secured Certificates shall be redeemed
in whole at a redemption price equal to 100% of the unpaid Principal Amount
thereof, together with accrued interest thereon to the date of redemption and
all other amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES.
All of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Secured Certificates shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to
the applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and
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payable upon each such Secured Certificate, and that, if any such Secured
Certificates are then outstanding, interest on such Secured Certificates shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Secured Certificates are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid (and not deemed revoked as contemplated in the proviso to Section
2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Secured
Certificates then outstanding shall cease to bear interest. Upon surrender of
any such Secured Certificate for redemption or purchase in accordance with said
notice, such Secured Certificate shall be redeemed at the redemption price. If
any Secured Certificate called for redemption or purchase shall not be so paid
upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable redemption date at the
interest rate in effect for such Secured Certificate as of such redemption date.
SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE.
If, in accordance with Section 8(x) of the Participation
Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall
assume (on a full recourse basis) all of the obligations of the Owner Trustee
hereunder, under the Secured Certificates and all other Operative Documents by
supplemental indenture satisfactory to the Indenture Trustee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and
12 of the Lease and (ii) other provisions necessary or advisable to effectuate
such assumption), then upon delivery of such supplemental indenture, payment by
Lessee of all expenses (including reasonable fees and expenses of counsel) for
the Owner Trustee and the Owner Participant, delivery by the Guarantor of a
guarantee of the Secured Certificates and other amounts owing to the Certificate
Holders substantially in the form of the Guarantee, and delivery of an opinion
of counsel for Lessee that such assumption has been duly and validly effected,
the Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES.
The Owner Trustee and the Owner Participant may, upon the
events and subject to the terms and conditions and for the price set forth in
this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind other than (i) of title to the
Secured Certificates so conveyed and (ii) against Liens on such Secured
Certificates arising by, through or under such holder), all of the right, title
and interest of such Certificate Holder in and to the Secured Certificates held
by it, and such purchaser or its nominee shall assume all of such holder's
obligations under the Participation Agreement and hereunder.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant upon any of the
following events, and, in any such event, the purchase price thereof shall equal
for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus
accrued and unpaid interest thereon to the date of purchase and all other
amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Participation Agreement to the
holder thereof. Such option to purchase the Secured Certificates may be
exercised: (i) upon an Indenture Trustee Event or (ii) in the event there
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shall have occurred and be continuing a Lease Event of Default, provided that if
such option is exercised pursuant to this clause (ii) at a time when there shall
have occurred and be continuing for less than 120 days a Lease Event of Default,
the purchase price thereof shall equal the price provided in the preceding
sentence plus the Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be
exercised by the Owner Trustee or the Owner Participant giving written notice of
its election of such option to the Indenture Trustee, which notice shall specify
a date for such purchase not more than 30 days or less than 15 days after the
date of such notice. The Indenture Trustee shall not exercise any of the
remedies hereunder or, without the consent of the Owner Trustee or the Owner
Participant, under the Lease, during the period from the time that a notice of
exercise by the Owner Trustee or the Owner Participant of such option to
purchase becomes irrevocable until the date on which such purchase is required
to occur pursuant to the terms of the preceding sentence. Such election to
purchase the Secured Certificates shall become irrevocable upon the sixteenth
day preceding the date specified in the written notice described in the first
sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Certificate Holders will comply with
all the provisions of Section 2.07 to enable new Secured Certificates to be
issued to the Owner Trustee or the Owner Participant or its nominee in such
denominations as the Owner Trustee or the Owner Participant shall request. All
taxes, charges and expenses required pursuant to Section 2.09 in connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
SECTION 2.15. SUBORDINATION.
(a) The Owner Trustee and, by acceptance of its Secured
Certificates of any Series, each Certificate Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "SENIOR HOLDER"
shall mean, (i) the Certificate Holders of Series A until the Secured
Obligations in respect of Series A Secured Certificates have been paid in full
and (ii) after the Secured Obligations in respect of Series A Secured
Certificates have been paid in full, the Certificate Holders of Series B until
the Secured Obligations in respect of Series B Secured Certificates have been
paid in full.
SECTION 2.16. DEFEASANCE.
(a) The Owner Trustee will be deemed to have paid and will be
discharged from any and all obligations in respect of the Secured Certificates
on the 90th day (or such other period as may be specified in the relevant
provision of the United States Bankruptcy Code) (such period being the
"Preference Period") after the date of the deposit referred to in clause (i) of
this Section 2.16(a) if:
(i) with reference to this Section 2.16(a), the Owner Trustee
has irrevocably deposited or caused to be irrevocably deposited with
the Indenture Trustee (or another trustee satisfying the requirements
of Section 8.02) and conveyed all right, title and interest for the
benefit of the Certificate Holders, under the terms of an irrevocable
trust agreement in form and substance satisfactory to the Indenture
Trustee, which provides irrevocable instructions therein to apply such
money or the proceeds of
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such U.S. Government Obligations to the payment of such principal and
interest with respect to the Secured Certificates, as trust funds in
trust, specifically entrusted to the Indenture Trustee for the benefit
of the Certificate Holders for payment of the principal of and
interest, if any, on the Secured Certificates, and dedicated solely
to, the benefit of the Certificate Holders, in and to (A) money in an
amount, (B) U.S. Government Obligations that, through the payment of
interest, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Indenture Trustee,
to pay and discharge, without consideration of the reinvestment of
such interest and after payment of all federal, state and local
withholding taxes or other similar charges and assessments in respect
thereof payable by the Indenture Trustee with respect to the amounts
deposited pursuant to clause (A), (B) or (C), the principal of and
accrued interest on the outstanding Secured Certificates at the
maturity of such principal or interest;
(ii) the Owner Trustee shall have delivered to the Indenture
Trustee (A) either (1) a ruling directed to the Indenture Trustee
received from the Internal Revenue Service to the effect that the
Certificate Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Owner Trustee's
exercise of its option under this Section 2.16(a) and will be subject
to federal income tax on that same amount and in the same manner and
at the same times as would have been the case if such option had not
been exercised or (2) an Opinion of Counsel to the same effect as the
ruling described in clause (1) above accompanied by a ruling to that
effect published by the Internal Revenue Service, unless there has
been a change in the applicable federal income tax law since the date
of this Indenture such that a ruling from the Internal Revenue Service
is no longer required and (B) an Opinion of Counsel to the effect that
(1) the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and (2) after the passage of the
Preference Period, the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code (or any successor
or replacement provision) in a case commenced by or against the Owner
Trustee or Lessee under either such statute, and either (I) the trust
funds will no longer remain the property of the Owner Trustee or
Lessee (and therefore will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (II) if a court were to rule
under any such law in any case or proceeding that the trust funds
remained the property of the Owner Trustee or Lessee (y) assuming such
funds remained in the possession of the Indenture Trustee prior to
such court ruling to the extent not paid to the Certificate Holders,
the Indenture Trustee will hold, for the benefit of the Certificate
Holders, a valid and perfected security interest in such trust funds
that is not avoidable in bankruptcy or otherwise except for the effect
of Section 552(b) of the United States Bankruptcy Code (or any
successor or replacement provision) on interest on the trust funds
accruing after the commencement of a case under such statute and (z)
the Certificate Holders will be entitled to receive adequate
protection of their interests in such trust funds if such trust funds
are used in such case or proceeding; and
(iii) the Owner Trustee shall have made arrangements reasonably
satisfactory to the Indenture Trustee for payment or satisfaction of
all amounts due under the third paragraph of Section 2.02.
After any such irrevocable deposit and satisfaction of the
condition precedent provided in clause (ii) of this Section 2.16(a), the
Indenture Trustee upon request shall execute and deliver appropriate instruments
to release the Lien of this Trust Indenture in accordance with Section 10.01 and
shall acknowledge in writing the discharge of the Owner Trustee's obligations
under the Secured Certificates and this Trust Indenture except for those
surviving obligations in the immediately succeeding paragraph.
Notwithstanding the foregoing, prior to the end of the
Preference Period, none of the Owner Trustee's obligations under this Trust
Indenture shall be discharged. Subsequent to the end of the Preference Period,
the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until
the Secured Certificates are no longer outstanding.
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(b) In lieu of satisfying its obligations set forth in Section
2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the
conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard
to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of
satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an
Opinion of Counsel to the effect that the Certificate Holders will not recognize
income, gain or loss for federal income tax purposes as a result of the Owner
Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit had not been made. If
the Owner Trustee elects such option, then the Indenture Trustee upon request
shall execute and deliver appropriate instruments to release the Lien of this
Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be
released from its obligations set forth in Section 4.01 (other than Section
4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in
full force and effect. For the avoidance of doubt, the effect of the Owner
Trustee's exercise of its option set forth in this subsection (b) shall be to
create an economic defeasance rather than the legal defeasance that would result
if the option set forth in subsection (a) above were to be exercised.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent or Interim Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 4.03 hereof shall be promptly distributed in the following
order of priority:
FIRST, (i) so much of such installment or payment as shall be required to
pay in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A Secured
Certificates shall be distributed to the Certificate Holders of
Series A ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then
due under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all Series A
Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series B Secured
Certificates shall be distributed to the Certificate Holders of
Series B ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then
due under each Series B Secured Certificate bears to the
aggregate amount of the payments then due under all Series B
Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent
permitted by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series C Secured
Certificates shall be distributed to the Certificate Holders of
Series C ratably,
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without priority of one over the other, in the proportion
that the amount of such payment or payments then due
under each Series C Secured Certificate bears to the
aggregate amount of the payments then due under all
Series C Secured Certificates; and
SECOND, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall have
occurred and be continuing, then such balance shall not
be distributed as provided in this clause "Second" but
shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with
Section 5.09 hereof until whichever of the following
shall first occur: (i) all Events of Default shall have
been cured or waived, in which event such balance shall
be distributed as provided in this clause "Second", (ii)
Section 3.03 hereof shall be applicable, in which event
such balance shall be distributed in accordance with the
provisions of such Section 3.03, or (iii) the 120th day
after the receipt of such payment in which case such
payment shall be distributed as provided in this clause
"Second".
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY
TERMINATION; REFINANCING.
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee (i) with respect to the Aircraft as
the result of an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
FIRST, (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in
connection with such redemption for which they are entitled to
reimbursement, or indemnity by Lessee, under the Operative
Documents and then (b) to pay any other amounts then due to the
Indenture Trustee and the Certificate Holders under this Trust
Indenture, the Participation Agreement or the Secured
Certificates;
SECOND, (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if
any, then due and payable in respect of the Series A
Secured Certificates;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then
due and payable in respect of the Series B Secured
Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then
due and payable in respect of the Series C Secured
Certificates; and
THIRD, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and
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such investment earnings) shall be released to Lessee at Lessee's written
request upon the release of such damaged Airframe or Engine and the replacement
thereof as provided in the Lease.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an
Event of Default shall have occurred and be continuing and after the occurrence
of an Indenture Trustee Event, as well as all payments or amounts then held by
the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other
loss (including, without limitation, all amounts to be expended
at the expense of, or charged upon the tolls, rents, revenues,
issues, products and profits of, the property included in the
Trust Indenture Estate (all such property being herein called
the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) ,
but other than income tax on, or measured by, fees payable to
the Indenture Trustee in its individual capacity pursuant to
the Operative Documents to which it is a party incurred by the
Indenture Trustee (to the extent not previously reimbursed),
the expenses of any sale, taking or other proceeding,
reasonable attorneys' fees and expenses, court costs, and any
other expenditures incurred or expenditures or advances made by
the Indenture Trustee or the Certificate Holders in the
protection, exercise or enforcement of any right, power or
remedy or any damages sustained by the Indenture Trustee or any
Certificate Holder, liquidated or otherwise, upon such Event of
Default shall be applied by the Indenture Trustee as between
itself and the Certificate Holders in reimbursement of such
expenses and any other expenses for which the Indenture Trustee
or the Certificate Holders are entitled to reimbursement under
any Operative Document and in the case the aggregate amount to
be so distributed is insufficient to pay as aforesaid, then
ratably, without priority of one over the other, in proportion
to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Certificate
Holders for payments made pursuant to Section 5.03 hereof (to
the extent not previously reimbursed) shall be distributed to
such then existing or prior Certificate Holders ratably,
without priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Certificate Holder pursuant to said Section
5.03 hereof;
THIRD, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series A Secured Certificates, and the
accrued but unpaid interest and other amounts due thereon
(other than Make-Whole Amount which shall not be due and
payable) and all other Secured Obligations in respect of
the Series A Secured Certificates (other than Make-Whole
Amount) to the date of distribution, shall be distributed
to the Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series
A Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series A Secured
Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon (other
than Make-Whole Amount) to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be required
to pay in full the aggregate unpaid Principal Amount of
all Series B Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and
all other Secured Obligations in respect of the Series B
Secured Certificates [(other than Make-Whole Amount)] to
the date of distribution, shall be distributed to the
Certificate Holders of Series B, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series
B Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the Make-Whole
Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series B Secured
Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon (other
than the Make-Whole Amount) to the date of distribution;
and
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required
to pay in full the aggregate unpaid Principal Amount of
all Series C Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and
all other Secured Obligations in respect of the Series C
Secured Certificates (other than Make-Whole Amount) to
the date of distribution, shall be distributed to the
Certificate Holders of Series C, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid Principal Amount of all Series
C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the Make-Whole
Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C Secured
Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon (other
than the Make-Whole Amount) to the date of distribution;
and
FOURTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. CERTAIN PAYMENTS.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt
any indemnity payment received by it from the Owner Trustee or Lessee in respect
of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the
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Intercreditor Agreement, and any payment received by the Indenture Trustee under
clause (c) of the third paragraph of Section 2.02 shall be distributed directly
to the Persons entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Trust Indenture, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to
the contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. OTHER PAYMENTS. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is made
in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or
in any other Operative Document shall be distributed by the Indenture Trustee to
the extent received or realized at any time (i) prior to the payment in full of
all Secured Obligations due the Certificate Holders, in the order of priority
specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after
payment in full of all Secured Obligations due the Certificate Holders, in the
following order of priority:
FIRST, to the extent payments or amounts described in clause "First"
of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated
to indemnify against thereunder, in the manner provided in
clause "First" of Section 3.03 hereof, and
SECOND, in the manner provided in clause "Fourth" of Section 3.03
hereof.
Further, and except as otherwise provided in Sections 3.02,
3.03 and 3.04 hereof, all payments received and amounts
realized by the Indenture Trustee under the Lease or otherwise
with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft
after the termination of the Lease with respect thereto), to
the extent received or realized at any time after payment in
full of all Secured Obligations due the Certificate Holders,
shall be distributed by the Indenture Trustee in the order of
priority specified in clause (ii) of the immediately preceding
sentence of this Section 3.05.
SECTION 3.06. PAYMENTS TO OWNER TRUSTEE.
Any amounts distributed hereunder by the Indenture Trustee to
the Owner Trustee shall be paid to the Owner Trustee (within the time limits
contemplated by Section 2.04(a)) by wire transfer of funds of the type received
by the Indenture Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from the Owner Trustee to
the Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account (within the time limits contemplated by Section
2.04(a)) specified in Schedule I to the Participation Agreement.
SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE.
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All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee.
The Owner Trustee hereby covenants and agrees (the covenants
and agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Secured Certificates and hereunder in
accordance with the terms of the Secured Certificates and this Trust
Indenture and all amounts, if any, payable by it to the Certificate
Holders under the Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity with
respect to the Aircraft or any other portion of the Trust Estate; that
it will promptly, at its own expense, take such action as may be
necessary to duly discharge such Lessor Lien attributable to it in its
individual capacity; and that it will make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge
of an Event of Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Event of Default or Event of Loss to the
Indenture Trustee, each Certificate Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Certificate Holders
and the Indenture Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates and
other instruments furnished to the Owner Trustee under the Lease,
including, without limitation, a copy of any Termination Notice and a
copy of each report or notice received pursuant to Section 9(a) and
11(c) of the Lease to the extent that the same shall not have been
furnished to the Certificate Holders or the Indenture Trustee pursuant
to the Lease;
(e) except with the consent of the Indenture Trustee (acting
pursuant to instructions given in accordance with Section 9.01 hereof),
the Owner Trustee will not contract for, create, incur, assume or
suffer to exist any Debt (other than the Secured Certificates), and
will not guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02.EVENT OF DEFAULT.
"EVENT OF DEFAULT" means any of the following events (whatever
the reason for such Event of Default and whether such event shall be voluntary
or involuntary or come about or be effected by operation of Law
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or pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease
Event of Default caused solely by a failure of Lessee to pay to the
Owner Trustee or the Owner Participant when due any amount that is
included in the definition of Excluded Payments shall not constitute an
Event of Default unless notice is given by the Owner Trustee to the
Indenture Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, interest on, Make-Whole Amount, if any,
or other amount due and payable under any Secured Certificate or
hereunder (other than any such failure arising by virtue of a tax
withheld pursuant to Section 2.04(b) hereof or as a result of a Lease
Event of Default or a Lease Default) and such failure shall have
continued unremedied for ten Business Days in the case of any payment
of Principal Amount or interest or Make-Whole Amount, if any, thereon
and, in the case of any other amount, for ten Business Days after the
Owner Trustee or the Owner Participant receives written demand from the
Indenture Trustee or any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in
its individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the
Participation Agreement, or by the Owner Participant pursuant to
Section 8(h) of the Participation Agreement shall remain undischarged
for a period of 30 days after the Owner Trustee or the Owner
Participant, as the case may be, shall have received written notice
from the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee herein, in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the Refunding
Agreement) or in any certificate furnished by the Owner Participant or
the Owner Trustee to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative
Documents shall prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such correction
is being sought diligently, such misrepresentation shall not have been
corrected within 60 days (or, without affecting Section 4.02(f) hereof,
in the case of the representations made in Section 8(c) of the
Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days)
following notice thereof from the Indenture Trustee or any Certificate
Holder to the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below, any
failure by the Owner Trustee or Owner Participant to observe or perform
in any material respect any other covenant or obligation of the Owner
Trustee or Owner Participant, as the case may be, for the benefit of
the Indenture Trustee or the Certificate Holders contained in the
Participation Agreement, Section 4.01(a) of the Trust Agreement, the
Secured Certificates or this Trust Indenture which is not remedied
within a period of 60 days after notice thereof has been given to the
Owner Trustee and the Owner Participant (or, if such failure cannot be
remedied during such 60-day period and the Owner Trustee and/or the
Owner Participant have been and are diligently proceeding to remedy
such failure, such additional period not in excess of 120 days, if such
failure is capable of being remedied during such additional period, as
may be necessary to remedy such failure); or
(f) if at any time when the Aircraft is registered under the
laws of the United States, the Owner Participant shall not be a Citizen
of the United States, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then
applicable thereunder, shall cease to be effective; provided that no
Event of Default shall be deemed to have occurred under this paragraph
(f)
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unless such circumstances continue unremedied for more than 60 days
after the Owner Participant has Actual Knowledge of the state of facts
that resulted in such ineffectiveness and of such loss of citizenship;
or
(g) at any time either (i) the commencement of an involuntary
case or other proceeding in respect of the Owner Participant, the Owner
Trustee or the Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar Law in the United States
or seeking the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Owner
Participant, the Owner Trustee or the Trust Estate or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of 90
consecutive days; or (ii) the commencement by the Owner Participant,
the Owner Trustee or the Trust Estate of a voluntary case or proceeding
under the federal bankruptcy Laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States, or the consent by
the Owner Participant, the Owner Trustee or the Trust Estate to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Owner Participant, the Owner Trustee or the Trust Estate or for
all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment
for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this Section 4.02(g)
with respect to the Owner Participant shall not constitute an Event of
Default if within 30 days of the commencement of the case or proceeding
(A) a final non-appealable order, judgment or decree shall be entered
in such case or proceeding by a court or a trustee, custodian, receiver
or liquidator, or (B) an opinion of counsel, reasonably satisfactory to
the Indenture Trustee, shall be provided by the Owner Participant, in
each case to the effect that, no part of the Trust Estate (except for
the Owner Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be included
in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation
of the Owner Participant referred to in this Section 4.02(g); provided
further that an event referred to in this Section 4.02(f) with respect
to the Owner Participant shall not constitute an Event of Default if,
not later than 90 days following such event, the Owner Participant has
been replaced with an entity eligible to act as Owner Participant in
accordance with Section 8(n) of the Participation Agreement.
SECTION 4.03. CERTAIN RIGHTS.
The Indenture Trustee shall give the Certificate Holders, the
Owner Trustee and the Owner Participant prompt written notice of any Event of
Default of which the Indenture Trustee has Actual Knowledge and, if any such
Event of Default results from a Lease Event of Default that can be cured by the
payment of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied), shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days' prior written notice of the date
(the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in
respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the
Lease, the Indenture Trustee shall have insufficient funds to make any payment
of Principal Amount and interest on any Secured Certificate on the day it
becomes due and payable, the Owner Trustee may, without the consent or
concurrence of any Certificate Holder, but shall not be obligated to, pay the
Indenture Trustee prior to the Enforcement Date, in the manner provided in
Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an
amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of
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payments of Basic Rent on each of the three immediately preceding Basic Rent
payment dates, or the Owner Trustee has cured six previous Events of Default in
respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would otherwise have arisen on account of the nonpayment
by Lessee of such installment of Interim Rent or Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the
payment of money (it being understood that defaults requiring action such as the
obtaining of insurance and the procuring of maintenance services can be so
remedied) has occurred, the Owner Trustee may, without the consent or
concurrence of any Certificate Holder, but shall not be obligated to, cure such
Event of Default by making such payment prior to the Enforcement Date as is
necessary to accomplish the observance or performance of the defaulted covenant,
condition or agreement to the party entitled to the same.
Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the
first or second preceding paragraphs of this Section 4.03, the Owner Trustee
shall be subrogated to the rights of the Indenture Trustee and the Certificate
Holders in respect of the Interim Rent or Basic Rent which was overdue at the
time of such payment and interest payable by Lessee on account of its being
overdue and any Supplemental Rent in respect of the reimbursement of amounts
paid by Owner Trustee pursuant to the immediately preceding paragraph (but in
either case shall have no rights as a secured party hereunder), and thereafter,
the Owner Trustee shall be entitled to receive such overdue Interim Rent or
Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Indenture Trustee; provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Interim Rent, Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not be
entitled to seek to recover any such payment (or any payment in lieu thereof)
except pursuant to the foregoing right of subrogation until payment of the
Principal Amount and interest that has become due in accordance with Section
4.04(b) hereof.
SECTION 4.04. REMEDIES.
(a) If an Event of Default shall have occurred and be
continuing and so long as the same shall continue unremedied, then and in every
such case the Indenture Trustee may, subject to the second paragraph of this
Section 4.04(a), exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article IV and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and, in the event such Event of Default is also a Lease Event of Default,
any and all of the remedies pursuant to Section 15 of the Lease and may take
possession of all or any part of the properties covered or intended to be
covered by the Lien created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee and Lessee and all persons claiming under any of
them wholly or partly therefrom, provided, that the Indenture Trustee shall give
the Owner Trustee and the Owner Participant twenty days' prior written notice of
its intention to sell the Aircraft or foreclose the Lien of this Trust
Indenture. Unless an Event of Default not resulting from or relating to a Lease
Event of Default has occurred and is continuing, the Owner Participant may bid
at any public sale and become the purchaser. Without limiting any of the
foregoing but subject to the immediately succeeding paragraph, it is understood
and agreed that the Indenture Trustee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Indenture Trustee shall not be entitled to exercise any
remedy hereunder as a result of an Event of Default which arises solely by
reason of one
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or more events or circumstances which constitute a Lease Event of Default unless
the Indenture Trustee as security assignee of the Owner Trustee shall have
exercised or concurrently be exercising one or more of the remedies provided for
in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is
not subsequently re-leased to Lessee or an Affiliate thereof) or take possession
and/or sell the Aircraft with respect to the Aircraft; provided, however, that
such requirement to exercise one or more of such remedies under the Lease shall
not apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under the Lease (a
"CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to
exercise one or more of such remedies under the Lease shall nonetheless be
applicable during a Continuous Stay Period subsequent to the expiration of the
Section 1110 Period to the extent that the continuation of such Continuous Stay
Period subsequent to the expiration of the Section 1110 Period (A) results from
an agreement by the trustee or the debtor-in-possession in such proceeding
during the Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy
Code and continues to perform as required by Section 1110(a)(1)(A-B) of the
Bankruptcy Code or (B) is an extension of the Section 1110 Period with the
consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy
Code or (C) results from Lessee's assumption during the Section 1110 Period with
the approval of the relevant court of the Lease pursuant to Section 365 of the
Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure
to give any requisite notice to any person. In the event that the applicability
of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by
Lessee in judicial proceedings, so long as the Indenture Trustee fails to
participate in such proceedings, the Owner Trustee shall have the right (without
affecting in any way any rights or remedy of the Indenture Trustee hereunder) to
participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Indenture Trustee may (and shall,
upon receipt of a written demand therefor from a Majority in Interest of
Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery
of written notice or notices to the Owner Trustee and the Owner Participant,
declare all the Secured Certificates to be due and payable, whereupon the unpaid
Principal Amount of all Secured Certificates then outstanding, together with
accrued but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition
that, if at any time after the Principal Amount of the Secured Certificates
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Secured Certificates and all other amounts payable
under the Secured Certificates (except the Principal Amount of the Secured
Certificates which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Certificate Holders may (but shall not
be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee's declaration and its consequences; but
no such rescission or annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereon.
(c) The Certificate Holders shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to credit against any
purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Certificate Holder and secured by the Lien of this
Trust Indenture (but only to the extent that such purchase price would have been
paid to such Certificate Holder pursuant to Article III hereof if such purchase
price were paid in cash and the foregoing provisions of this subsection (c) were
not given effect).
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(d) In the event of any sale of the Trust Indenture Estate, or
any part thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Trust Indenture,
the unpaid Principal Amount of all Secured Certificates then outstanding,
together with accrued interest thereon (without Make-Whole Amount), and other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is
a Certificate Holder, the Indenture Trustee will not be authorized or empowered
to acquire title to any Mortgaged Property or take any action with respect to
any Mortgaged Property so acquired by it if such acquisition or action would
cause any Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 4.05. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be
continuing and the Indenture Trustee shall have foreclosed, or shall
concurrently be foreclosing, the Lien of this Trust Indenture and shall be
taking steps for the sale or repossession of the Aircraft, subject to Section
4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or an agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Mortgaged
Property included in the Trust Indenture Estate to which the Indenture Trustee
shall at the time be entitled hereunder. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent permitted by
applicable law, and (ii) pursue all or part of such Mortgaged Property wherever
it may be found and, in the event that a Lease Event of Default has occurred and
is continuing, may enter any of the premises of Lessee wherever such Mortgaged
Property may be or be supposed to be and search for such Mortgaged Property and
take possession of and remove such Mortgaged Property. All expenses of obtaining
such judgment or of pursuing, searching for and taking such property shall,
until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee
may, from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
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SECTION 4.06. REMEDIES CUMULATIVE.
Subject to the other provisions of Article IV hereof, each and
every right, power and remedy given to the Indenture Trustee specifically or
otherwise in this Trust Indenture shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS.
In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Indenture Trustee, then and in every such case the Owner Trustee, the
Owner Participant, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Owner Participant, the Indenture
Trustee or Lessee shall continue as if no such proceedings had been instituted.
SECTION 4.08. WAIVER OF PAST DEFAULTS.
Upon written instruction from a Majority in Interest of
Certificate Holders, the Indenture Trustee shall waive any past Default or Event
of Default hereunder and its consequences and upon any such waiver such Default
or Event of Default shall cease to exist and any Event of Default arising from
any such Default shall be deemed to have been cured for every purpose of this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Certificate Holders,
the Indenture Trustee shall not waive any Default or Event of Default (i) in the
payment of the Principal Amount, Make-Whole Amount, if any, and interest and
other amounts due under any Secured Certificate then outstanding, or (ii) in
respect of a covenant or provision hereof which, under Article IX hereof, cannot
be modified or amended without the consent of each Certificate Holder.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Indenture Trustee shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee thereof) for all or any part of the Mortgaged Property,
whether such receivership be incidental to a proposed sale of the Mortgaged
Property or the taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Mortgaged
Property shall be entitled to exercise all the rights and powers of the
Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF
SALE, ETC.
The Owner Trustee irrevocably appoints the Indenture Trustee
the true and lawful attorney-in-fact of the Owner Trustee in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Indenture Trustee or any purchaser, the
Owner Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing
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and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Trust Indenture,
the right of any Certificate Holder to receive payment of principal of, and
premium, if any, and interest on a Secured Certificate on or after the
respective due dates expressed in such Secured Certificate, or to bring suit for
the enforcement of any such payment on or after such respective dates in
accordance with the terms hereof, shall not be impaired or affected without the
consent of such Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Indenture Trustee shall have Actual Knowledge of an Event of Default or
of a Default arising from a failure to pay Rent, the Indenture Trustee shall
give prompt written notice thereof to the Owner Trustee, the Owner Participant,
Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02
and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from
taking such action, with respect to such Event of Default or Default (including
with respect to the exercise of any rights or remedies hereunder) as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture
Trustee shall not have received instructions as above provided within 20 days
after mailing notice of such Event of Default to the Certificate Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to
the preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Certificate Holders. If the
Indenture Trustee shall at any time declare the Lease to be in default pursuant
to Section 15 thereof or shall elect to foreclose or otherwise enforce this
Trust Indenture, the Indenture Trustee shall forthwith notify the Owner
Participant, the Certificate Holders, the Owner Trustee and Lessee. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the Indenture Trustee, the Owner Trustee or the Owner Participant, the
Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may
be, shall not be deemed to have knowledge of a Default or an Event of Default
(except, in the case of the Indenture Trustee, the failure of Lessee to pay any
installment of Interim Rent or Basic Rent within one Business Day after the same
shall become due, if any portion of such installment was then required to be
paid to the Indenture Trustee, which failure shall constitute knowledge of a
Default) unless notified in writing by Lessee, the Owner Trustee, the Owner
Participant or one or more Certificate Holders.
SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Certificate Holders, the Indenture Trustee
shall, subject to the terms of this Section 5.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee;
provided,
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that anything contained in this Trust Indenture, the Lease or the other
Operative Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, at all
times without the consent of the Indenture Trustee, (A) to the
exclusion of the Indenture Trustee demand, collect, sue for or
otherwise obtain all amounts included in Excluded Payments from Lessee,
(B) unless the Lien of this Trust Indenture shall have been foreclosed
upon, grant or withhold its consent to amendments or supplements to
Indenture Agreements required in accordance with Article IX hereof and
(C) seek legal or equitable remedies to require Lessee to maintain the
insurance coverage referred to in Section 11 of the Lease; provided,
that the rights referred to in this clause (1) shall not be deemed to
include the exercise of any remedies provided for in Section 15 of the
Lease other than the right to proceed by appropriate court action,
either at law or in equity, to enforce payment by Lessee of such
amounts included in Excluded Payments or performance by Lessee of such
insurance covenant or to recover damages for the breach thereof;
(2) at all times prior to the foreclosure of the Lien of this
Trust Indenture, the Indenture Trustee shall not, without the consent
of the Owner Trustee, which consent shall not be unreasonably withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be diminished or impaired thereby, (i) enter into, execute and
deliver amendments, modifications, waivers or consents in respect of
any of the provisions of the Lease, or (ii) approve any accountants,
engineers, appraisers or counsel as satisfactory to render services for
or issue opinions to the Owner Trustee pursuant to the Operative
Documents;
(3) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, each of the Owner
Trustee, the Owner Participant and, except with respect to clauses
(iii) and (iv), the Indenture Trustee shall have the right (i) to
receive from Lessee all notices, certificates, reports, filings,
opinions of counsel and other documents and all information which any
thereof is permitted or required to give or furnish to the Owner
Trustee or Lessor pursuant to any Operative Document (including
pursuant to Section 7(b) of the Participation Agreement), (ii) to
exercise inspection rights pursuant to Section 12 of the Lease, (iii)
to retain all rights with respect to insurance maintained for its own
account which Section 11(e) of the Lease specifically confers on
Lessor, and (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor
under Section 21 of the Lease;
(4) whether or not a Default or Event of Default under the
Trust Indenture has occurred and is continuing, the Owner Trustee shall
at all times, to the exclusion of the Indenture Trustee, have the right
to adjust Rent, Stipulated Loss Values and Termination Values as
provided in Section 3(d) of the Lease;
(5) unless an Indenture Trustee Event shall have occurred, to
exercise all of the rights of Lessor under Section 7(b) of the Lease;
(6) whether or not a Default or Event of Default shall have
occurred and is continuing, the Owner Trustee may, without the consent
of the Indenture Trustee, (i) solicit and make bids with respect to the
Aircraft under Section 9 of the Lease in respect of a termination of
the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair
market sales value" and "fair market rental value" under Section 19 of
the Lease for all purposes except following an Event of Default
pursuant to Section 15 of the Lease, and (iii) make an election
pursuant to and in accordance with the provisions of Section 9(c) of
the Lease; and
(7) so long as no Event of Default shall have occurred and be
continuing, all other rights of the "Lessor" under the Lease shall be
exercised by the Owner Trustee to the exclusion of the Indenture
Trustee including, without limitation, the right to (i) exercise all
rights with respect to Lessee's use and
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operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease and (iii)
request further assurances pursuant to Section 16 of the Lease;
provided that the foregoing shall not limit (A) any rights separately
granted to the Indenture Trustee under the Operative Agreements or (B)
the right of the Indenture Trustee to receive any funds to be delivered
to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein
(including this Section 5.02), the Indenture Trustee shall have the right, to
the exclusion of the Owner Trustee and the Owner Participant (other than with
respect to Excluded Payments), to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. INDEMNIFICATION.
The Indenture Trustee shall not be under any obligation to take
any action under this Trust Indenture or any other Operative Document and
nothing herein or therein shall require the Indenture Trustee to expend or risk
its own funds or otherwise incur the risk of any financial liability in the
performance of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it (the written indemnity of any
Certificate Holder who is a QIB, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to Indenture Trustee
shall be accepted as reasonable assurance of adequate indemnity). The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE
OR INSTRUCTIONS.
The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in
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written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.
The Owner Trustee and the Indenture Trustee agree that they
will not use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Indenture Estate
except (i) as required by the terms of the Lease or (ii) in accordance with the
powers granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Trust Indenture and in accordance with the
express terms hereof.
SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Trust Indenture and the Indenture Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
A. With respect to any Replacement Airframe:
(i) a description of the Airframe which shall be
identified by manufacturer, model, FAA
registration number (or other applicable
registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe to
be received (including the manufacturer,
model, FAA registration number (or other
applicable registration information) and
manufacturer's serial number) as consideration
for the Airframe to be released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Airframe the Owner Trustee will be
the legal owner of such Replacement Airframe
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that such
Replacement Airframe will on such date be in
good working order and condition, and that
such Replacement
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Airframe has been or, substantially
concurrently with such withdrawal, will be
duly registered in the name of the Owner
Trustee under the Federal Aviation Act or
under the law then applicable to the
registration of the Airframe and that an
airworthiness certificate has been duly issued
under the Federal Aviation Act (or such other
applicable law) with respect to such
Replacement Airframe, and that such
registration and certificate is in full force
and effect, and that Lessee will have the full
right and authority to use such Replacement
Airframe;
(iv) the existence of the insurance required by
Section 11 of the Lease with respect to such
Replacement Airframe and the payment of all
premiums then due thereon;
(v) that the Replacement Airframe is of the same
or an improved model as the Airframe requested
to be released from this Indenture;
(vi) the fair market value of the Replacement
Airframe as of the date of such certificate
(which in the judgment of Lessee shall be not
less than the then fair market value of the
Airframe requested to be released (assuming
such Airframe was in the condition and repair
required to be maintained under the Lease));
(vii) the fair market value of the Airframe
immediately prior to the date the Airframe
suffered an Event of Loss (assuming that such
Airframe was in the condition and repair
required under the Lease);
(viii) that no Lease Event of Default and no event
which, with lapse of time or notice, or both,
would become a Lease Event of Default, has
occurred which has not been remedied or
waived, and that Lessee will not be in
default, by the making and granting of the
request for release and the addition of a
Replacement Airframe, in the performance of
any of the terms and covenants of the Lease;
and
(ix) that the release of the Airframe so to be
released will not be in contravention of any
of the provisions of this Indenture; or
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be
identified by manufacturer's serial number;
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(ii) a description of the Replacement Engine
(including the manufacturer's name and serial
number) as consideration for the Engine to be
released;
(iii) that on the date of the Trust Agreement and
Indenture Supplement relating to the
Replacement Engine the Owner Trustee will be
the legal owner of such Replacement Engine
free and clear of all Liens except as are
permitted by Section 6 of the Lease, that such
Replacement Engine will on such date be in
good working order and condition and that such
Replacement Engine is substantially the same
as the Engine to be released (or as improved
model);
(iv) the fair market value of the Replacement
Engine as of the date of such certificate
(which value shall not be less than the then
fair market value of the Engine to be released
(assuming such Engine was in the condition and
repair required to be maintained under the
Lease));
(v) the fair market value of the Engine to be
released (immediately prior to any Event of
Loss suffered by such Engine and assuming that
such Engine was in the condition and repair
required under the Lease);
(vi) that each of the conditions specified in
Section 10(b) of the Lease with respect to
such Replacement Engine have been satisfied
and that Lessee will not be in default, by the
making and granting of the request for release
and the addition of the Replacement Engine, in
the performance of any of the terms and
covenants of the Lease;
(vii) that, with respect to the replacement of an
Engine pursuant to Section 9(d) of the Lease,
no Lease Event of Default and no event which,
with lapse of time or notice, or both, would
become a Lease Event of Default has occurred
which has not been remedied or waived; and
(viii) that the release of the Engine so to be
released will not be in contravention of any
of the provisions of this Indenture.
(3) (a) The appropriate instruments (i) transferring
to the Owner Trustee title to the Replacement Airframe or Replacement Engine to
be received as consideration for the Airframe or Engine to be released and (ii)
assigning to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties generally available with respect to such Replacement Airframe or
Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting
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such Replacement Airframe or Replacement Engine and any related warranty rights
to the lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the lien created by this
Indenture as deemed necessary or desirable by counsel for the Indenture Trustee
to protect the lien under the Indenture in the Replacement Engine.
(4) A certificate from either an aircraft engineer (who may be
an employee of Lessee) or a firm of independent aircraft appraisers selected by
Lessee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments
and/or property which have been or are therewith
delivered to and deposited with the Indenture
Trustee conform to the requirements of this Trust
Indenture and the Lease and, upon the basis of such
application, the property so sold or disposed of may
be lawfully released from the lien of this Trust
Indenture and all conditions precedent herein
provided for relating to such release have been
complied with; and
(ii) the Replacement Airframe or Replacement Engine has
been validly subjected to the lien of this Indenture
and covered by the Lease, the instruments subjecting
such Replacement Airframe or Replacement Engine to
the Lease and to the Lien of this Trust Indenture,
as the case may be, have been duly filed for
recordation pursuant to the Federal Aviation Act or
any other law then applicable to the registration of
the Aircraft, and no further action, filing or
recording of any document is necessary or advisable
in order to establish and perfect the right, title,
estate and interest of the Owner Trustee to and the
lien of this Trust Indenture on such Replacement
Aircraft or Replacement Engine.
SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS.
If a Replacement Airframe or Replacement Engine is being
substituted as contemplated by Section 10 of the Lease, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Certificate Holders and
Lessee, subject to fulfillment of the conditions precedent and compliance by
Lessee with its obligations set forth in Section 10 of the Lease and the
requirements of Section 5.06 hereof with respect to such Replacement Airframe or
Replacement Engine, to execute and deliver a Lease Supplement and a Trust
Agreement and Indenture Supplement, as applicable, as contemplated by Section 10
of the Lease.
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SECTION 5.08. EFFECT OF REPLACEMENT.
In the event of the substitution of an Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of
this Trust Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced
and (b) the provisions of this Trust Indenture shall no longer be applicable to
the Airframe or Engine or Engines being replaced, which shall be released from
the Lien of this Indenture.
SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE.
Any amounts held by the Indenture Trustee as assignee of the
Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of
the Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by Lessee so long as the Indenture Trustee may acquire the same using
its best efforts. Unless otherwise expressly provided in this Trust Indenture,
any income realized as a result of any such investment, net of the Indenture
Trustee's reasonable fees and expenses in making such investment, shall be held
and applied by the Indenture Trustee in the same manner as the principal amount
of such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than
by reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement (or, upon consummation of the Refinancing Transaction,
the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement (or, upon consummation of
the Refinancing Transaction, the Refunding Agreement) or expressly made
hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable
for any action or
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inaction of the other or of the Owner Participant. The Owner Trustee shall not
be deemed to be a trustee for the Certificate Holders for any purpose.
SECTION 6.02. ABSENCE OF DUTIES.
In the case of the Indenture Trustee, except in accordance with
written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty
(i) to see to any registration of the Aircraft or any recording or filing of the
Lease or of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT
OR DOCUMENTS.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE
UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual capacity
warrants that (i) the Owner Trustee has received on the Delivery Date whatever
title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the Owner
Trustee in its individual capacity. Neither the Owner Trustee, in its individual
capacity or as Owner Trustee under the Trust Agreement, nor the Indenture
Trustee, in its individual or trust capacities, makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the Participation
Agreement (or, upon consummation of the Refinancing Transaction, the Refunding
Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as
to the correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Indenture Trustee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement). The Loan Participants, the Certificate
Holders and the Owner Participant make no representation or warranty hereunder
whatsoever.
SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST.
Any monies paid to or retained by the Indenture Trustee
pursuant to any provision hereof and not then required to be distributed to the
Certificate Holders, Lessee or the Owner Trustee as provided in Article III
hereof need not be segregated in any manner except to the extent required by Law
or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Indenture Trustee shall not be liable for any interest thereon (except that the
Indenture Trustee shall invest
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all monies held as directed by Lessee so long as no Lease Event of Default or
Lease Default has occurred and is continuing (or in the absence of such
direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.
Neither the Owner Trustee nor the Indenture Trustee shall incur
any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of any party to the Participation Agreement, certified by the Secretary
or an Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to the aggregate unpaid Principal Amount of
Secured Certificates outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Indenture Trustee. As to any fact or
matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. CAPACITY IN WHICH ACTING.
The Owner Trustee acts hereunder solely as trustee as herein
and in the Trust Agreement provided, and not in its individual capacity, except
as otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. COMPENSATION.
The Indenture Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the reasonable
fees and expenses of counsel), for all services rendered hereunder and shall, on
and subsequent to an Event of Default hereunder, have a priority claim on the
Trust Indenture Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS.
In the administration of the trusts created hereunder, the
Indenture Trustee shall have the right to seek instructions from a Majority in
Interest of Certificate Holders should any provision of this Trust Indenture
appear to conflict with any other provision herein or should the Indenture
Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee
shall incur no liability in refraining from acting until it receives such
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instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. SCOPE OF INDEMNIFICATION.
The Owner Trustee, not in its individual capacity, but solely
as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
Document to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder except only in the case of willful misconduct or gross negligence (or
negligence in the case of handling funds) of the Indenture Trustee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Indenture Trustee (in its individual capacity)
in Section 8 of the Participation Agreement or Section 6.03 hereof, or as
provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof,
or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the
Participation Agreement from Lessee's indemnities under such Sections;
provided that, so long as the Lease is in effect, the Indenture Trustee,
unless otherwise prohibited by law, shall not make any claim under this Section
7.01 for any claim or expense without first making demand on Lessee for the
payment on behalf of Lessor of such claim or expense pursuant to the Lease or
the Participation Agreement, including, without limitation, Section 7(b) or 7(c)
of the Participation Agreement. In addition, if necessary, the Indenture Trustee
shall be entitled to indemnification from the Trust Indenture Estate for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 7.01 to the extent
not reimbursed by Lessee or others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Trust Indenture Estate.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE.
In the case of any appointment of a successor to the Owner
Trustee pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Indenture Trustee or any successor thereto may resign
at any time without cause by giving at least 30 days' prior written notice to
Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In
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addition, a Majority in Interest of Certificate Holders may at any time (but
only with the consent of Lessee, which consent shall not be unreasonably
withheld, except that such consent shall not be necessary if a Lease Event of
Default is continuing) remove the Indenture Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the Owner
Participant and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Certificate Holder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a Majority in
Interest of Certificate Holders may appoint a successor Indenture Trustee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Indenture Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the
Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate
Holder may apply to any court of competent jurisdiction to appoint a successor
Indenture Trustee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having its principal place of business in the Borough
of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Indenture Trustee and the Indenture Trustee under this Trust Indenture without
further act, except that such Person shall give prompt subsequent notice of such
transaction to the Owner Trustee and the Owner Participant.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Indenture Trustee shall deem it necessary
or desirable in order to conform to any law of any jurisdiction in which all or
any part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or
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one or more persons approved by the Indenture Trustee, either to act jointly
with the Indenture Trustee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Indenture
Trustee or a Majority in Interest of Certificate Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional and separate trustee,
subject in each case to the remaining provisions of this Section 8.03. If the
Owner Trustee shall not have taken any action requested of it under this Section
8.03(a) that is permitted or required by its terms within 15 days after the
receipt of a written request from the Indenture Trustee so to do, or if an Event
of Default shall have occurred and be continuing, the Indenture Trustee may act
under the foregoing provisions of this Section 8.03(a) without the concurrence
of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which
appointment is coupled with an interest) the Indenture Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute, deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee
appointed under this Section 8.03(a) shall die, become incapable of acting,
resign or be removed, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall revert to the
Indenture Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon the
Indenture Trustee in respect of the custody, investment and payment of monies
and all monies received by any such additional or separate trustee from or
constituting part of the Trust Indenture Estate or otherwise payable under any
Operative Document to the Indenture Trustee shall be promptly paid over by it to
the Indenture Trustee. All other rights, powers, duties and obligations
conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Indenture Trustee and such additional or separate trustee
jointly except to the extent that applicable Law of any jurisdiction in which
any particular act is to be performed renders the Indenture Trustee incompetent
or unqualified to perform such act, in which event such rights, powers, duties
and obligations (including the holding of title to all or part of the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed by
such additional or separate trustee. No additional or separate trustee shall
take any discretionary action except on the instructions of the Indenture
Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the
consequences of its lack of reasonable care in selecting, and Indenture
Trustee's own actions in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section 8.03 shall be
subject to, and shall have the benefit of Articles IV through VIII and Article X
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 8.03 shall not
in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no
longer necessary or desirable in order to conform to any such law or take any
such action or shall be advised by such counsel that it is no longer so
necessary or desirable in the interest of the Certificate Holders, or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Certificate Holders, the Indenture Trustee and,
upon the written request of the Indenture Trustee, the Owner Trustee, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Indenture Trustee may act on behalf of the Owner Trustee under this Section
8.03(c) when and to the extent it could so act under Section 8.03(a) hereof.
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ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(a) Except as provided in Section 5.02 hereof, the Owner
Trustee agrees it shall not enter into any amendment of or supplement to the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent
and Agreement or the Guarantee, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Guarantee, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Indenture Trustee and a Majority in Interest of
Certificate Holders. Anything to the contrary contained herein notwithstanding,
without the necessity of the consent of any of the Certificate Holders or the
Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant
may be modified, amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may
enter into amendments of or additions to the Lease to modify Section 5 (except
to the extent that such amendment would affect the rights or exercise of
remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so
long as such amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments (other than Excluded
Payments) until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof,
the Indenture Trustee agrees with the Certificate Holders that it shall not
enter into any amendment, waiver or modification of, supplement or consent to
this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Guarantee or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Certificate Holders, or does not adversely
effect the Certificate Holders, but upon the written request of a Majority in
Interest of Certificate Holders, the Indenture Trustee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Manufacturer; provided, however, that, without the
consent of each holder of an affected Secured Certificate then outstanding, no
such amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Guarantee or the Participation Agreement or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or
Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add
an Event of Default) of the Lease, the definitions of "Event of Default",
"Default", "Lease Event of Default", "Lease Default", "Majority in Interest of
Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the
percentage of Certificate Holders required to take or approve any action
hereunder, (ii) reduce the amount, or change the time of payment or method of
calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or
interest with respect to any Secured Certificate, or alter or modify the
provisions of Article III hereof with respect to the order of priorities in
which distribution thereunder shall be made as among the Certificate Holders,
the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in
favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders
(except that the Owner Trustee (in its individual capacity) or the Indenture
Trustee, as the case may be, may consent to any waiver or reduction of an
indemnity payable to it), (iv) consent to any change in the Trust Indenture or
the Lease which would permit redemption of Secured Certificates earlier than
permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured
Certificates other than as permitted by Section 2.14 hereof, (v) except as
contemplated by the Lease or the Participation Agreement, reduce the amount or
extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value,
or Termination Value for the Aircraft in each case as set forth in the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect of the payment
of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the
Aircraft or altering the absolute and unconditional character of the obligations
of Lessee to pay Rent as set forth in Sections
-51-
<PAGE> 52
3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any
Certificate Holder for any of the following purposes: (i) (a) to cure any defect
or inconsistency herein or in the Secured Certificates, or to make any change
not inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Certificate Holder in its capacity solely
as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Certificate Holders in its capacity
solely as Certificate Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Certificate Holders, or to
surrender any rights or power herein conferred upon the Owner Trustee, the Owner
Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and
(vii) to include on the Secured Certificates any legend as may be required by
law.
SECTION 9.02. TRUSTEES PROTECTED.
If, in the opinion of the institution acting as Owner Trustee
under the Trust Agreement or the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 9.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such document.
SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 9.01 hereof,
the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR
TRUST AGREEMENT AND INDENTURE SUPPLEMENT.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
-52-
<PAGE> 53
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TERMINATION OF TRUST INDENTURE.
Upon (or at any time after) payment in full of the Principal Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale,
the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment
with the Consent and Agreement attached thereto from the assignment and pledge
thereof hereunder and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and give written notice thereof to Lessee; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Indenture Trustee of all property
constituting part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all monies or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Trust Indenture and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN
CERTIFICATE HOLDERS.
No holder of a Secured Certificate shall have legal title to
any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS
BINDING.
Any sale or other conveyance of the Trust Indenture Estate, or
any part thereof (including any part thereof or interest therein), by the
Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind
the Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS.
Nothing in this Trust Indenture, whether express or implied,
shall be construed to give any person other than the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders,
any legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
SECTION 10.05. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee,
-53-
<PAGE> 54
addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. SEVERABILITY.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. HEADINGS.
The headings of the various Articles and sections herein and in
the table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-54-
<PAGE> 55
SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate 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.
SECTION 10.12. VOTING BY CERTIFICATE HOLDERS.
All votes of the Certificate Holders shall be governed by a
vote of a Majority in Interest of Certificate Holders, except as otherwise
provided herein.
SECTION 10.13. BANKRUPTCY.
It is the intention of the parties that the Owner Trustee, as
lessor under the Lease (and the Indenture Trustee as assignee of the Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE
LEASE.
Notwithstanding any of the provisions of this Trust Indenture
or the Trust Agreement to the contrary, neither the Indenture Trustee nor the
Owner Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-55-
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee, as Owner Trustee
By:
-----------------------------------------
Name:
---------------------------------------
Title:
STATE STREET BANK AND TRUST COMPANY, as
Indenture Trustee
By:
-----------------------------------------
Name:
---------------------------------------
Title:
-56-
<PAGE> 57
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1996 F]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 F],
dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under
that certain Trust Agreement [NW 1996 F] dated as of May 14, 1996 (the "TRUST
AGREEMENT"), between the Owner Trustee and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [NW 1996 F], dated as of June 12, 1996 (as amended and supplemented to
the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE
STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft (such term and
other terms used but not defined herein having the respective meanings ascribed
thereto in the Trust Indenture), and shall specifically mortgage such Aircraft
to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and
Engines described below, and a counterpart of the Trust Indenture is attached
hereto and made a part hereof and this Trust Indenture Supplement, together with
such counterpart of the Trust Indenture, is being filed for recordation on the
date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that
the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the
Trust Indenture Estate covers all of Owner Trustee's right, title and interest
in and to the following described property:
<PAGE> 58
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
- ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest
in and to all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above
subject, however, to all of the terms of the Trust Indenture including, without
limitation, the rights of the Owner Trustee and the Owner Participant under
Section 5.02 of the Trust Indenture.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Certificate Holders, except
EXHIBIT A-2
<PAGE> 59
as provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
This Trust Indenture Supplement is being delivered in the State
of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
EXHIBIT A-3
<PAGE> 60
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity, but solely
as Owner Trustee, Owner Trustee
By:
------------------------------------------
Name:
Title:
EXHIBIT A-4
<PAGE> 61
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST RATE
---------------- -------------
<S> <C> <C>
Series A $25,329,837 7.67%
Series B $ 8,287,407 8.07%
Series C $ 6,381,986 8.97%
</TABLE>
<PAGE> 62
SECURED CERTIFICATES AMORTIZATION
SERIES A
AIRCRAFT: N542US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 1.84826358%
Jul 2, 1998 0.00073036%
Jan 2, 1999 2.04440698%
Jul 2, 1999 0.00040269%
Jan 2, 2000 2.04460437%
Jul 2, 2000 0.00020529%
Jan 2, 2001 2.04481361%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.04480967%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.04480967%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.04480967%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.04480967%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.04480967%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.04481361%
Jul 2, 2007 0.00000000%
Jan 2, 2008 2.04480967%
Jul 2, 2008 0.00000000%
Jan 2, 2009 2.04480967%
Jul 2, 2009 0.00000000%
Jan 2, 2010 10.94516737%
Jul 2, 2010 0.00000000%
Jan 2, 2011 12.71303596%
Jul 2, 2011 0.00000000%
Jan 2, 2012 13.68812721%
Jul 2, 2012 17.03142412%
Jan 2, 2013 15.75209603%
Jul 2, 2013 0.89631490%
Jan 2, 2014 4.63192625
</TABLE>
<PAGE> 63
SERIES B
AIRCRAFT: N542US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00258223%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.08328130%
Jul 2, 1999 0.00000000%
Jan 2, 2000 2.08326923%
Jul 2, 2000 0.00000000%
Jan 2, 2001 2.08328130%
Jul 2, 2001 0.00000000%
Jan 2, 2002 2.08393289%
Jul 2, 2002 0.00000000%
Jan 2, 2003 2.08398115%
Jul 2, 2003 0.00000000%
Jan 2, 2004 2.08402942%
Jul 2, 2004 0.00000000%
Jan 2, 2005 2.08408975%
Jul 2, 2005 0.00000000%
Jan 2, 2006 2.08236424%
Jul 2, 2006 0.00000000%
Jan 2, 2007 2.08125412%
Jul 2, 2007 0.00000000%
Jan 2, 2008 13.01526521%
Jul 2, 2008 0.00000000%
Jan 2, 2009 22.98583863%
Jul 2, 2009 0.00000000%
Jan 2, 2010 2.62562222%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 35.93951643%
Jul 2, 2014 4.83767721%
Jan 2, 2015 1.84401466%
</TABLE>
<PAGE> 64
SERIES C
AIRCRAFT: N542US
<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
PAYMENT DATE AMOUNT TO BE PAID
------------ ----------------------
<S> <C>
Jan 2, 1997 0.00000000%
Jul 2, 1997 0.00000000%
Jan 2, 1998 0.00000000%
Jul 2, 1998 0.00000000%
Jan 2, 1999 2.60370361%
Jul 2, 1999 0.00000000%
Jan 2, 2000 3.67861979%
Jul 2, 2000 0.00000000%
Jan 2, 2001 4.84938388%
Jul 2, 2001 0.00000000%
Jan 2, 2002 6.12517796%
Jul 2, 2002 0.00000000%
Jan 2, 2003 7.51540351%
Jul 2, 2003 0.00000000%
Jan 2, 2004 9.03033946%
Jul 2, 2004 0.00000000%
Jan 2, 2005 10.68115787%
Jul 2, 2005 0.00000000%
Jan 2, 2006 5.48255668%
Jul 2, 2006 0.00000000%
Jan 2, 2007 12.93797887%
Jul 2, 2007 0.00000000%
Jan 2, 2008 13.95521708%
Jul 2, 2008 0.00000000%
Jan 2, 2009 0.00000000%
Jul 2, 2009 0.00000000%
Jan 2, 2010 0.00000000%
Jul 2, 2010 0.00000000%
Jan 2, 2011 0.00000000%
Jul 2, 2011 0.00000000%
Jan 2, 2012 0.00000000%
Jul 2, 2012 0.00000000%
Jan 2, 2013 0.00000000%
Jul 2, 2013 0.00000000%
Jan 2, 2014 0.00000000%
Jul 2, 2014 0.00000000%
Jan 2, 2015 23.14046129%
</TABLE>
<PAGE> 65
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1A,
dated as of June 12, 1996.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1B,
dated as of June 12, 1996.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company, as supplemented by Trust Supplement No. 1996-1C,
dated as of June 12, 1996.
<PAGE> 1
LEASE AGREEMENT
[NW 1996 F]
This LEASE AGREEMENT [NW 1996 F], dated as of May 14, 1996,
between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. The following terms shall have the
following meanings for all purposes of this Lease Agreement [NW 1996 F] and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Administrative Agent" means [ ], a
[ ] banking corporation, as administrative agent pursuant
to the Participation Agreement, and any successor acting as
administrative agent.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling, controlled by
or under common control with such person. For the purposes of
this definition, "control" (including "controlled by" and
"under common control with") shall mean 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 or by contract or otherwise.
"After-Tax Basis" means an additional amount which
when added to the amount of payment otherwise required to be
made on an After-Tax Basis, after deduction of all Federal,
state, local and foreign taxes required to be paid by or on
behalf of a Person in respect of the receipt or realization of
any such amounts, results in a sum equal to the payment
required under the provisions of the Operative Documents to be
made on an After-Tax Basis. Any payment under the Operative
Documents which does not actually result in an increase (or a
decrease in a refund) of the Owner Participant's Federal,
state, local or foreign income tax liability for the year of
the accrual or receipt of such payment but which reduces any
net operating loss or business credit or foreign tax credit
carryover of the recipient shall be treated as giving rise to
an actual increase in (or a decrease in a refund of) tax
liability for the year in which such tax attribute if not
reduced thereby would have given rise to a reduction in such
recipient's tax liability (or such recipient's allowable
refund in respect of any
<PAGE> 2
such taxes). With respect to the Owner Participant, for
purposes of this definition, it shall be assumed that United
States federal, state, local and foreign income taxes are
payable at the Highest Marginal Rate (as defined in the Tax
Indemnity Agreement) then applicable to the Owner Participant.
"Aircraft" means the Airframe to be delivered and
leased hereunder (or any airframe from time to time
substituted for such Airframe pursuant to Section 10(a)
hereof) together with the two Engines initially leased
hereunder (or any engine substituted for either of such
Engines pursuant to the terms hereof), whether or not any of
such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the Boeing 757-251 aircraft
(except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which
aircraft shall be leased by Lessor to Lessee hereunder and
under such Lease Supplement, and any aircraft (except Engines
or engines from time to time installed thereon) which may from
time to time be substituted for such aircraft (except Engines
or engines from time to time installed thereon) pursuant to
clause (ii) of the first paragraph of Section 10(a); and (ii)
any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed
thereon), or (B) so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after
removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at
such time as an aircraft (except Engines or engines from time
to time installed thereon) shall be deemed part of the
property leased hereunder in substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted
average of the interest rates borne by the Secured
Certificates then outstanding and, if no Secured Certificates
shall be outstanding, the Base Rate.
"Assumed Interest Rate" has the meaning set forth in
Section 3(c) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Base Rate" means the rate of interest announced
publicly by Citibank, N.A. in New York, New York from time to
time as its base rate.
"Basic Rent" means, for the Basic Term, the rent
payable for the Aircraft pursuant to Section 3(c) as adjusted
as provided in Section 3(d) but
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<PAGE> 3
subject always to the provisions of Section 3(d)(v) hereof
and, for any Renewal Term, Basic Rent determined pursuant to
Section 19.
"Basic Term" means the term for which the Aircraft is
leased hereunder pursuant to Section 3(a) hereof commencing on
the Commencement Date and ending on January 2, 2019, or such
earlier date as this Lease may be terminated in accordance
with the provisions hereof.
"Bill of Sale" means a full warranty bill of sale
covering the Aircraft, executed by Lessee in favor of the
Owner Trustee, dated the Delivery Date, specifically referring
to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of
Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Bill of Sale, free
and clear of all liens, encumbrances and rights of others
except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or
Sunday or a day on which commercial banks are required or
authorized to close in New York, New York; Boston,
Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota
and, in connection with any payment of Rent and so long as any
Secured Certificate is a Eurodollar Loan (as defined in the
Trust Indenture), such day is also a day for trading by and
between banks in the interbank Eurodollar market.
"Certificate Holder" means Certificate Holder as
defined in the Trust Indenture.
"Certificated Air Carrier" means a Citizen of the
United States holding a carrier operating certificate issued
by the Secretary of Transportation pursuant to Chapter 447 of
Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo or
that otherwise is certified or registered to the extent
required to fall within the purview of 11 U.S.C. Section 1110
or any analogous successor provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning
specified in Section 40102(a)(15) of Title 49 of the United
States Code or any similar legislation of the United States of
America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil
Reserve Air Fleet Program currently administered by the United
States Air Force Air Mobility Command pursuant to Executive
Order No. 11490, as amended, or any substantially similar
program.
"Code" means the Internal Revenue Code of 1986, as
amended.
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<PAGE> 4
"Commencement Date" means January 2, 1997.
"Commitment" means the commitment of a Loan
Participant or of the Owner Participant, as the case may be,
to finance the Owner Trustee's payment of Lessor's Cost for
the Aircraft.
"Consent and Agreement" means the Consent and
Agreement [NW 1996 F], dated as of the date hereof, executed
by the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the
applicable provisions thereof.
"Credit Agreement" means the Credit Agreement, dated
as of November 2, 1995, among Lessee, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, [ ], as documentation
agent, [ ], as administrative agent, and
[ ], as syndication agent, as the same
may be amended, supplemented or otherwise modified from time
to time.
"Debt Rate" has the meaning set forth in the Trust
Indenture.
"Default" means any event which with the giving of
notice or the lapse of time or both would become an Event of
Default.
"Delivery Date" means the date of the initial Lease
Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee
hereunder.
"Depreciation Period" means the period commencing on
the Delivery Date and ending on December 31, 2003, provided,
however, that if the chief legal officer or chief tax officer
of Lessee has actual knowledge that the Depreciation Period is
other than the period specified in the Tax Assumptions as a
result of an "Operative Event" (as defined in the Tax
Indemnity Agreement), then ending on the last day of the Owner
Participant's taxable year in which a depreciation or cost
recovery deduction is allowed or allowable with respect to the
Aircraft.
"Documentation Agent" means [ ], a
bank organized under the laws of the [ ], as
documentation agent pursuant to the Participation Agreement,
and any successor acting as documentation agent.
"Dollars" and "$" means the lawful currency of the
United States of America.
"Engine" means (i) each of the two Pratt & Whitney
Model PW2037 engines listed by manufacturer's serial number in
the initial Lease Supplement,
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<PAGE> 5
whether or not from time to time thereafter installed on the
Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for either of such
two engines, together in each case with any and all Parts
incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine; provided, however,
that at such time as an engine shall be deemed part of the
property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term
"Engines" means, as of any date of determination, all Engines
then leased hereunder.
"Event of Default" has the meaning specified in
Section 14 hereof.
"Event of Loss" with respect to the Aircraft,
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 uneconomic or which renders such
property permanently unfit for normal use by Lessee for any
reason whatsoever; (ii) any damage to such property which
results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or
compromised total loss; (iii) the theft or disappearance of
such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property
(other than a requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any agency
or instrumentality of any thereof whose obligations are backed
by the full faith and credit of such government) which in the
case of any event referred to in this clause (iii) (other than
a requisition of title) shall have resulted in the loss of
possession of such property by Lessee for a period in excess
of 180 consecutive days or, if earlier, until the end of the
Term or, in the case of a requisition of title by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and designated therein as a "Specified Country" or
any agency or instrumentality of any thereof whose obligations
are backed by the full faith and credit of such government, as
the case may be, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of
title or, if earlier, at the end of the Term (it being
understood that a requisition of title by any government other
than as expressly provided above shall constitute an immediate
Event of Loss); (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration
or other governmental body of the government of registry of
the Aircraft having jurisdiction, the use of such property in
the normal course of the business of air transportation shall
have been prohibited for a period of 180 consecutive days,
unless Lessee, prior to the
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<PAGE> 6
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward in a manner that does not
discriminate against the Aircraft all steps which are
necessary or desirable to permit the normal use of such
property by Lessee, and, within one year of such prohibition,
Lessee shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of
the same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the
Aircraft by Lessee, provided, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss
if such use shall have been prohibited for a period of two
years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States
Government or any other government of registry of the Aircraft
which is listed on Exhibit C to the Participation Agreement
and designated therein as a "Specified Country" or any
instrumentality or agency of any thereof whose obligations are
backed by the full faith and credit of such government, which
shall have occurred during the Basic Term (or the Interim Term
or any Renewal Term) and shall have continued for thirty (30)
days beyond the Term, provided, however, that no Event of Loss
pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section
10(d) hereof; (vi) any divestiture of title to or interest in
an Engine treated as an Event of Loss pursuant to Section 7(b)
hereof; and (vii) the operation of or location of the
Aircraft, while under requisition for use by any government,
in an area excluded from coverage by any insurance policy in
effect with respect to the Aircraft required by this
Agreement, unless in the case of a requisition by the United
States Government or any other government of registry of the
Aircraft which is listed on Exhibit C to the Participation
Agreement and is designated a "Specified Country" or any
agency or instrumentality of any thereof whose obligations are
backed by the full faith and credit of such government, Lessee
shall have obtained an indemnity in lieu thereof from such
government or such agency or instrumentality. 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 Airframe.
"Excess Amount" for the Transition Date means an
amount equal to the amount determined by multiplying Lessor's
Cost by the percentage set forth in Exhibit B hereto under the
heading "Excess Amount" opposite the Transition Date;
provided, however, that, to the extent that the aggregate
amount of interest due and payable on the Transition Date on
the Secured Certificates for the period from and including the
Delivery Date to but excluding the Transition Date is less
than the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the
Transition Date if such Secured Certificates had borne
interest at the Assumed Interest Rate for such period, the
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<PAGE> 7
corresponding percentage set forth in Exhibit B shall be
decreased by the amount which when multiplied by Lessor's Cost
will equal such differential.
"Expenses" has the meaning specified in Section 7(c)
of the Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the
Aircraft on AC Form 8050-2 or such other form as may be
approved by the Federal Aviation Administration on the
Delivery Date for the Aircraft, executed by Lessee in favor of
the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the
United States Code comprising those provisions formerly
referred to as the Federal Aviation Act of 1958, as amended,
or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the
United States Federal Aviation Administration and any agency
or instrumentality of the United States government succeeding
to their functions.
"Funding Loss Amount" has the meaning assigned to
that term in the Trust Indenture.
"Guarantee" means the Guarantee [NW 1996 F], dated as
of the date hereof, made by the Guarantor in favor of the
Parties, as such Guarantee may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a
Delaware corporation.
"Indemnitee" means the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the
Trust Agreement, the Trust Estate, the Indenture Trustee, the
Administrative Agent, the Documentation Agent, the Loan
Participants and each other Certificate Holder, and each of
their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents.
"Indenture Trustee" means the Indenture Trustee under
the Trust Indenture, and any entity which may from time to
time be acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
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<PAGE> 8
"Indenture Trustee's Liens" means any Lien which
arises as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the
administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by,
or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts
arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 of the
Participation Agreement pursuant to said Section 7, or (D)
claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its
interest in the Aircraft, the Trust Estate, the Trust
Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of
the Lease or Article IV or V of the Trust Indenture, or a
transfer of the Aircraft pursuant to Section 15 of the Lease
while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due
pursuant to the Trust Indenture.
"Interest Period" means Interest Period as defined in
the Trust Indenture.
"Interim Rent" means the rent payable for the
Aircraft for the Interim Term pursuant to Section 3(b) hereof.
"Interim Term" means the period commencing on the
Delivery Date and ending on and including the day immediately
preceding the Commencement Date unless earlier terminated in
accordance with the provisions hereof.
"Lease Agreement", "this Lease Agreement", "this
Lease", "this Agreement", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement [NW
1996 F] as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions hereof and
in accordance with the Trust Agreement and the Trust
Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant
to the applicable provisions hereof.
"Lease Period" means each of the consecutive
semi-annual periods throughout the Basic Term and any Renewal
Term ending on a Lease Period Date, the first such period
commencing on and including the Commencement Date and each
succeeding period commencing on the date immediately following
the preceding Lease Period Date.
"Lease Period Date" means July 2, 1997 and each
succeeding January 2 and July 2, to and including the last
such date in the Term.
"Lease Supplement" means a Lease Supplement,
substantially in the form of Exhibit A hereto, to be entered
into between Lessor and Lessee on the
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<PAGE> 9
Delivery Date for the purpose of leasing the Aircraft under
and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with
the terms hereof.
"Lessee Documents" means the Participation Agreement,
the Lease, the Lease Supplement covering the Aircraft, the
Purchase Agreement (insofar as it relates to the Aircraft),
the FAA Bill of Sale, the Bill of Sale, the Purchase Agreement
Assignment and the Tax Indemnity Agreement.
"Lessor Liens" means any Lien or disposition of title
or interest arising as a result of (i) claims against Lessor,
First Security Bank of Utah, National Association, in its
individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii)
any act or omission of the Owner Participant, Lessor, or First
Security Bank of Utah, National Association, in its individual
capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) claims
against the Owner Participant, Lessor, or First Security Bank
of Utah, National Association, in its individual capacity,
with respect to Taxes or Expenses against which Lessee is not
required to indemnify the Owner Participant, Lessor or First
Security Bank of Utah, National Association, in its individual
capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising
out of any transfer by Lessor or the Owner Participant of all
or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the
Operative Documents other than the transfer of possession of
the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or pursuant to the
exercise of the remedies set forth in Section 15 hereof,
provided, however, that any Lien which is attributable solely
to First Security Bank of Utah, National Association or the
Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the
use, possession, operation, or quiet enjoyment of the Aircraft
by Lessee (or any Sublessee), (3) the existence of such Lien
does not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Trust Indenture, (4) First
Security Bank of Utah, National Association or the Owner
Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a
material risk of interference with the payment of Rent (other
than Excluded Payments in favor of First Security Bank of
Utah, National Association or the Owner Participant, as
appropriate).
"Lessor's Cost" for the Aircraft means the amount
denominated as such in Exhibit B to the Lease.
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<PAGE> 10
"Lien" means any mortgage, pledge, lien, charge,
claim, encumbrance, lease, sublease, sub-sublease or security
interest.
"Loan Participant" means each institution executing
the Participation Agreement as a Loan Participant, and its
respective successors and assigns, and any Certificate Holder;
at any time when there is only one Certificate Holder, "each
Loan Participant" shall mean such Certificate Holder.
"Loan Participant Liens" means any Lien which arises
from acts or claims against any Loan Participant not related
to the transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in
Section 10(a) hereof.
"Majority in Interest of Certificate Holders" has the
meaning assigned to that term in the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement
and the Consent and Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Economic Return" shall have the meaning ascribed
to such term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net after-tax
present value, as of the Delivery Date, of Basic Rent set
forth in Exhibit B hereto through and including the date on
which the Special Purchase Price is payable pursuant to
Section 19(d) hereof, and the Special Purchase Price payable
as of such date, computed on the basis of the same
methodology, constraints and assumptions as were utilized in
determining Basic Rent, the Special Purchase Price, Stipulated
Loss Value and Termination Value percentages as of the
Delivery Date.
"Operative Documents" and "Operative Document" means
each of the Participation Agreement, the Lease, the Trust
Indenture, the Trust Agreement, an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement
covering the Aircraft, the Secured Certificates, the Bill of
Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as
it relates to the Aircraft), the Guarantee, the Owner
Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
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<PAGE> 11
"Overall Transaction" means all the transactions
contemplated by the Operative Documents.
"Owner Participant" means the corporation executing
the Participation Agreement as the Owner Participant and any
Person to which such corporation transfers all or any portion
of its right, title and interest in and to the Trust
Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement
and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, and the Tax Indemnity
Agreement.
"Owner Participant Guarantor" means the entity
executing the Owner Participant Guaranty as guarantor
thereunder.
"Owner Participant Guaranty" means the Owner
Participant Guaranty [NW 1996 F], dated as of the date hereof,
made by the Owner Participant Guarantor in favor of Lessee,
Lessor, the Loan Participants and the Indenture Trustee, as
such Owner Participant Guaranty may be amended or supplemented
from time to time pursuant to the applicable provisions
thereof.
"Owner Trustee" means the entity executing the
Participation Agreement as Owner Trustee and any entity
appointed as successor Owner Trustee pursuant to Section 9.01
of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"Owner Trustee Documents" means the Participation
Agreement, the Trust Agreement, the Trust Supplement covering
the Aircraft, the Lease, the Lease Supplement covering the
Aircraft, the Purchase Agreement Assignment, the Trust
Indenture and the Secured Certificates.
"Participants" means and includes the Loan
Participants and the Owner Participant.
"Participation Agreement" means that certain
Participation Agreement [NW 1996 F], dated as of the date
hereof, among Lessee, the Loan Participants, the Indenture
Trustee, the Owner Participant and Owner Trustee, as such
Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture
Trustee and the Participants.
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<PAGE> 12
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines,
(b) any items leased by Lessee from a third party (other than
Lessor) and (c) cargo containers) which may from time to time
be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in
Lessor in accordance with Section 8 after removal therefrom.
"Past Due Rate" means (i) with respect to the portion
of any payment of Rent that may be required by the Trust
Indenture to be paid by the Indenture Trustee to the Loan
Participants, or the holders of any outstanding Secured
Certificates, the "Past Due Rate" as defined in the Trust
Indenture and (ii) with respect to the remaining portion of
any payment of Rent (and the entire amount of any payment of
Rent after the satisfaction and discharge of the Trust
Indenture), a rate per annum (calculated based on the actual
number of days elapsed in a year consisting of 365 days or 366
days, as the case may be) equal to (x) 1% over the Base Rate
for the first 5 Business Days from the date such payment
became due, and (y) 3% over the Base Rate thereafter.
"Permitted Carrier" means an air carrier domiciled
and principally based in a country set forth on Exhibit C to
the Participation Agreement and designated therein as a
"Specified Country".
"Permitted Lien" means any Lien referred to in
clauses (i) through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a
country listed in Exhibit C to the Participation Agreement.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Prepaid Rent" has the meaning assigned in Section
3(g) hereof.
"Purchase Agreement" means the Purchase Agreement No.
1631, dated December 1, 1989, between the Manufacturer and
Lessee relating to the purchase by Lessee of the Aircraft, as
originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the
foregoing relates to the Aircraft.
"Purchase Agreement Assignment" means the Purchase
Agreement Assignment [NW 1996 F], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended,
supplemented or modified from time to time, with a form of
Consent and Agreement to be executed by the Manufacturer
attached thereto.
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<PAGE> 13
"Reimbursement Amount" has the meaning set forth in
Section 3(g) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair
Market Renewal Term as those terms are defined in Section 19
hereof.
"Rent" means Interim Rent, Basic Rent and
Supplemental Rent, collectively.
"Rent Differential Amount" has the meaning set forth
in Section 3(c) hereof.
"Restricted Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Return Site" means a major airport on Lessee's route
system located within the forty-eight contiguous states of the
United States.
"S&P" means Standard & Poor's Corporation.
"Secured Certificates" has the meaning assigned to
that term in the Trust Indenture.
"Special Purchase Price" shall mean the amount
denominated as such in Exhibit B hereto.
"Specified Country" has the meaning set forth on
Exhibit C to the Participation Agreement.
"Stipulated Loss Value" with respect to the Aircraft
as of any date through and including January 2, 2019, means,
but subject always to the provisions of Section 3(d)(v)
hereof, the amount determined by multiplying Lessor's Cost for
the Aircraft by the percentage specified in Exhibit C hereto
opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted
from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement). To the extent that
the actual amount of interest paid and to be paid on the
Secured Certificates during the Interim Term or the Lease
Period in which such Stipulated Loss Value Date occurs up to
and including such Stipulated Loss Value Date is greater or
less than the amount included in calculating the percentage
set forth in Exhibit C with respect to such Stipulated Loss
Value Date on account of such interest, the corresponding
percentage set forth in Exhibit C shall be adjusted
appropriately to compensate for such differential. "Stipulated
Loss Value" as of any date after January 2, 2019 shall be the
amount determined as provided in Section 19(a) hereof.
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<PAGE> 14
"Stipulated Loss Value Date" means the 2nd calendar
day of each calendar month during the Interim Term, Basic Term
and any Renewal Term.
"Sublease" means any sublease permitted by the terms
of Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so
long, as such Person is in possession of the Airframe and/or
any Engine pursuant to the terms of a Sublease which is then
in effect pursuant to Section 7(b)(x) hereof.
"Supplemental Rent" means all amounts, liabilities
and obligations (other than Interim Rent and Basic Rent) which
Lessee assumes or agrees to pay to Lessor or others hereunder,
under the Participation Agreement, under the Tax Indemnity
Agreement or under any of the other Operative Documents. The
parties acknowledge that Supplemental Rent is a general
category and, accordingly, agree that any provision of any
Operative Document which calls for the payment of Supplemental
Rent and also calls for the payment of specific items which
are includable in Supplemental Rent is not to be interpreted
as requiring any double payment.
"Tax Indemnitee" means the Owner Participant, the
Owner Trustee, in its individual capacity and as trustee under
the Trust Agreement, the Trust Estate, the Indenture Trustee,
the Loan Participants and each other Certificate Holder, and
each of their respective Affiliates, successors and permitted
assigns.
"Tax Indemnity Agreement" means that certain Tax
Indemnity Agreement [NW 1996 F], dated as of the date hereof,
between the Owner Participant and Lessee, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof.
"Taxes" means any and all fees (including, without
limitation, license, recording, documentation and registration
fees), taxes (including, without limitation, income, receipts,
sales, rental, use, turnover, value added, property (tangible
and intangible), excise and stamp taxes), license, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a
"TAX").
"Term" means the Interim Term, Basic Term and, if
actually entered into, any Renewal Term.
"Termination Date" has the meaning set forth in
Section 9(a) hereof.
"Termination Value" with respect to the Aircraft as
of any date through and including January 2, 2019, means, but
subject always to the provisions of
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<PAGE> 15
Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D hereto opposite the Termination Date with respect to
which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof
and in Section 7 of the Tax Indemnity Agreement). In the event
that the Termination Date with respect to which Termination
Value is determined is a date on which Basic Rent is payable
in advance as indicated on Exhibit B, to the extent that the
actual amount of interest paid and to be paid on the Secured
Certificates during the Lease Period ending on such
Termination Date is greater or less than the amount included
in calculating the corresponding percentage set forth in
Exhibit D with respect to such Termination Date on account of
such interest, the corresponding percentage set forth in
Exhibit D shall be adjusted appropriately to compensate for
such differential.
"Transaction Expenses" means: (i) the reasonable and
actual fees, expenses and disbursements of (1) Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, such
information to be furnished by the Indenture Trustee, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under
the Trust Agreement, such information to be furnished by the
Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special
counsel to the Loan Participants, such information to be
furnished by the Documentation Agent, (4) Cadwalader,
Wickersham & Taft, special counsel to Lessee and Guarantor,
such information to be furnished by Lessee, and (5) Crowe &
Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma,
such information to be furnished by Lessee, (ii) all fees,
taxes and other charges payable in connection with the
recording or filing of instruments and financing statements
(but excluding any sales, use and other transfer taxes which
apply to the Aircraft), such information to be furnished by
Lessee, (iii) the initial fee and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement,
such information to be furnished by the Owner Trustee, and the
reasonable out-of-pocket expenses of the Owner Participant,
such information to be furnished by the Owner Participant,
(iv) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture, such
information to be furnished by the Indenture Trustee, (v) the
fees of Aeroeconomics, Inc. and BK Associates, Inc. with
respect to the appraisals of the Aircraft pursuant to Sections
4(a)(xx) and 4(a)(xxix), respectively, of the Participation
Agreement, such information to be furnished by the Owner
Participant in the case of Aeroeconomics, Inc. and by the
Documentation Agent in the case of BK Associates, Inc., (vi)
the reasonable and actual fees, expenses and disbursements of
Dewey Ballantine, special counsel to the Owner Participant,
such information to be furnished by the Owner Participant,
(vii) the fee and reasonable disbursements of Babcock and
Brown Financial Corporation, such information to be furnished
by Lessee, and (viii) the fee payable to the Loan Participants
on the Delivery Date.
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<PAGE> 16
"Transition Date" means the date designated as such
in Exhibit B hereto.
"Trust Agreement" means that certain Trust Agreement
[NW 1996 F], dated as of the date hereof, between the Owner
Participant and First Security Bank of Utah, National
Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to
the applicable provisions thereof, including, without
limitation, supplementation thereof by one or more Trust
Supplements entered into pursuant to the applicable provisions
thereof.
"Trust Estate" means the Trust Estate as that term is
defined in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1996 F], dated as of the date
hereof, between Lessor and the Indenture Trustee, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof.
"Trust Supplement" means a supplement to the Trust
Agreement and the Trust Indenture, substantially in the form
of Exhibit A to the Trust Indenture.
"U.S. Air Carrier" means any Certificated Air Carrier
as to which there is in force an air carrier operating
certificate issued pursuant to Part 121 of the regulations
under the Federal Aviation Act, or which may operate as an air
carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby Lessee (or
any Sublessee) agrees to furnish the Airframe and Engines or
engines installed thereon to a third party pursuant to which
such Airframe and Engines or engines (i) shall be operated
solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be
required under the Federal Aviation Act or, if the Aircraft is
not registered in the United States, all certificates and
licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions
within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not
be regular employees of Lessee (or any Sublessee)) and (ii)
shall be maintained by Lessee (or any Sublessee) in accordance
with its normal maintenance practices.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject
to satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
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<PAGE> 17
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term. The
Interim Term shall commence on the Delivery Date and end on and include the day
immediately preceding the Commencement Date unless earlier terminated pursuant
to the provisions hereof. The Basic Term shall commence on the Commencement Date
and end on January 2, 2019, or such earlier date as this Lease may be terminated
in accordance with the provisions hereof.
(b) Interim Rent. Lessee shall pay Interim Rent on the
Commencement Date in an amount equal to Lessor's Cost multiplied by the
percentage specified in Exhibit B hereto for Interim Rent on the Commencement
Date.
Although the Interim Rent percentage set forth in Exhibit B
hereto has been computed on the assumption that the rate of interest on the
Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee
recognize that the actual rate of interest on the Secured Certificates may be a
rate from time to time which may be greater or less than the Assumed Interest
Rate and that the related basis upon which interest on the Secured Certificates
will be computed will be as provided in the Trust Indenture. Accordingly, the
Interim Rent payable on the Commencement Date shall be increased or decreased
(but not below zero) by the difference between (i) the aggregate amount of
interest due and payable on the Secured Certificates on the Commencement Date
relating to the period from the Transition Date to but excluding the
Commencement Date and (ii) the aggregate amount of interest on the Secured
Certificates that would have been due and payable on the Secured Certificates on
the Commencement Date relating to the period from the Transition Date to the
Commencement Date if such Secured Certificates had borne interest at the Assumed
Interest Rate. If the amount determined in accordance with clause (i) of the
preceding sentence shall be greater than the amount determined in accordance
with clause (ii) of such sentence, the amount of Interim Rent payable on the
Commencement Date shall be increased by such difference. If the amount
determined in accordance with clause (i) of the preceding sentence shall be less
than the amount determined in accordance with clause (ii) of such sentence, the
amount of Interim Rent payable on the Commencement Date shall be decreased (but
not below zero) by such difference.
(c) Basic Rent. Lessee shall pay Basic Rent with respect to
each Lease Period during the Basic Term on each Lease Period Date during the
Basic Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B hereto.
Although the Basic Rent percentages set forth in Exhibit B
hereto have been computed on the assumption that the rate of interest on the
Secured Certificates throughout the Term will be 6.5% per annum, computed on the
basis of a 360-day year of twelve 30-day
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<PAGE> 18
months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the
actual rate of interest on the Secured Certificates may be a rate from time to
time which may be greater or less than the Assumed Interest Rate and that the
related basis upon which interest on the Secured Certificates will be computed
will be as provided in the Trust Indenture. Accordingly, each installment of
Basic Rent shall be increased or decreased (but not below zero), as the case may
be, by the Rent Differential Amount (as defined herein). For purposes hereof,
"RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect
to the Basic Term, the difference between (i) the aggregate amount of interest
due and payable on such Lease Period Date on the Secured Certificates, and (ii)
the aggregate amount of interest on the Secured Certificates that would have
been due and payable on such Lease Period Date if such Secured Certificates had
borne interest at the Assumed Interest Rate, in each case for the period from
and including the Lease Period Date (or the Commencement Date in the case of the
first Lease Period) next preceding such Lease Period Date to but excluding such
Lease Period Date. If, as of any Lease Period Date, the amount determined in
accordance with clause (i) of the immediately preceding sentence shall be
greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Basic Rent payable on such Lease Period Date shall be
increased by the Rent Differential Amount. If, as of any Lease Period Date, the
amount determined in accordance with such clause (ii) shall exceed the amount
determined in accordance with such clause (i), the amount of Basic Rent due on
such Lease Period Date shall be decreased (but not below zero) by the Rent
Differential Amount.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date
occurs other than on May 14, 1996, or (B) Transaction Expenses
paid by Lessor pursuant to Section 16 of the Participation
Agreement are determined to be other than 1.0% of Lessor's
Cost, then in each case the Basic Rent percentages set forth
in Exhibit B and Stipulated Loss Value percentages set forth
in Exhibit C, the Termination Value percentages set forth in
Exhibit D and the Special Purchase Price shall be recalculated
on or prior to November 30, 1996 using the same methods and
assumptions used to calculate original Basic Rent, Stipulated
Loss Value and Termination Value percentages and Special
Purchase Price, in order to: (1) maintain the Owner
Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof.
(ii) (A) In the event of a refinancing as contemplated
by Section 17 of the Participation Agreement, then the Basic
Rent percentages set forth in Exhibit B, the Stipulated Loss
Value percentages set forth in Exhibit C, the Termination
Value percentages set forth in Exhibit D and the Special
Purchase Price shall be recalculated (upwards or downwards) by
the Owner Participant as contemplated by such Section to (1)
maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee and (B) in
the event that Lessee elects, subject to the Owner
Participant's consent, which the Owner
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<PAGE> 19
Participant may withhold in its sole discretion, to satisfy
any indemnity obligation under the Tax Indemnity Agreement
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement,
then the Basic Rent percentages set forth in Exhibit B, the
Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or
downwards) by Owner Participant, using the same methods and
assumptions (except to the extent such assumptions shall be
varied to take into account the Loss (as defined in the Tax
Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used to
calculate the Basic Rent percentages, the Stipulated Loss
Value percentages and the Termination Value percentages and
the Special Purchase Price on the Delivery Date, in order to
(1) maintain the Owner Participant's Net Economic Return and
(2) to the extent possible consistent with clause (1) hereof,
minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant
to this Section 3(d), the Owner Participant shall redetermine
the Excess Amount set forth in Exhibit B in a manner
consistent with such recalculation. In addition, (X) any
recalculation of Basic Rent, Stipulated Loss Value or
Termination Value percentages made pursuant to this Section
3(d) shall take into account any decrease in the Excess Amount
with respect to the Transition Date required by the proviso to
the definition of "Excess Amount", (Y) after January 31, 1997
but prior to July 2, 1997, the Basic Rent percentages set
forth in Exhibit B, the Stipulated Loss Value percentages set
forth in Exhibit C and the Termination Value percentages set
forth in Exhibit D shall be recalculated to take into account
any decrease in Excess Amount with respect to the Transition
Date that has not theretofore been taken into account in
accordance with clause (X) of this sentence, and (Z) at the
time of any payment of Stipulated Loss Value or Termination
Value, the Stipulated Loss Value percentage set forth in
Exhibit C or the Termination Value percentage set forth in
Exhibit D, by reference to which the amount of such payment is
determined shall be recalculated to take into account any
decrease in the Excess Amount with respect to the Transition
Date that has not theretofore been taken into account in
accordance with clause (X) or clause (Y) of this sentence.
(iv) Any recalculation of Basic Rent, Excess
Amount, Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price pursuant to this
Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in
Exhibit E hereto. In addition, notwithstanding any other
provisions herein, in no event shall the Special Purchase
Price be adjusted to an amount that is less than the greater
of (A) the Termination Value as of July 2, 2012, (B) the
estimated fair market value of the Aircraft on July 2, 2012,
determined as of the Delivery Date and set forth in the
opinion received from Aeroeconomics, Inc. pursuant to Section
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<PAGE> 20
4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and
(C) 101% multiplied by the present value as of July 2, 2012 of
(x) the remaining scheduled Basic Rent through the end of the
Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair
market value of the Aircraft as of the end of the Basic Term
as set forth in the Appraisal) (the present value calculation
described in this clause (C) shall utilize a semi-annual
compounded discount rate no lower than that utilized by the
Owner Participant in determining the Special Purchase Price as
of the Delivery Date, but in no event shall such discount rate
be less than 11.8% per annum). Such recalculated Basic Rent,
Excess Amount and Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price shall be set forth
in a Lease Supplement or an amendment to this Lease.
(v) Anything contained in the Participation
Agreement or this Lease to the contrary notwithstanding, each
installment of Interim Rent and Basic Rent payable hereunder,
whether or not adjusted in accordance with this Section 3(d),
shall, together with the amount of the Excess Amount in
respect of the date on which such installment is payable, and
each payment of Termination Value and Stipulated Loss Value,
whether or not adjusted in accordance with this Section 3(d),
shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in
any event, in an amount at least sufficient to pay in full, on
the date on which such amount of Rent is due, any payments
then required to be made on account of the principal of,
premium, if any, and interest on the Secured Certificates. It
is agreed that no installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased
or adjusted by reason of (i) any attachment or diversion of
Rent on account of (A) Lessor Liens or (B) any Loan
Participant Lien or other Lien on or against the Trust Estate,
any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to
the transactions contemplated by the Operative Documents, (ii)
any modification of the payment terms of the Secured
Certificates made without the prior written consent of Lessee
or (iii) the acceleration of any Secured Certificate or
Secured Certificates due to the occurrence of an "Event of
Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this
Section 3(d) shall be (A) in compliance with the tests of
Sections 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 and
with Section 467 of the Internal Revenue Code of 1986, as
amended, as each is then in effect as long as the Schedule of
Basic Rent was in compliance with Section 467 of the Code as
in effect on the Closing Date, it being understood that, to
the extent that any grandfather, effective date, or similar
provisions in any regulations under Section 467 or other
administrative pronouncement interpreting Section 467
promulgated or issued after the Closing
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<PAGE> 21
Date causes such regulations or pronouncement not to be
applicable to the Schedule of Basic Rent in effect on the
Closing Date, such Schedule shall be deemed to be in
compliance with Section 467 as in effect on the Closing Date
(provided that the test of Rev. Proc. 75-28 Section 4.08(1)
and Section 467 shall be applied on a prospective basis from
the date of such adjustment if and to the extent permitted by
applicable law, as then in effect) and (B) subject to
verification pursuant to Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be
paid) promptly to Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent constituting Stipulated Loss Value or Termination Value as
the same shall become due and owing and all other amounts of Supplemental Rent
within five days after demand or within such other relevant period as may be
provided in any Operative Document, and in the event of any failure on the part
of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or in any other Operative Document or by
law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall
pay, on behalf of Lessor, as Supplemental Rent when due any amount of premium
payable when due under the Trust Indenture and shall pay on behalf of Lessor
amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02
of the Trust Indenture, as and when the same shall become due and payable.
Lessee also will pay to Lessor, or to whomsoever shall be entitled thereto, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate on any part of any installment of Interim Rent and
Basic Rent not paid when due for any period for which the same shall be overdue
and on any payment of Supplemental Rent not paid when due for the period until
the same shall be paid.
(f) Payments in General. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by wire
transfer of immediately available funds prior to 10:30 A.M., New York time, on
the date of payment, to Lessor at its account at First Security Bank of Utah,
National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No.
124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department,
Credit Northwest/NW 1996 F (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); provided that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby
irrevocably directs and Lessee agrees, that, unless the Indenture Trustee shall
otherwise direct, all Rent payable to Lessor and assigned to the Indenture
Trustee pursuant to the Trust Indenture shall be paid prior to 10:30 A.M., New
York time on the due date thereof in funds of the type specified in this Section
3(f) directly to the Indenture Trustee at its account at State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No.
011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department,
Reference: Northwest/NW 1996 F (or such other account of the Indenture Trustee
in the continental United States as the Indenture Trustee shall direct in a
notice to Lessee at least 10 Business Days prior to the date such payment of
Rent is due). All payments of Supplemental Rent owing to the Indenture Trustee
or to a Loan Participant or any other Certificate Holder pursuant to the
Participation Agreement shall be made in Dollars in immediately available funds
prior to 10:30 A.M., New
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<PAGE> 22
York time, on the due date thereof at the office of the Indenture Trustee or at
such other office of such other financial institution located in the continental
United States as the party entitled thereto may so direct at least 10 Business
Days prior to the due date thereof. All payments of Supplemental Rent payable to
the Owner Participant, to the extent that such amounts constitute Excluded
Payments (as defined in the Trust Indenture), shall be made in Dollars in
immediately available funds prior to 10:30 A.M., New York time, on the due date
thereof, to the account of the Owner Participant specified in Schedule I to the
Participation Agreement (or to such other account as may be specified in writing
by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if
any date on which a payment of Rent becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
(g) Prepayment of Certain Rent Payments. To the extent, if
any, that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by 10:30 A.M.,
New York time, on the Transition Date from Lessor an amount equal to the Excess
Amount for such date, Lessee shall on the Transition Date, prepay on the
Transition Date a portion of Basic Rent equal to the Excess Amount not so paid
(the amount of such Basic Rent to be prepaid by Lessee being herein called
"PREPAID RENT"); provided that Lessee shall, under all circumstances and whether
or not an Event of Default shall be continuing on the Transition Date, pay as
Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to
the excess, if any, of the interest on the Secured Certificates relating to the
period from and including the Delivery Date to but excluding the Transition Date
over the Excess Amount payable on the Transition Date; provided, further, that
Lessee will also pay to the Indenture Trustee, on demand, as Supplemental Rent,
to the extent permitted by applicable law, interest at the Past Due Rate in
effect from time to time on any part of any Prepaid Rent and on the amount, if
any, payable pursuant to the immediately preceding proviso not paid when due for
any period for which the same shall be overdue. Lessor agrees to reimburse
Lessee in the manner provided in the following sentence for (x) the Prepaid Rent
so paid by Lessee, plus (y) any Supplemental Rent paid with respect to Prepaid
Rent by Lessee pursuant to this Section 3(g), plus (z) accrued interest on the
unreimbursed portion thereof at a rate equal to the Base Rate as in effect from
time to time plus 5% per annum from the date such amount is paid by Lessee to
but not including the date of each such reimbursement (such amounts to be
reimbursed being herein called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to
Lessee, in funds of the type specified in Section 3(f) hereof, within five days
after Lessor, the Owner Participant and the Indenture Trustee shall have
received written notice from Lessee demanding payment, the Reimbursement Amount.
In addition, if, for any reason, Lessor shall fail to pay to Lessee the
Reimbursement Amount as above provided, Lessee shall be entitled to offsets
(without duplication) against each succeeding payment (other than as limited by
the proviso to this sentence) due from Lessee to Persons other than the Loan
Participants, the Indenture Trustee
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<PAGE> 23
and the Owner Trustee in its individual capacity (including, without limitation,
Basic Rent, payments due under Section 9, 10, 15 and 19 hereof, payments due
under the Tax Indemnity Agreement and payments due to Persons other than the
Loan Participants, the Indenture Trustee and Lessor in its individual capacity
under Section 7 of the Participation Agreement), until Lessee has been fully
reimbursed for the Reimbursement Amount; provided, however, that in the case of
any payment due from Lessee which is distributable under the terms of the Trust
Indenture, Lessee's right of offset shall be limited to amounts distributable to
Lessor thereunder. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any installment of Interim Rent or Basic Rent
to an amount insufficient, together with the Excess Amount and all other amounts
payable simultaneously by Lessee, to pay in full the payments then required to
be made on account of the principal of and interest on (and premium, if any, due
with respect to) the Secured Certificates then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR
LEASES AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS."
NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that First
Security Bank of Utah, National Association, in its individual capacity, (i)
represents and warrants that on the Delivery Date, Lessor shall have received
whatever title to the Aircraft was conveyed to it by Lessee, (ii) represents and
warrants that on the Delivery Date the Aircraft shall be free of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens) attributable to it, (iii) covenants that it
will not, through its own actions or inactions, interfere in Lessee's quiet
enjoyment of the Aircraft during the Term, (iv) agrees that it will not directly
or indirectly create, incur, assume or suffer to exist any Lessor Lien
attributable to it on or with respect to the Airframe or any Engine or any
portion of the Trust Estate and (v) represents and warrants that it is a Citizen
of the United States without making use of a voting trust, voting powers
agreement or similar arrangement, and agrees that if at any time it shall cease
to be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the Federal
Aviation Act as in effect at such time or, if it is not necessary, if and so
long as the Owner Trustee's citizenship would have any material adverse effect
on the Loan Participants, the Owner Participant or Lessee), effective upon the
appointment of a successor Owner Trustee in accordance with Section 9.01 of the
Trust Agreement. None of the provisions of this Lease shall be deemed to amend,
modify or
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<PAGE> 24
otherwise affect the representations, warranties or other obligations (express
or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not, through its own actions or inactions, interfere
in the quiet enjoyment of the Aircraft by Lessee or any Sublessee and agrees
that it will not directly or indirectly create, incur, assume or suffer to exist
any Lessor Lien attributable to it on or with respect to the Airframe or any
Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) Condition Upon Return.
Unless purchased by Lessee pursuant to Section 19 hereof, upon the termination
of this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c) or 15, Lessee, at its own expense, will return the Airframe to
Lessor at a Return Site then being serviced by Lessee's 757-200 aircraft, which
Return Site shall be chosen by Lessor and reasonably acceptable to Lessee
(provided, that at Lessor's request, Lessee will consider in good faith a Return
Site not then being serviced by Lessee's 757-200 aircraft, provided, further,
that, in the case of a return to a Return Site not then being serviced by
Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately
following a revenue passenger flight with the Airframe to such Return Site), and
Lessor will give Lessee at least ten (10) days' prior written notice of the
Return Site; provided, however, that if Lessor shall have made the request for
storage pursuant to Section 5(d) hereof, Lessee shall return the Airframe to
Lessor at the site of the storage at the end of the storage period. At the time
of such return, Lessee will, unless otherwise requested by Lessor at least
ninety (90) days prior to the return hereunder, cause the Aircraft, if it is not
then so registered, to be registered under the laws of the United States with
the Federal Aviation Administration in the name of the Lessor or its designee,
provided that Lessee shall be relieved of its obligations under this sentence if
(i) such registration is prohibited by reason of the failure of Lessor or its
designee to be eligible on such date to own an aircraft registered with the
Federal Aviation Administration or (ii) such registration is otherwise
prohibited by applicable law and not due to any act or failure to act on the
part of Lessee; the Airframe will be fully equipped with the Engines (or other
Pratt & Whitney Model PW2037 engines or two engines of the same or another
manufacturer of not less than equivalent utility, fair market sales value and
remaining useful life, and suitable for installation and use on the Airframe
without impairing the value, utility or remaining useful life of the Aircraft;
provided that both engines shall be of the same make and model) duly installed
thereon. Also, at the time of such return, such Airframe and Engines or engines
(i) shall be certified (or, if not then registered under the Federal Aviation
Act, shall be eligible for certification) as an airworthy aircraft by the
Federal Aviation Administration without the necessity of any further expense
being incurred by Lessor, (ii) shall be free and clear of all Liens (other than
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Indenture Trustee's Liens
and Loan Participant Liens) and rights of third parties under pooling,
interchange, overhaul, repair or other similar agreements or arrangements, (iii)
shall be in as good an operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, or, in the case of any such engines
owned by Lessee, shall have a value, utility and remaining useful life at least
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<PAGE> 25
equal to, and shall be in as good an operating condition as required by the
terms hereof with respect to, Engines constituting part of the Aircraft but not
then installed on the Airframe, and (iv) shall be in compliance with the return
conditions, if any, set forth in Exhibit F. Lessor agrees to pay Lessee those
amounts specified in Exhibit F to be for the cost, expense or account of Lessor.
During the last six (6) months of the Term (unless Lessee
shall have elected to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease), with reasonable notice, Lessee will cooperate,
and cause any Sublessee to cooperate, in all reasonable respects with the
efforts of Lessor to sell or lease the Aircraft, including, without limitation,
permitting prospective purchasers or lessees to inspect fully the Aircraft and
the records relating thereto, provided that such cooperation shall not interfere
with the operation or maintenance of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not
owned by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a bill of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the return
of the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessee shall invoice Lessor, and Lessor shall pay Lessee, as compensation
for any fuel or oil contained in the fuel or oil tanks of such Airframe, the
value of such fuel or oil at the price paid by Lessee for such fuel or oil, as
the case may be, and (ii) Lessee shall deliver or cause to be delivered to
Lessor all logs, manuals and data and inspection, modification and overhaul
records required to be maintained with respect thereto under applicable rules
and regulations of each country under the laws of which the Aircraft has been
registered during the period of operation thereof, which logs, manuals, data and
records, if not maintained in English, shall be translated into English at
Lessee's expense.
(d) Storage Upon Return. If, at least thirty (30) days
prior to termination of this Lease at the end of the Basic Term or any Renewal
Term or pursuant to Section 9(c), Lessee receives from Lessor a written request
for storage of the Aircraft upon its return hereunder, Lessee will provide
Lessor, or cause Lessor to be provided, with free parking
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<PAGE> 26
facilities for the Aircraft (maintenance costs and other out-of-pocket costs
other than parking fees incurred by Lessee in connection with such storage to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such period
not exceeding thirty (30) days and be reimbursed by Lessor for the premiums
thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of Lessee
(or any Sublessee) either not yet due or being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of Lessee's (or, if a Sublease is then in effect, the Sublessee's)
business (including those arising under maintenance agreements entered into in
the ordinary course of business) securing obligations that are not overdue for a
period of more than forty-five (45) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any
judgment or award against Lessee (or any Sublessee), unless the judgment secured
shall not, within sixty (60) days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within sixty (60) days after the expiration
of such stay, (vii) any other Lien with respect to which Lessee (or any
Sublessee) shall have provided a bond, cash collateral or other security
adequate in the reasonable opinion of Lessor, and (viii) Liens approved in
writing by Lessor. Lessee will promptly, at its own expense, take (or cause to
be taken) such actions as may be necessary duly to discharge any such Lien not
excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION
AND SUBLEASES; INSIGNIA. (a)(I) Registration and Maintenance. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) forthwith upon
the delivery thereof hereunder, cause the Aircraft to be duly registered in the
name of Lessor, and, subject to the second paragraph of this Section 7(a) and
Section 8(f) of the Participation Agreement, to remain duly registered in the
name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not
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<PAGE> 27
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section
8(f) of the Participation Agreement and shall cause the Trust Indenture to be
duly recorded and maintained of record as a first mortgage on the Aircraft; (ii)
maintain, service, repair and overhaul (or cause to be maintained, serviced,
repaired and overhauled) the Aircraft so as to keep the Aircraft in as good an
operating condition as delivered to Lessee hereunder, ordinary wear and tear
excepted, and as may be necessary to enable the applicable airworthiness
certification for the Aircraft to be maintained in good standing at all times
(other than during temporary periods of storage in accordance with applicable
regulations or during maintenance or modification permitted hereunder) under the
Federal Aviation Act, except when all Boeing 757-200 aircraft powered by engines
of the same type as those with which the Airframe shall be equipped at the time
of such grounding and registered in the United States have been grounded by the
FAA (although such certification need actually be maintained only during such
periods as the Aircraft is registered in the United States), or the applicable
laws of any other jurisdiction in which the Aircraft may then be registered from
time to time in accordance with Section 8(f) of the Participation Agreement,
utilizing, except during any period that a Sublease is in effect, the same
manner and standard of maintenance, service, repair or overhaul used by Lessee
with respect to similar aircraft operated by Lessee in similar circumstances and
utilizing, during any period that a Sublease is in effect, the same manner and
standard of maintenance, service, repair or overhaul used by the Sublessee with
respect to similar aircraft operated by the Sublessee in similar circumstances
or such manner as shall have been approved by the Owner Participant pursuant to
Section 7(b)(x) and without in any way discriminating against the Aircraft, by
reason of its leased status, including, without limitation, the termination of
airworthiness directives; provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Sublessee) in accordance with
maintenance standards required by, or substantially equivalent to those required
by, the FAA or the central civil aviation authority of Canada, France, Germany,
Japan, the Netherlands or the United Kingdom; (iii) maintain or cause to be
maintained all records, logs and other materials required to be maintained in
respect of the Aircraft by the FAA or the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered (which
records, logs and other materials, as between Lessor and Lessee and all parties
claiming through Lessee, shall be the property of Lessor but shall be maintained
by Lessee during the Term and shall become the property of Lessee upon Lessee's
purchase of the Aircraft pursuant to the terms of this Lease or upon the
occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof);
and (iv) promptly furnish or cause to be furnished to Lessor and the Owner
Participant such information as may be required to enable Lessor to file any
reports required to be filed by Lessor or the Owner Participant with any
governmental authority because of Lessor's ownership of the Aircraft. (II)
Operation. Lessee will not maintain, use, service, repair, overhaul or operate
the Aircraft (or permit any Sublessee to maintain, use, service, repair,
overhaul or operate the Aircraft) in violation of any law or any rule,
regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law,
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<PAGE> 28
rule, regulation or order in any reasonable manner which does not materially
adversely affect Lessor or the Owner Participant or, so long as any Secured
Certificates shall be outstanding, the first priority Lien of the Trust
Indenture and does not involve any material risk of sale, forfeiture or loss of
the Aircraft. Lessee will not operate the Aircraft, or permit any Sublessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 11; provided, however, that the failure of
Lessee to comply with the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable to causes beyond
the reasonable control of Lessee (or any Sublessee) or to extraordinary
circumstances involving an isolated occurrence or series of incidents not in the
ordinary course of the regular operations of Lessee (or any Sublessee) and in
each case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon
compliance with all of the terms of Section 8(f) of the Participation Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions required to change the registration of the Aircraft to another
country.
(b) Possession and Subleases. Lessee will not, without the
prior written consent of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of the Airframe or any Engine or install or
permit any Engine to be installed on any airframe other than the Airframe or
enter into any Wet Lease; provided that, so long as no Default of the type
referred to in Section 14(a) or 14(e) or Event of Default shall have occurred
and be continuing at the time of such sublease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority lien of the Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7(b)) any Engine, and so long
as Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a)
and 11 hereof, Lessee may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or
engines then installed thereon to normal interchange
agreements or any Engine to normal pooling or similar
arrangements, in each case customary in the airline industry
and entered into by Lessee (or any Sublessee) in the ordinary
course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to
the Airframe, (B) if Lessor's title to any Engine shall be
divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with
respect to such Engine and Lessee shall (or shall cause
Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the
Airframe may be subject shall be with a U.S. Air Carrier or a
Permitted Carrier;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof (or for delivery thereto)
or to any organization (or for delivery thereto) for testing,
service, repair, maintenance or overhaul work on
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<PAGE> 29
the Airframe or Engine or any part of any thereof or for
alterations or modifications in or additions to such Airframe
or Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii) install an Engine on an airframe owned by
Lessee (or any Sublessee) free and clear of all Liens, except:
(A) Permitted Liens and those which apply only to the engines
(other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety), (B) the rights of third parties
under interchange agreements which would be permitted under
clause (i) above, provided that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the
first priority Lien of the Trust Indenture shall not be
divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards
this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not
become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to
Lessee (or any Sublessee) or purchased by Lessee (or any
Sublessee) subject to a conditional sale or other security
agreement, provided that (x) such airframe is free and clear
of all Liens, except: (A) the rights of the parties to the
lease or conditional sale or other security agreement covering
such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and (y)
such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by
Lessee (or any Sublessee), leased to Lessee (or any Sublessee)
or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement under
circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of
Loss with respect to such Engine and Lessee shall (or shall
cause any Sublessee to) comply with Section 10(b) hereof in
respect thereof, Lessor not intending hereby to waive any
right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b)
hereof, subject any appliances, Parts or other equipment owned
by Lessor and removed from the Airframe or any Engine to any
pooling arrangement referred to in Section 8(b) hereof;
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<PAGE> 30
(vii) subject (or permit any Sublessee to subject)
the Airframe or any Engine to the Civil Reserve Air Fleet
Program and transfer (or permit any Sublessee to transfer)
possession of the Airframe or any Engine to the United States
of America or any instrumentality or agency thereof pursuant
to the Civil Reserve Air Fleet Program, so long as Lessee (or
any Sublessee) shall (A) promptly notify Lessor upon
subjecting the Airframe or any Engine to the Civil Reserve Air
Fleet Program in any contract year and provide Lessor with the
name and address of the Contracting Office Representative for
the Air Mobility Command of the United States Air Force to
whom notice must be given pursuant to Section 15 hereof, and
(B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of
the Term, enter into a Wet Lease (which, if entered into with
tax-exempt entities during the Depreciation Period, may not
exceed three years) for the Airframe and Engines or engines
then installed thereon with any third party; provided that if
Lessee (or any Sublessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options)
Lessee shall provide Lessor written notice of such Wet Lease
(such notice to be given prior to entering into such Wet
Lease, if practicable, but in any event promptly after
entering into such Wet Lease);
(ix) for a period not to extend beyond the end of
the Term, transfer possession of the Airframe or any Engine to
the United States of America or any instrumentality or agency
thereof pursuant to a contract (the term of which, during the
Depreciation Period, may not exceed three years), a copy of
which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any
sublease with (1) a U.S. Air Carrier, (2) any Person approved
in writing by the Owner Participant and the Indenture Trustee
in their sole discretion, or (3) after the Depreciation
Period, any Permitted Sublessee if (A) in any such case, the
Sublessee under such sublease is not subject to a proceeding
or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into,
(B) in the event that the Sublessee under such sublease is a
foreign air carrier (other than a foreign air carrier
principally based and domiciled in Taiwan), the United States
maintains diplomatic relations with the country in which such
proposed Sublessee is principally based and domiciled at the
time such sublease is entered into (or, in the case of a
sublease to a proposed Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in
effect on the Delivery Date) and (C) in the event that the
Sublessee under such sublease is domiciled and principally
based in a country listed on Exhibit C to the Participation
Agreement and designated therein as a "Restricted Country",
Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee to the effect that (I) the terms
of the proposed
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<PAGE> 31
sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally)
enforceable against the proposed Sublessee in the country in
which the proposed Sublessee is principally based and
domiciled, (II) there exist no possessory rights in favor of
the Sublessee under such Sublease under the laws of such
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee and assuming at such
time such Sublessee is not insolvent or bankrupt, prevent the
return or repossession of the Aircraft in accordance with the
terms of this Lease, (III) the laws of such Sublessee's
country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into Dollars for the loss of use of the Aircraft
in the event of the requisition by such government of such
use, (IV) the laws of such Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to
the registry of the Aircraft in the name of Lessor (or Lessee,
as "lessee", or the proposed Sublessee, as "sublessee", as
appropriate) and to the Lien of the Trustee Indenture, (V)
such Sublease will not result in a risk of unindemnified Taxes
to Lessor or the Owner Participant (it being agreed that in
the event such opinion cannot be given in a form reasonably
satisfactory to the Owner Participant, such opinion will be
waived if (A) the Owner Participant has received assurances
satisfactory to it to the effect that such Sublease will not
result in any such risk, or (B) Lessee shall have entered into
a binding agreement to indemnify in a manner satisfactory in
form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant for such
unindemnified Taxes; provided, however, that if (a) Lessee
(or, so long as the Guarantee remains in full force and
effect, the Guarantor) has outstanding publicly issued or
privately placed unsecured indebtedness (excluding any
short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (b) Lessee
provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and substance
to Lessor, the amount of which is sufficient (as determined by
the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner
Participant has been indemnified by Lessee under the Operative
Documents in addition to any additional adverse tax
consequences resulting from such subleasing or (c) the
anticipated indemnified amount (as determined by the Owner
Participant in its reasonable judgment) is less than $50,000,
then, in determining whether the indemnity to be provided by
Lessee is satisfactory in form and substance to the Owner
Participant, the Owner Participant will not take into account
the creditworthiness of Lessee), (VI) none of the Owner
Trustee, the Owner Participant or the Indenture Trustee will
be required to register to do business in such country as a
result of such sublease, after (A) taking into account any
other contacts of the Owner Trustee and the Owner Participant
with such jurisdiction (provided, that upon request by Lessee
(such request having been acknowledged by the Owner
Participant's general counsel), the Owner Trustee and the
Owner Participant must respond
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<PAGE> 32
within fourteen (14) Business Days after receipt of such
request describing its contacts in such jurisdiction, or else
such party shall be deemed for purposes of this clause (VI) to
have no such contacts) and (B) assuming that the Indenture
Trustee has no other contacts with such jurisdiction, and
(VII) there is no tort liability for owners not in possession
of aircraft in such country more onerous than under the laws
of the United States or any state thereof (it being agreed
that in the event such opinion cannot be given in a form
reasonably satisfactory to the Owner Participant, such opinion
will be waived if insurance reasonably satisfactory to the
Owner Participant is provided to cover the risk of such tort
liability), provided, however, that no sublease entered into
pursuant to this clause (x) shall extend beyond the expiration
of the Basic Term or any Renewal Term then in effect unless
Lessee shall have irrevocably committed to purchase the
Aircraft; provided, further, that in the event the Sublessee's
maintenance program for the Airframe will be a block overhaul
program, a sublease entered into pursuant to this clause (x)
to such Sublessee shall not extend beyond the date which is
six months prior to the expiration of the Basic Term or any
Renewal Term then in effect (and Lessee, if the last Sublessee
was not a U.S. Air Carrier, shall upon expiration of the
sublease to such Sublessee (1) incorporate the Aircraft into
Lessee's approved maintenance program for aircraft of the same
make and model and in active commercial service and (2) place
the Aircraft into active passenger service or, in lieu
thereof, upon the return of the Aircraft to Lessor pursuant to
Section 5, Lessee shall comply with those return conditions
that would have been applicable had Lessee adopted a block
overhaul program) unless either the Owner Participant shall
have previously approved in writing the maintenance procedures
of the Sublessee or Lessee shall have irrevocably committed to
purchase the Aircraft at, or extend the Term of this Lease by
a period of at least six months from, the end of the Basic
Term or such Renewal Term, as the case may be.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant to
Section 15 hereof and to avoid such Sublease upon such repossession, and Lessee
shall remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such Sublease or transfer had not
occurred, and, except as otherwise provided herein, the terms of any such
Sublease shall not permit any Sublessee to take any action not permitted to be
taken by Lessee in this Lease with respect to the Aircraft. No pooling
agreement, sublease or other relinquishment of possession of the Airframe or any
Engine or Wet Lease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any sublease permitted under Section 7(b) shall expressly
prohibit any further sub-sublease by the Sublessee. Lessor agrees, for the
benefit of Lessee (and any Sublessee) and for the benefit of any mortgagee or
other holder of a
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<PAGE> 33
security interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee (or
any Sublessee) and any conditional vendor of any engine (other than an Engine)
purchased by Lessee (or any Sublessee) subject to a conditional sale agreement
or any other security agreement, that no interest shall be created hereunder in
any engine so owned, leased or purchased and that none of Lessor, its successors
or assigns will acquire or claim, as against Lessee (or any Sublessee) or any
such mortgagee, lessor or conditional vendor or other holder of a security
interest or any successor or assignee of any thereof, any right, title or
interest in such engine as the result of such engine being installed on the
Airframe; provided, however, that such agreement of Lessor shall not be for the
benefit of any lessor or secured party of any airframe (other than the Airframe)
leased to Lessee (or any Sublessee) or purchased by Lessee (or any Sublessee)
subject to a conditional sale or other security agreement or for the benefit of
any mortgagee of or any other holder of a security interest in an airframe owned
by Lessee (or any Sublessee), unless such lessor, conditional vendor, other
secured party or mortgagee has expressly agreed (which agreement may be
contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as against
Lessor, any right, title or interest in an Engine as a result of such Engine
being installed on such airframe. Lessee shall provide to the Owner Participant
and the Indenture Trustee (i) written notice of any Sublease hereunder (such
notice to be given not later than (A) fifteen (15) days prior to entering into
any Sublease with a term of more than one (1) year, (B) five (5) Business Days
prior to entering into any Sublease with a term equal to or less than one (1)
year with a Permitted Sublessee and (C) five (5) days prior to entering into any
Sublease with a term equal to or less than one (1) year with any proposed
Sublessee other than a Permitted Sublessee, if practicable, but in any event
promptly after entering into any such Sublease) and (ii) a copy of each Sublease
which has a term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as soon
as practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank of Utah, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
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<PAGE> 34
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost and
expense, replace such Parts as promptly as practicable. All replacement Parts
shall be free and clear of all Liens (except for Permitted Liens and pooling
arrangements to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Parts replaced assuming such replaced Parts
were in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in paragraph (c) of this Section 8, all Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until such time as such Parts shall be replaced
by Parts which have been incorporated or installed in or attached to the
Airframe or such Engine and which meet the requirements for replacement Parts
specified above. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided,
without further act (subject only to Permitted Liens and any pooling arrangement
to the extent permitted by paragraph (b) of this Section 8 and except in the
case of replacement property temporarily installed on an emergency basis), (i)
title to such replacement Part shall thereupon vest in Lessor, (ii) such
replacement Part shall become subject to this Lease and be deemed part of the
Airframe or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Airframe or such
Engine, and (iii) title to the replaced Part shall thereupon vest in Lessee (or,
if a Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in paragraph (a) of this Section 8 may be subjected by
Lessee (or any Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Sublease is then in effect, any
Sublessee) is a party entered into in the ordinary course of Lessee's (or any
Sublessee's) business; provided that the Part replacing such removed Part
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<PAGE> 35
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) and by causing title to such further
replacement Part to vest in Lessor in accordance with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at
its own expense, will make (or cause to be made) such alterations and
modifications in and additions to the Airframe and Engines as may be required
from time to time to meet the applicable standards of the FAA or any applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 8(f) of the Participation Agreement;
provided, however, that Lessee (or, if a Sublease is then in effect, any
Sublessee) may, in good faith, contest the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not adversely
affect Lessor, the Owner Participant, or, so long as any Secured Certificates
are outstanding, the Indenture Trustee. In addition, Lessee (or any Sublessee),
at its own expense, may from time to time add further parts or accessories and
make such alterations and modifications in and additions to the Airframe or any
Engine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee (or
any Sublessee) has determined in its reasonable judgment to be obsolete or no
longer suitable or appropriate for use on the Airframe or such Engine (such
parts, "OBSOLETE PARTS"); provided that no such alteration, modification or
addition shall diminish the value, utility or remaining useful life of the
Airframe or such Engine, or materially impair the condition or airworthiness
thereof, below the value, utility, remaining useful life, condition or
airworthiness thereof immediately prior to such alteration, modification or
addition, assuming the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Lease, except that the value (but
not the utility or remaining useful life) of the Airframe or any Engine may be
reduced by the value of Obsolete Parts which shall have been removed so long as
the aggregate original cost of all Obsolete Parts which shall have been removed
and not replaced shall not exceed $500,000. Title to all Parts incorporated or
installed in or attached or added to the Airframe or an Engine as the result of
such alteration, modification or addition (the "ADDITIONAL PARTS") shall,
without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such Additional Part (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or substitution for, any such
Part, (ii) is not required to be incorporated or installed in or attached or
added to the Airframe or
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<PAGE> 36
any Engine pursuant to the terms of Section 7 hereof or the first sentence of
this paragraph (c) and (iii) can be removed from the Airframe or such Engine
without diminishing or impairing the value, utility, remaining useful life,
condition or airworthiness which the Airframe or such Engine would have had at
the time of removal had such alteration, modification or addition not occurred,
assuming that such Airframe or Engine was in the condition and repair required
to be maintained by the terms hereof. Upon the removal by Lessee (or Sublessee)
of any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed. Any Part not
removed by Lessee (or any Sublessee) as above provided prior to the return of
the Airframe or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this
Lease on any Lease Period Date occurring on or after January 2, 2003 if Lessee
shall have made the good faith determination, which shall be evidenced by a
resolution duly adopted by its Board of Directors (or the Executive Committee
thereof), that the Aircraft is obsolete or surplus to its needs.
(3) Lessee shall give to Lessor at least one hundred twenty
(120) days' revocable advance written notice of Lessee's intention to so
terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying (i)
the Lease Period Date on which Lessee intends to terminate this Lease in
accordance with this Section 9 (such specified date, a "TERMINATION DATE") and
(ii) that Lessee has determined that the Aircraft is obsolete or surplus to its
needs. Any Termination Notice shall become irrevocable fifteen (15) days prior
to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee
shall have exercised its right to terminate this Lease under Section 9(a)(2),
then during the period from the giving of the notice referred to in Section
9(a)(3) until the proposed Termination Date (unless Lessee shall have revoked
the Termination Notice specifying such proposed Termination Date), Lessee, as
agent for Lessor and at no expense to Lessor, shall use its best efforts to
obtain bids in Dollars in the worldwide market for the purchase of the Aircraft
and, in the event it receives any bid, Lessee shall, within five Business Days
after receipt thereof and at least ten Business Days prior to the proposed
Termination Date, certify to Lessor in writing the amount and terms of such bid,
and the name and address of the party or parties (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an
arrangement or understanding regarding the future use, lease or ownership of the
Aircraft by Lessee or any such Affiliate but who may be the Owner Participant,
any Affiliate thereof or any Person contacted by the Owner Participant)
submitting such bid. After Lessee shall have certified to Lessor all bids
received, the Owner Participant, any Affiliate thereof or any Person contacted
by the Owner Participant may submit a further
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<PAGE> 37
bid or bids to Lessee not later than five Business Days prior to the Termination
Date proposed by Lessee (unless Lessee shall have revoked the Termination Notice
specifying such proposed Termination Date). Subject to the next succeeding
sentence, on or before the Termination Date, subject to the release of all
mortgage and security interests with respect to the Aircraft under the Trust
Indenture: (1) Lessee shall deliver the Aircraft, or cause the Aircraft to be
delivered, to the bidder(s), if any, which shall have submitted the highest cash
bid therefor (net of any brokerage commissions) at least ten (or, in the case of
the Owner Participant, any Affiliate thereof, or Person contacted by the Owner
Participant, five) Business Days prior to such Termination Date, in the same
manner and in the same condition and otherwise in accordance with all the terms
of this Lease as if delivery were made to Lessor pursuant to Section 5, and
shall duly transfer to Lessor title to any engines not owned by Lessor all in
accordance with the terms of Section 5, (2) Lessor shall comply with the terms
of the Trust Indenture and shall, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), subject to prior
or concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total sales price realized at such
sale to be retained by Lessor, and (3) Lessee shall simultaneously pay or cause
to be paid to Lessor in funds of the type specified in Section 3(f) hereof, an
amount equal to the sum of (A) the excess, if any, of (i) the Termination Value
for the Aircraft, computed as of the Termination Date, over (ii) the sale price
of the Aircraft sold by Lessor after deducting the reasonable expenses incurred
by Lessor, the Owner Participant or the Indenture Trustee in connection with
such sale, (B) all unpaid Basic Rent with respect to the Aircraft due prior to
such Termination Date and, if such Basic Rent is payable in arrears on such
Termination Date as indicated on Exhibit B, on such Termination Date, and all
unpaid Supplemental Rent due on or prior to the Termination Date with respect to
the Aircraft, and (C) on behalf of Lessor, the premium and Funding Loss Amount,
if any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens that would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor shall
give to Lessee written notice of such election at least five Business Days prior
to the Termination Date accompanied by an irrevocable undertaking by the Owner
Participant to make available to the Lessor for payment to the Indenture Trustee
on the Termination Date the amount required to pay in full the unpaid principal
amount of the Secured Certificates outstanding on the Termination Date plus
interest accrued thereon through the Termination Date. Upon receipt of notice of
such an election by Lessor and the accompanying undertaking by the Owner
Participant, Lessee shall cease its efforts to obtain bids as provided above and
shall reject all bids theretofore or thereafter received. On the Termination
Date, Lessor shall (subject to the payment by Lessee of all Rent due on or prior
to such date as set forth below) pay in full the unpaid principal amount of the
Secured Certificates outstanding on the Termination Date plus interest accrued
thereon through the Termination Date together with all premium and Funding Loss
Amount, if any, due on the Secured Certificates and, so long as
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<PAGE> 38
the Secured Certificates are paid as aforesaid, Lessee shall deliver the
Airframe and Engines or engines to Lessor in accordance with Section 5 and shall
pay all Basic Rent due prior to the Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on Exhibit B, on such
Termination Date, and all Supplemental Rent (other than Termination Value) due
on or prior to the Termination Date. If no sale shall have occurred on the
Termination Date and Lessor has not made the payment contemplated by the
preceding sentence and thereby caused this Lease to terminate, if Lessee revokes
its Termination Notice or, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the
effect that payment by Lessee of the amount specified in clause (3)(A) above in
connection with a termination where Lessor has not elected to retain title will
not constitute a preference under applicable U.S. bankruptcy laws, a Default or
an Event of Default of the type referred to in Section 14(e) hereof shall exist
on such Termination Date (unless, in the case of any such Default or Event of
Default, Lessee has obtained an order from the applicable bankruptcy court
approving the payment of any such amount), this Lease shall continue in full
force and effect as to the Aircraft, Lessee shall pay the reasonable costs and
expenses incurred by the Owner Participant, the Indenture Trustee and Lessor
(unless such failure to terminate the Lease is a consequence of the failure of
Lessor or the Owner Participant without due cause to make, or cause to be made,
the payment referred to in the immediately preceding sentence, in which case
Lessee shall pay only the reasonable costs and expenses of the Indenture
Trustee), if any, in connection with preparation for such sale and Lessee may
give one or more additional Termination Notices in accordance with Section
9(a)(2), subject to the last sentence of this Section 9(c). In the event of any
such sale or such retention of the Aircraft by Lessor and upon compliance by
Lessee with the provisions of this paragraph, Basic Rent or any other amounts
hereunder arising subsequent to such date of sale or retention shall cease to
accrue, Lessee shall have no further obligation in this respect and this Lease
shall terminate. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise take any action
in connection with any such sale other than to transfer (in accordance with the
foregoing provisions) to the purchaser named in the highest bid certified by
Lessee to Lessor all of Lessor's right, title and interest in the Aircraft,
against receipt of the payments provided herein. Lessee may revoke a Termination
Notice given pursuant to Section 9(a)(2) no more than two times during the Term
and a Termination Notice may be given not more than once during any 365-day
period.
If (x) there is a sale of the Aircraft pursuant to this
Section 9(c), (y) an Event of Default of the type described in Section 14(c)
relating to Section 7(a) or Section 8 shall have occurred and be continuing on
the date of such sale and (z) the fair market sales value of the Aircraft on the
date of such sale is lower than it would have been had no such Event of Default
occurred, Lessee shall pay to Lessor, in addition to any other amounts due
hereunder, the amount in excess of Termination Value that Lessor would have
received had no such Event of Default occurred. Lessor and Lessee shall confer
in good faith with a view to reaching agreement on what the fair market sales
value of the Aircraft would have been in the absence of such Event of Default.
If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or
the Owner Participant of the occurrence of such Event of Default, the question
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<PAGE> 39
shall be determined by an appraisal in accordance with the procedures described
in Section 19(c).
(d) Termination as to Engines. So long as no Event of
Default shall have occurred and be continuing, Lessee shall have the right at
its option at any time during the Term, on at least thirty (30) days' prior
written notice, to terminate this Lease with respect to any Engine. In such
event, and prior to the date of such termination, Lessee shall replace such
Engine hereunder by complying with the terms of Section 10(b) to the same extent
as if an Event of Loss had occurred with respect to such Engine, and Lessor
shall transfer such right, title and interest as it may have to the replaced
Engine as provided in Section 5(b). No termination of this Lease with respect to
any Engine as contemplated by this Section 9(d) shall result in any reduction of
Interim Rent or Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of
Loss with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause
(i), in which event not later than the earlier of (x) the
Business Day next succeeding the 120th day following the
occurrence of such Event of Loss or (y) the third Business Day
following the receipt of insurance proceeds in respect of such
occurrence (but not earlier than thirty (30) days after such
occurrence) (the "LOSS PAYMENT DATE") Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in
Section 3(f) hereof, an amount equal to the Stipulated Loss
Value of the Aircraft corresponding to the Stipulated Loss
Value Date occurring on or immediately following the Loss
Payment Date; provided, however, that if the Commencement Date
or a Lease Period Date shall occur prior to the Loss Payment
Date with respect to which Stipulated Loss Value is
determined, Lessee shall pay on such Lease Period Date an
amount equal to the Interim Rent or Basic Rent that would have
been due on the Commencement Date or such Lease Period Date as
if such Event of Loss had not occurred, or
(ii) so long as no Default of the type referred to
in Section 14(a) or 14(e) or Event of Default shall have
occurred and be continuing, substitute an aircraft or an
airframe or an airframe and one or more engines, as the case
may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee
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<PAGE> 40
shall pay or cause to be paid to Lessor on the Business Day next succeeding the
120th day following the occurrence of such Event of Loss the amount specified in
clause (i) above.
At such time as Lessor shall have received the amounts
specified in subparagraph (i) above, together with all other amounts that then
may be due hereunder (including, without limitation, all Basic Rent due before
the date of such payment, and, if Basic Rent is payable in arrears on the date
of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment
date, and all Supplemental Rent), under the Participation Agreement and under
the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss
Value, Termination Value or any other amount due hereunder shall cease to
accrue, and Lessee shall have no further obligation in any such respect,
provided, that the obligations of Lessee under the other Operative Documents
which, by their express terms, are stated to survive shall not be terminated,
(2) this Lease shall terminate, (3) Lessor will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest in and to the
Airframe and any Engines subject to such Event of Loss, as well as any Engines
not subject to such Event of Loss, and furnish to or at the direction of Lessee
a bill of sale in form and substance reasonably satisfactory to Lessee (or any
Sublessee), evidencing such transfer, and (4) Lessee will be subrogated to all
claims of Lessor, if any, against third parties, for damage to or loss of the
Airframe and any Engines which were subject to such Event of Loss to the extent
of the then insured value of the Aircraft. Notwithstanding anything to the
contrary contained in the foregoing, in the event that any payment of Stipulated
Loss Value is to be made pursuant to this Section 10(a) on a date that is
subsequent to the scheduled expiration of the Term, then Lessee shall, in
addition to any other amounts payable pursuant to this Section 10(a), pay on the
relevant Loss Payment Date such additional amount as is necessary to preserve
the Owner Participant's Net Economic Return. Any calculation of any such
additional amount shall be made by the Owner Participant and shall be subject to
the verification procedures set forth in Exhibit E hereto.
In the event Lessee shall elect to substitute an aircraft (or
an airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or an
airframe or an airframe and one or more engines which, together with the Engines
constituting a part of the Aircraft but not installed thereon at the time of
such Event of Loss constitute the Aircraft) free and clear of all Liens (other
than Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Aircraft subject to such Event of Loss (Lessee shall in
connection therewith provide the certificate or the appraisal described in
Section 5.06(4) of the Trust Indenture) assuming that the Aircraft had been
maintained in accordance with this Lease; provided that any aircraft, airframe
or engine so substituted hereunder shall be of the same or improved model as
those initially leased hereunder and any airframe so substituted hereunder shall
have a year of manufacture after December 31, 1994 and (B) prior to or at the
time of any such substitution, Lessee (or any Sublessee), at its own expense,
will (1) furnish Lessor with a full warranty bill of sale and a
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<PAGE> 41
Federal Aviation Administration bill of sale, in form and substance reasonably
satisfactory to Lessor, evidencing such transfer of title, (2) cause a Lease
Supplement and a Trust Supplement to be duly executed by Lessee and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Airframe may then be
registered as permitted by Section 8(f) of the Participation Agreement, (3)
cause a financing statement or statements with respect to such substituted
property to be filed in such place or places as are deemed necessary or
desirable by Lessor to perfect its and the Indenture Trustee's interest therein
and herein, (4) furnish Lessor with such evidence of compliance with the
insurance provisions of Section 11 with respect to such substituted property as
Lessor may reasonably request, (5) furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor simultaneously will comply with the terms of the
Trust Indenture and transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens, including for this
purpose Liens that would be Lessor Liens but for the proviso in the definition
of Lessor Liens), all of Lessor's right, title and interest, if any, in and to
the Aircraft or the Airframe and one or more Engines, as the case may be, with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to Lessee
(or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion
of counsel (which shall be Cadwalader, Wickersham & Taft and, if not, other
counsel chosen by Lessee and reasonably acceptable to Lessor) reasonably
satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as
assignee of Lessor will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the substitute aircraft, provided that such
opinion need not be delivered to the extent that immediately prior to such
substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not,
solely by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, (7)(x) furnish Lessor with an opinion of tax counsel
chosen by the Owner Participant and reasonably acceptable to Lessee to the
effect that such substitution will not result in any adverse tax consequences to
the Owner Participant or (y) indemnify the Owner Participant as to such tax
consequences in a manner reasonably satisfactory in form and substance, which
may include consideration of the creditworthiness of Lessee, to the Owner
Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee
remains in full force and effect, the Guarantor) has outstanding publicly issued
or privately placed unsecured indebtedness (excluding any short-term commercial
paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long
as the rating by the other agency is not less than "BBB" or "Baa2", as the case
may be, or (b) Lessee provides the Owner Participant with cash collateral or a
letter of credit reasonably satisfactory in form and substance to Lessor, the
amount of which is sufficient (as determined by the Owner Participant in its
reasonable judgment) to cover any anticipated adverse tax consequences for which
the Owner Participant has been indemnified by Lessee under the Operative
Documents in addition to any additional adverse tax consequences resulting from
such substitution or (c) the anticipated indemnified amount (as determined by
the Owner Participant in its reasonable judgment) is less than $50,000, then, in
determining whether the indemnity to be provided by Lessee is satisfactory in
form and substance to the
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Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee, and (8) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe or
the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Interim Rent or Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Lessee shall forthwith (and in any event, within fifteen days after such
occurrence) give Lessor written notice thereof and shall, within sixty (60) days
after the occurrence of such Event of Loss, convey or cause to be conveyed to
Lessor, as replacement for the Engine with respect to which such Event of Loss
occurred, title to another Pratt & Whitney Model PW2037 engine (or engine of the
same or another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft, and Lessee shall in connection
therewith provide the certificate or appraisal described in Section
5.06(2)(B)(iv) of the Trust Indenture; provided that both Engines shall be of
the same make and model) free and clear of all Liens (other than Permitted
Liens, which engine may upon its transfer to Lessor become subject to any and
all Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Engine subject to such Event of Loss assuming that such
Engine had been maintained in accordance with this Lease. Prior to or at the
time of any such conveyance, Lessee, at its own expense, will (i) furnish Lessor
with a warranty (as to title) bill of sale, in form and substance reasonably
satisfactory to Lessor, with respect to such replacement engine, (ii) cause a
Lease Supplement and Trust Supplement to be duly executed by Lessee and to be
filed for recording pursuant to the Federal Aviation Act, or the applicable
laws, rules and regulations of any other jurisdiction in which the Airframe may
then be registered as permitted by Section 8(f) of the Participation Agreement,
(iii) furnish Lessor with such evidence of compliance with the insurance
provisions of Section 11 hereof with respect to such replacement engine as
Lessor may reasonably request and furnish Lessor with copies of the
documentation required to be provided by Lessee pursuant to Section 5.06 of the
Trust Indenture, and Lessor will comply with the terms of the Trust Indenture
and transfer to or at the direction of Lessee without recourse or warranty
(except as to absence of Lessor Liens, including for this purpose Liens that
would be Lessor Liens but for the proviso in the definition of Lessor Liens) all
of Lessor's right, title and interest, if any, in and to (A) the Engine with
respect to which such Event of Loss occurred and furnish to or at the direction
of Lessee a bill of sale in form and substance reasonably satisfactory to
Lessee, evidencing such transfer and (B) all claims, if any, against third
parties, for damage to or loss of the Engine subject to such Event of Loss, and
such Engine shall thereupon cease to be the Engine leased hereunder. For all
purposes hereof, each such replacement engine shall, after such conveyance, be
deemed part of the property leased hereunder, and shall be deemed an
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<PAGE> 43
"ENGINE". No Event of Loss with respect to an Engine under the circumstances
contemplated by the terms of this paragraph (b) shall result in any reduction in
Interim Rent or Basic Rent.
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the
Airframe (or the Airframe and any Engine or engines then
installed thereon), (A) unless the same are replaced pursuant
to the last paragraph of Section 10(a), after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement)
and the Owner Participant for reasonable costs and expenses,
so much of such payments remaining as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a), shall be applied in reduction of Lessee's
obligation to pay Stipulated Loss Value, if not already paid
by Lessee, or, if already paid by Lessee, shall be applied to
reimburse Lessee for its payment of Stipulated Loss Value, and
following the foregoing application, the balance, if any, of
such payments will be paid to Lessor and Lessee, as their
interests may appear; provided that Lessee shall have fully
performed or, concurrently therewith, will fully perform the
terms of the last paragraph of Section 10(a) with respect to
the Event of Loss for which such payments are made; and
(ii) if such payments are received with respect to
an Engine under circumstances contemplated by Section 10(b)
hereof, so much of such payments remaining after reimbursement
of Lessor (as provided for in Section 7.01 of the Trust
Agreement) and the Owner Participant for reasonable costs and
expenses shall be paid over to, or retained by, Lessee,
provided that Lessee shall have fully performed, or
concurrently therewith will perform, the terms of Section
10(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of the Aircraft which is a
Specified Country. In the event of the requisition for use of the Airframe and
the Engines or engines installed on the Airframe during the Term by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any instrumentality or agency of any thereof whose
obligations are backed by the full faith and credit of such government, Lessee
shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government, instrumentality or agency, as the case may be, prior to the
end of the Term, Lessee shall be obligated to return the Airframe and such
Engines or engines to Lessor
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<PAGE> 44
pursuant to, and in all other respects in compliance with the provisions of,
Section 5 promptly on the date of such return by such government,
instrumentality or agency. If, in the event of any such requisition, Lessee
shall fail to return the Aircraft on or before the thirtieth day beyond the end
of the Term, such failure shall constitute an Event of Loss which shall be
deemed to have occurred on the last day of the Term and in such event Lessee
shall make the payment contemplated by Section 10(a)(i) in respect of such Event
of Loss; provided, however, that Lessor may notify Lessee in writing on or
before the twentieth day prior to the last day of the Term that, in the event
Lessee shall fail by reason of such requisition to return the Airframe and such
Engines or engines on or before the thirtieth day beyond the end of the Term,
such failure shall not be deemed an Event of Loss. Upon the giving of such
notice and such failure to return by the thirtieth day beyond the end of the
Term, Lessee shall be relieved of all of its obligations pursuant to the
provisions of Section 5 (including Exhibit F) but not under any other Section,
except that if any engine not owned by Lessor shall then be installed on the
Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be furnished,
to Lessor a full warranty (as to title) bill of sale with respect to each such
engine, in form and substance reasonably satisfactory to Lessor (together with
an opinion of counsel to the effect that such full warranty bill of sale has
been duly authorized and delivered and is enforceable in accordance with its
terms and that such engines are free and clear of Liens other than Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the proviso
in the definition of Lessor Liens), against receipt from Lessor of a bill of
sale evidencing the transfer, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), by Lessor to
Lessee or its designee of all of Lessor's right, title and interest in and to
any Engine constituting part of the Aircraft but not then installed on the
Airframe. All payments received by Lessor or Lessee from such government for the
use of such Airframe and Engines or engines during the Term shall be paid over
to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and all
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines after the end of the Term shall be paid over to,
or retained by, Lessor unless Lessee shall have exercised its purchase option
hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft which is a Specified
Country. In the event of the requisition for use of an Engine by the United
States Government or any other government of registry of the Aircraft which is
listed on Exhibit C to the Participation Agreement and designated therein as a
"Specified Country" or any agency or instrumentality of any thereof whose
obligations are backed by the full faith and credit of such government (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 which is payable to or
retainable by Lessee (or any
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<PAGE> 45
Sublessee) shall not be paid to or retained by Lessee (or such Sublessee) if at
the time of such payment or retention, an Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) shall have occurred and be
continuing, but shall be held by or paid over to Lessor as security for the
obligations of Lessee (or such Sublessee) under this Lease and, if Lessor
declares this Lease to be in default pursuant to Section 15 hereof, applied
against Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Default, such amount shall
be paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) Public Liability and Property
Damage Insurance. (I) Except as provided in clause (II) of this Section 11(a),
Lessee will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by Lessee (or any Sublessee) with respect to
other aircraft owned or leased, and operated by Lessee (or such Sublessee) on
the same routes) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an
amount not less than the greater of (x) the amount of public liability and
property damage insurance from time to time applicable to aircraft owned or
operated by Lessee of the same type as the Aircraft and (y) such amount per
occurrence as may have been agreed to on the Delivery Date by the Owner
Participant and (ii) cargo liability insurance, in the case of both clause (i)
and clause (ii), (A) of the type and covering the same risks as from time to
time applicable to aircraft operated by Lessee of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name Lessor, in its individual capacity
and as owner trustee, the Indenture Trustee and the Owner Participant (but
without imposing on any such parties liability to pay the premiums for such
insurance) (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds as their respective
interests may appear, (B) shall provide that in respect of the respective
interests of Lessor, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if any Sublease is then in effect, any Sublessee) or
any other Person and shall insure Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee (or, if
any Sublease is then in effect, any Sublessee), (C) may provide for
self-insurance to the extent permitted by Section 11(d) and (D) shall provide
that if the insurers cancel such insurance for any reason whatever or if any
material change is made in such insurance which adversely affects the interest
of Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), or
such insurance shall lapse for non-payment of premium, such cancellation, lapse
or change shall not be effective as to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease) for thirty (30) days (seven (7) days
in the case of war risk and allied perils coverage) after
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<PAGE> 46
issuance to Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), respectively, of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), (2) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, and (3) shall
waive any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
Lessor or the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) to
the extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that (A) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
of the same type as the Aircraft which are on the ground and not in operation;
and (B) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by
Lessee of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I)
Except as provided in clause (II) of this Section 11(b), Lessee shall maintain
or cause to be maintained in effect, at its or any Sublessee's expense, with
insurers of recognized responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk ground and flight coverage of
Engines and Parts while temporarily removed from the Aircraft and not replaced
by similar components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, any Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned by Lessee of the same type as the Aircraft;
provided that such insurance shall at all times while the Aircraft is subject to
this Lease be for an amount (subject to self-insurance to the extent permitted
by Section 11(d)) not less than the Stipulated Loss Value for the Aircraft. Any
policies carried in accordance with this paragraph (b) covering the Aircraft and
any policies taken out in substitution or replacement for any such policies (i)
shall name Lessor, as owner trustee, the Indenture
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<PAGE> 47
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease) as additional insureds,
as their respective interests may appear (but without imposing on any such party
liability to pay premiums with respect to such insurance), (ii) may provide for
self-insurance to the extent permitted in Section 11(d), (iii) shall provide
that (A) in the event of a loss involving proceeds in excess of $3,500,000 (or,
if the Aircraft is then under a Sublease, in excess of $2,000,000), the proceeds
in respect of such loss up to an amount equal to the Stipulated Loss Value for
the Aircraft shall be payable to Lessor (or, so long as the Trust Indenture
shall not have been discharged, the Indenture Trustee) (except in the case of a
loss with respect to an Engine installed on an airframe other than the Airframe,
in which case Lessee (or any Sublessee) shall arrange for any payment of
insurance proceeds in respect of such loss to be held for the account of Lessor
(or, so long as the Trust Indenture shall not have been discharged, the
Indenture Trustee) whether such payment is made to Lessee (or any Sublessee) or
any third party), it being understood and agreed that in the case of any payment
to Lessor (or the Indenture Trustee) otherwise than in respect of an Event of
Loss, Lessor (or the Indenture Trustee) shall, upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have been
repaired or that such payment shall then be required to pay for repairs then
being made, pay the amount of such payment to Lessee or its order, and (B) the
entire amount of any loss involving proceeds of $3,500,000 (or, if the Aircraft
is then under a Sublease, of $2,000,000) or less or the amount of any proceeds
of any loss in excess of the Stipulated Loss Value for the Aircraft shall be
paid to Lessee or its order unless an Event of Default or a Default of the type
referred to in Section 14(a) or 14(e) shall have occurred and be continuing and
the insurers have been notified thereof by Lessor or the Indenture Trustee, (iv)
shall provide that if the insurers cancel such insurance for any reason
whatever, or such insurance lapses for non-payment of premium or if any material
change is made in the insurance which adversely affects the interest of Lessor,
the Indenture Trustee or the Owner Participant, such cancellation, lapse or
change shall not be effective as to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) for thirty (30) days (seven (7) days in the case
of hull war risk and allied perils coverage) after issuance to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), respectively,
of written notice by such insurers of such cancellation, lapse or change,
provided, however, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable, (v) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if a Sublease is then in effect, any
Sublessee) or any other Person and shall insure the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), as
they appear, regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee), (vi) shall be primary without any right of contribution
from any other insurance which is carried by Lessor, the Owner Participant or
the Indenture Trustee (or, if
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<PAGE> 48
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), and
(viii) shall waive any right of the insurers to set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee or
the Owner Participant. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Lessor shall hold any payment to it
of any insurance proceeds in respect of such loss for the account of Lessee or
any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to
the Airframe (or the Airframe and the Engines installed
thereon), (i) unless such property is replaced pursuant to the
last paragraph of Section 10(a), so much of such payments
remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) and the Owner Participant
for reasonable costs and expenses, as shall not exceed the
Stipulated Loss Value required to be paid by Lessee pursuant
to Section 10(a) hereof shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if not
already paid by Lessee, or, if already paid by Lessee, shall
be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such
payments remaining thereafter will be paid over to, or
retained by, Lessee (or if directed by Lessee, any Sublessee);
or (ii) if such property is replaced pursuant to the last
paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), provided that Lessee shall have fully performed
or, concurrently therewith, will fully perform the terms of
the last paragraph of Section 10(a) with respect to the Event
of Loss for which such payments are made; and
(y) if such payments are received with respect to
an Engine under the circumstances contemplated by Section
10(b) hereof, so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) and the Owner Participant for reasonable
costs and expenses, shall be paid over to, or retained by,
Lessee (or if directed by Lessee, any Sublessee), provided
that Lessee shall have fully performed or, concurrently
therewith, will fully perform, the terms of Section 10(b) with
respect to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any
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<PAGE> 49
balance (or if already paid for by Lessee (or any Sublessee), all such insurance
proceeds) remaining after compliance with such Sections with respect to such
loss shall be paid to Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground
and not in operation, Lessee may carry or cause to be carried, in lieu of the
insurance required by clause (I) above, insurance otherwise conforming with the
provisions of said clause (I) except that the scope of the risks and the type of
insurance shall be the same as from time to time applicable to aircraft owned by
Lessee of the same type similarly on the ground and not in operation, provided
that Lessee shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft during
such period that the Aircraft is on the ground and not in operation.
(c) Reports, etc. Lessee will furnish, or cause to be
furnished, to Lessor, the Indenture Trustee and the Owner Participant, on or
before the Delivery Date and on or before July 1 in each year thereafter during
the Term commencing July, 1996, a report, signed by Marsh & McLennan,
Incorporated or any other independent firm of insurance brokers reasonably
acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail
the insurance and reinsurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried
and maintained with respect to the Aircraft complies with the terms hereof;
provided, however, that all information contained in the foregoing report shall
not be made available by Lessor, the Indenture Trustee, the Loan Participants or
the Owner Participant to anyone except (A) to permitted transferees of Lessor's,
the Loan Participants', the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to Lessor's, the
Loan Participants', the Owner Participant's or the Indenture Trustee's counsel
or independent certified public accountants or independent insurance advisors
who agree to hold such information confidential or (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation. Lessee will cause such Insurance Brokers to agree to advise Lessor,
the Indenture Trustee and the Owner Participant in writing of any default in the
payment of any premium and of any other act or omission on the part of Lessee of
which it has knowledge and which might invalidate or render unenforceable, in
whole or in part, any insurance on the Aircraft. To the extent such agreement is
reasonably obtainable, Lessee will also cause such Insurance Brokers to agree to
advise Lessor, the Indenture Trustee and the Owner Participant in writing at
least thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage), prior to the expiration or termination date of any insurance carried
and maintained on the Aircraft pursuant to this Section 11. In addition, Lessee
will also cause such Insurance Brokers to deliver to Lessor, the Indenture
Trustee and the Owner Participant, on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form as delivered by
Lessee to such parties on the Delivery Date. In the event that Lessee or any
Sublessee shall fail to maintain or cause to be maintained insurance as herein
provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or the
Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor or the
Indenture Trustee, as the case may be, without waiver of
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any other rights Lessor or the Indenture Trustee may have; provided, however,
that no exercise by Lessor or the Indenture Trustee, as the case may be, of said
option shall affect the provisions of this Lease, including the provisions of
Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of
deductible, premium adjustment or franchise provisions or otherwise (including,
with respect to insurance maintained pursuant to Section 11(b), insuring for a
maximum amount which is less than the Stipulated Loss Value of the Aircraft) in
the insurance covering the risks required to be insured against pursuant to this
Section 11 under a program applicable to all aircraft in Lessee's fleet, but in
no case shall the aggregate amount of self-insurance in regard to Section 11(a)
and Section 11(b) exceed during any policy year, with respect to all of the
aircraft in Lessee's fleet (including, without limitation, the Aircraft), the
lesser of (a) 50% of the largest replacement value of any single aircraft in
Lessee's fleet or (b) 1-1/2% of the average aggregate insurable value (during
the preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and
any Sublessee) may at its own expense carry insurance with respect to its
interest in the Aircraft in amounts in excess of that required to be maintained
by this Section 11; the Owner Participant either directly or through Lessor may
carry for its own account at its sole cost and expense insurance with respect to
its interest in the Aircraft, provided that such insurance does not prevent
Lessee (or any Sublessee) from carrying the insurance required or permitted by
this Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written consent
of Lessor, other government of registry of the Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee (or any Sublessee)
with respect to the Aircraft (including permitted self-insurance) shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default or a Default of the type referred to in Section
14(a) or 14(e) shall have occurred and be continuing, but shall be held by or
paid over to Lessor as security for the obligations of Lessee (or any Sublessee)
under this Lease and, if Lessor declares this Lease to be in default pursuant to
Section 15 hereof, applied against Lessee's obligations hereunder as and when
due. At such time as there shall not be continuing
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<PAGE> 51
any such Event of Default or Default, such amount shall be paid to Lessee (or
such Sublessee) to the extent not previously applied in accordance with the
preceding sentence.
SECTION 12. INSPECTION. At all reasonable times, and upon at
least 15 days' prior written notice to Lessee, Lessor, the Owner Participant or
the Indenture Trustee or their respective authorized representatives may (not
more than once every calendar year (unless an Event of Default has occurred and
is continuing when such inspection right shall not be so limited)) inspect the
Aircraft and inspect and make copies (at Lessor's, the Owner Participant's or
the Indenture Trustee's expense, as the case may be unless an Event of Default
shall have occurred and be continuing) of the books and records of Lessee
relating to the maintenance of the Aircraft; any such inspection of the Aircraft
shall be limited to a visual, walk-around inspection and shall not include
opening any panels, bays or the like without the express consent of Lessee;
provided that no exercise of such inspection right shall interfere with the
operation or maintenance of the Aircraft by, or the business of, Lessee (or any
Sublessee). Upon receipt by Lessee of a written request from the Owner
Participant specifying that the Owner Participant desires to have an authorized
representative observe the next scheduled major overhaul to be performed on the
Aircraft, Lessee shall cooperate with the Owner Participant to enable the Owner
Participant's authorized representative to observe the next scheduled major
overhaul to be performed on the Aircraft; provided that Lessee shall be required
to so cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe one scheduled major overhaul during each
three-year period of the Term; provided that the Owner Participant's authorized
representative shall merely observe such major overhaul, shall not interfere
with or extend in any manner the conduct or duration of the major overhaul and
shall not be entitled to direct any of the work performed in connection with
such overhaul. None of Lessor, the Owner Participant or the Indenture Trustee
shall have any duty to make any such inspection nor shall any of them incur any
liability or obligation by reason of not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein,
Lessee will not, without prior written consent of Lessor, assign in whole or in
part any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and each such
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
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(a) Lessee shall not have made a payment of
Interim Rent, Basic Rent or Stipulated Loss Value within ten
(10) days after the same shall have become due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value) after the
same shall have become due and such failure shall continue for
ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax
Indemnity Agreement or any failure of Lessee to pay to Lessor
or the Owner Participant when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(c) Lessee shall have failed to perform or
observe (or caused to be performed and observed) in any
material respect any covenant or agreement (except the
covenants set forth in the Tax Indemnity Agreement and in
clauses (i)(B) and (ii) of the first sentence of second
paragraph of Exhibit F) to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of thirty (30) days after receipt by
Lessee of written notice thereof from Lessor or the Indenture
Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause
(ii) or clause (iii) of the first sentence of Section 7(a), or
under the second sentence of Section 7(a) as it relates to
maintenance, service, repair or overhaul or under Section 8
and, notwithstanding the diligence of Lessee in attempting to
cure such failure, such failure is not cured within said
thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so
long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such
written notice; or
(d) any representation or warranty made by Lessee
herein or in the Participation Agreement or any document or
certificate furnished by Lessee in connection herewith or
therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 3 of the
Tax Indemnity Agreement and such documents or certificates as
are furnished to the Owner Participant solely in connection
with matters dealt with in the Tax Indemnity Agreement and for
no other purpose and except the representations and warranties
in, or in connection with, the Credit Agreement) shall prove
to have been incorrect in any material respect at the time
made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the
interests of the Owner Participant, Lessor or the Certificate
Holders) within thirty (30) days after the receipt by Lessee
of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
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<PAGE> 53
(e) the commencement of an involuntary case or
other proceeding in respect of Lessee in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its
property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of ninety
(90) consecutive days or an order, judgment or decree shall be
entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Lessee, a
receiver, trustee or liquidator of Lessee, or of any
substantial part of its property, or sequestering any
substantial part of the property of Lessee and any such order,
judgment or decree or appointment or sequestration shall be
final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of
entry thereof; or
(f) the commencement by Lessee of a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United
States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of Lessee or for all or substantially all of its property, or
the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to
authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or
with respect to the Aircraft (or cause to be carried and
maintained) insurance required to be maintained in accordance
with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
Section 14(c) or (d) hereof, any failure of Lessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as Lessee
is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default; and at any time thereafter, so long as any such
outstanding Events of Default shall not have been remedied, Lessor may do one or
more of the following with respect to all or any part of the Airframe and any or
all of the Engines as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable law then in effect; provided, however, that during any period the
Aircraft is subject to the Civil Reserve Air Fleet Program in accordance with
the provisions of Section 7(b) hereof and in possession of the United States
government or an agency or instrumentality of the United States, Lessor shall
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not, on account of any Event of Default, be entitled to do any of the following
in such manner as to limit Lessee's control under this Lease (or any Sublessee's
control under any Sublease) of any Airframe or any Engines installed thereon,
unless at least sixty (60) days' (or such lesser period, if any, as may then be
applicable under the Air Mobility Command program of the United States
Government) written notice of default hereunder shall have been given by Lessor
by registered or certified mail to Lessee (and any Sublessee) with a copy
addressed to the Contracting Office Representative for the Air Mobility Command
of the United States Air Force under any contract with Lessee (or any Sublessee)
relating to the Aircraft:
(a) upon the written demand of Lessor and at
Lessee's expense, cause Lessee to return promptly, and Lessee
shall return promptly, the Airframe or any Engine as Lessor
may so demand to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where all or any part of
the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or
otherwise (and/or, at Lessor's option, store the same at
Lessee's premises until disposal thereof by Lessor), all
without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or
otherwise;
(b) sell the Airframe and/or any Engine at public
or private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the
Aircraft as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee, except as hereinafter
set forth in this Section 15;
(c) whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under paragraph (a) or paragraph (b) above with respect to the
Airframe and/or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Stipulated
Loss Value Date not earlier than ten days from the date of
such notice, may demand that the Lessee pay to Lessor, and
Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Interim Rent or Basic Rent for
the Aircraft due on or after the payment date specified in
such notice), any unpaid Interim Rent or Basic Rent due on the
payment date so specified (unless Basic Rent is payable in
advance on such date but including, without limitation, any
adjustments to Basic Rent payable pursuant to Section 3(d)),
plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with
interest, if any, on such amount at the Past Due Rate from
such specified payment date until the date of actual payment
of such amount): (i) an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
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<PAGE> 55
such notice, over the aggregate fair market rental value
(computed as hereafter in this Section 15 provided) of such
Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the
Stipulated Loss Value Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 3%;
or (ii) an amount equal to the excess, if any, of the
Stipulated Loss Value for such Aircraft, computed as of the
Stipulated Loss Value Date specified as the payment date in
such notice over the fair market sales value of such Aircraft
(computed as hereafter in this Section provided) as of the
Stipulated Loss Value Date specified as the payment date in
such notice;
(d) in the event Lessor, pursuant to paragraph
(b) above, shall have sold the Airframe and/or any Engine,
Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the
installments of Interim Rent or Basic Rent for the Aircraft
due on or after such date), any unpaid Interim Rent or Basic
Rent with respect to the Aircraft due prior to such date
(including, without limitation, any adjustments to Basic Rent
payable pursuant to Section 3(d)) plus the amount of any
deficiency between the net proceeds of such sale (after
deduction of all reasonable costs of sale) and the Stipulated
Loss Value of such Aircraft, computed as of the Stipulated
Loss Value Date on or immediately following the date of such
sale together with interest, if any, on the amount of such
deficiency, at the Past Due Rate, from the date of such sale
to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to
the Aircraft, and/or may exercise any other right or remedy
which may be available to it under applicable law or proceed
by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
For the purposes of paragraph (c) above, the "fair market
rental value" or the "fair market sales value" of the Aircraft shall be the
rental value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller in possession under no compulsion
to sell, as the case may be, in each case based upon the actual condition and
location of the Aircraft and an all cash, contemporaneous sale, which value
shall be determined by mutual agreement or, in the absence of mutual written
agreement, pursuant to an appraisal prepared and delivered by a nationally
recognized firm of independent aircraft appraisers nominated by Lessor, and
Lessor shall immediately notify Lessee of such nomination. Unless Lessee shall
have objected in writing within ten days after its receipt of Lessor's notice,
Lessor's nomination shall be conclusive and binding. If Lessee shall object,
however, Lessor and Lessee shall endeavor, within ten days after such objection
is made, to
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<PAGE> 56
select a mutually acceptable appraiser; provided that, if Lessee shall not so
endeavor to make such selection, Lessor's nomination referred to in the
preceding sentence hereof shall be conclusive and binding. If Lessor and Lessee
fail to reach agreement (except for the reason referred to in the proviso in the
preceding sentence), or if any appraiser selected fails to act for any reason,
then the question shall be determined by an appraisal (applying the definitions
of "fair market rental value" and "fair market sales value" as set forth above
based upon the actual condition of the Aircraft) mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the City
of New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business Days after
the appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. The cost of such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any and
all unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to
this Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the
Owner Participant) or Lessee may bid for and purchase such property. Lessor will
endeavor to give Lessee at least fifteen (15) days' prior written notice of the
date fixed for any public sale of the Airframe or any Engine and any such public
sale shall be conducted in general so as to afford Lessee (and any Sublessee) a
commercially reasonable opportunity to bid (it being understood that Lessor
shall
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<PAGE> 57
incur no liability for its failure to provide any such notice). Except as
otherwise expressly provided above, no remedy referred to in this Section 15 is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Lessor
of any or all of such other remedies. No waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or amendment to be duly
filed and recorded, and maintained of record, in accordance with the applicable
laws of the government of registry of the Aircraft. In addition, Lessee will at
its expense promptly and duly execute and deliver to Lessor such further
documents and take such further action as Lessor or the Indenture Trustee may
from time to time reasonably request in order more effectively to carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor and the Indenture
Trustee hereunder, including, without limitation, if requested by Lessor or the
Indenture Trustee, at the expense of Lessee, the execution and delivery of
supplements or amendments hereto or to the Trust Indenture, each in recordable
form, subjecting to this Lease and the Trust Indenture, any airframe or engine
substituted for the Airframe or any Engine pursuant to the terms thereof and the
recording or filing of counterparts thereof, in accordance with the laws of such
jurisdictions as Lessor or the Indenture Trustee may from time to time deem
advisable. Lessee agrees to furnish to Lessor and the Indenture Trustee promptly
after execution and delivery of any supplement and amendment hereto and promptly
after the execution and delivery of any supplement and amendment to the Trust
Indenture (except for any such supplement or amendment which does not require or
receive the approval of Lessee pursuant to the Operative Documents and is not
required pursuant to the terms of the Operative Documents), an opinion of
counsel reasonably satisfactory to Lessor and the Indenture Trustee as to the
due recording or filing of such supplement or amendment. Commencing in 1997, on
or before April 30 of each year during the Term, Lessee will deliver to Lessor
and the Indenture Trustee a certificate of Lessee, signed by the President, a
Vice President or the Chief Financial Officer of Lessee to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and the
signer does not have actual knowledge of the existence, as of the date of such
certificate, of any condition or event which constitutes a Default or an Event
of Default. Lessee agrees that if the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer of Lessee
has actual knowledge of the existence of a Default, then Lessee shall promptly
give to Lessor, the Owner Participant and the Indenture Trustee notice thereof
and such other information relating thereto as Lessor, the Owner Participant or
the Indenture Trustee may reasonably request. Lessee agrees that if an officer
of Lessee has knowledge of the existence of an Event of
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Default, Lessee shall promptly give to Lessor and the Indenture Trustee notice
thereof and such other information relating thereto as Lessor or the Indenture
Trustee may reasonably request. Lessee will deliver to Lessor, the Owner
Participant and the Indenture Trustee (i) within sixty (60) days after the end
of each of the first three quarterly periods of each fiscal year of the
Guarantor, the publicly filed Form 10-Q report of the Guarantor; and (ii) within
one hundred twenty (120) days after the close of such fiscal year, the publicly
filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopy or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest
Drive (A4010), St. Paul, Minnesota 55111-3034, and for
overnight courier at 2700 Lone Oak Parkway (A4010), Eagan,
Minnesota 55121, Attention: Senior Vice President-Finance and
Treasurer (Telecopy No. (612) 726-0665), or to such other
address or telecopy number as Lessee shall from time to time
designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt
Lake City, Utah 84111, Attention: Corporate Trust Department
(Telecopy No. (801) 246-5053), or to such other address or
telecopy number as Lessor shall from time to time designate in
writing to Lessee, and
(iii) if to a Loan Participant, the Indenture
Trustee or the Owner Participant, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at
such address or telecopy number as such Loan Participant, the
Indenture Trustee or the Owner Participant shall have
furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant,
the Indenture Trustee or the Owner Participant at its address
or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is a net
lease. All Rent shall be paid by Lessee to Lessor in funds of the type specified
in Section 3(f). Except as provided in Section 3(g) hereof, Lessee's obligation
to pay all Rent payable hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which Lessee may have
against Lessor, in its individual capacity or as Owner Trustee under the Trust
Agreement, the Indenture Trustee (in its individual capacity or as Indenture
Trustee), any Loan Participant, the Owner Participant, or anyone else for any
reason whatsoever (whether in connection with the transactions contemplated
hereby or any other transactions), including, without limitation, any breach by
Lessor or the Owner Participant of their respective warranties, agreements or
covenants contained in any of the Operative Documents,
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<PAGE> 59
(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in or prohibition of the use or
possession thereof by Lessee (or any Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation or prohibition
resulting from the act of any government authority, (iii) any insolvency,
bankruptcy, reorganization or similar case or proceedings by or against Lessee
(or any Sublessee) or any other person, or (iv) any other circumstance,
happening, or event whatsoever, whether or not unforeseen or similar to any of
the foregoing. 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 without limitation of the other
rights or remedies of Lessor hereunder, subject to the rights of Lessee to
setoff under Section 3(g) hereof, to pay to Lessor an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Lease not been terminated in whole or in part.
Lessee hereby waives, to the extent permitted by applicable law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Lease except in accordance with the express terms hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION. (a)
Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
renew this Lease for up to three consecutive one year renewal terms the first of
which shall commence only upon the expiration of the Basic Term (any such
renewal term, a "FIXED RENEWAL TERM"). Basic Rent during any Fixed Renewal Term
shall be payable in an amount and at the times specified in Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the
third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the
option, upon compliance with the notice provisions set forth in Section 19(e)
hereof, to renew this Lease for a renewal term of not less than one year and not
more than three years for a Basic Rent equal to the "fair market rental value"
of the Aircraft for such period (any such renewal term, a "FAIR MARKET RENEWAL
TERM"). The aggregate length of all Fair Market Renewal Terms pursuant to this
Section 19(a)(2) may not exceed five years.
(3) If no written notice is delivered by Lessee to Lessor
pursuant to Section 19(e) on or before the day specified therefor, Lessee shall
be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if
Lessee has elected to renew this Lease as aforesaid, and provided that there
shall not then have occurred and be continuing a Default of the type referred to
in Section 14(a), 14(b), 14(e) or 14(f) or an Event of Default and that all
necessary governmental authorizations and approvals shall have been received and
that Basic Rent for the Renewal Term has already been determined as above
provided and a Lease Supplement evidencing such renewal has been executed and
filed for recordation with the Federal Aviation Administration, this Lease shall
continue in full force
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and effect during the Renewal Term, except that (x) Lessee shall pay Lessor
Basic Rent for the Aircraft during the Renewal Term in an amount equal to the
"fair market rental value" thereof determined in accordance with Section 19(c),
but not to exceed in the case of a Fixed Renewal Term one-half of the average
Basic Rent during the Basic Term (such average being determined as the total of
all payments of Basic Rent during the Basic Term added together and divided by
the number of payments of Basic Rent during the Basic Term), which Basic Rent
shall be payable in semi-annual installments in arrears unless any portion of
Basic Rent during the Basic Term was payable in advance, in which case the same
proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic
Term divided into the total Basic Rent payable in advance during the Basic Term)
shall be payable in advance during such Renewal Term, each such installment
being due and payable on each Lease Period Date occurring during the Renewal
Term, commencing with the Lease Period Date immediately following the
commencement of the Renewal Term, and (y) the Stipulated Loss Values applicable
during the Renewal Term shall be determined separately for each Renewal Term by
the Owner Participant in good faith to reflect Stipulated Loss Values determined
in accordance with the following sentence. Stipulated Loss Values during a
Renewal Term shall on the date on which such Renewal Term begins be equal to the
fair market sales value of the Aircraft as of such date, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof, and shall decline ratably on a monthly basis to the fair market sales
value of the Aircraft as of the last day of such Renewal Term, determined in
accordance with the provisions of this Section 19(a)(4) and Section 19(c)
hereof.
In determining fair market sales value for purposes of
calculating Stipulated Loss Value for any Renewal Term effect shall be given to
the encumbrance on the Aircraft of any Renewal Term available or in force under
this Section 19.
(b) Purchase Options. Lessee shall have the option, upon
compliance with the notice provisions set forth in Section 19(e) hereof, to
purchase the Aircraft on the last Business Day of the Basic Term or any Renewal
Term for a purchase price equal to the fair market sales value of the Aircraft;
provided that, unless Lessee shall have provided Lessor with an opinion of
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that the payment of the purchase price by Lessee will not constitute a
preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled
to purchase the Aircraft if there shall exist on such last Business Day of the
Basic Term or any Renewal Term, as the case may be, a Default of the type
referred to in Section 14(e) hereof. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) Valuation. For all purposes of this Section 19,
including the appraisal referred to in this Section 19(c), in determining "fair
market rental value" or "fair market sales value", the Aircraft shall be valued
(i) as if in the condition and otherwise in compliance with
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<PAGE> 61
the terms of Section 5 upon a return of the Aircraft to the United States and as
if it had been maintained at all times as required in accordance with Section
7(a)(I) during periods when no Sublease was in effect, (ii) on the basis of the
value which would obtain in an arm's-length transaction between an informed and
willing buyer-user or lessee (other than a lessee or an Affiliate of a lessee
currently in possession or a used equipment scrap dealer) under no compulsion to
buy or lease and an informed and willing seller or lessor unaffiliated with such
buyer-user or lessee and under no compulsion to sell or lease and disregarding
this Lease, including the purchase and renewal options of Lessee provided in
this Lease, and (iii) in the case of such valuation for determining "fair market
rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of a notice from Lessee pursuant to Section 19(e) hereof, Lessor and
Lessee shall confer in good faith with a view to reaching agreement on the "fair
market rental value" or "fair market sales value" of the Aircraft. If the
parties have not so agreed by two hundred seventy (270) days prior to the end of
the Basic Term or the Renewal Term in question, then the question shall be
determined by an appraisal mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) Special Purchase Option. On July 2 , 2012 (or, if July
2, 2012 is not a Business Day, the Business Day immediately succeeding July 2,
2012), Lessee shall have the
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<PAGE> 62
option, upon at least ninety (90) days' irrevocable prior notice to Lessor and,
if any Secured Certificates are then outstanding, the Indenture Trustee, to
purchase the Aircraft on such date for a purchase price equal to the Special
Purchase Price; provided that, unless Lessee shall have provided Lessor with an
opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the
effect that the payment of the Special Purchase Price by Lessee will not
constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not
be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or,
if July 2, 2012 is not a Business Day, on the Business Day immediately
succeeding July 2, 2012) a Default of the type referred to in Section 14(e)
hereof. In addition, if on such date there shall be any Secured Certificates
outstanding, Lessee shall have the option to assume, pursuant to Section 8(x) of
the Participation Agreement and Section 2.15 of the Trust Indenture, all of the
obligations of Lessor under the Trust Indenture. If such assumption is made,
Lessee shall pay Lessor a purchase price equal to (I) the Special Purchase Price
minus (II) an amount equal to principal of, and accrued but unpaid interest on,
any Secured Certificates that are outstanding on such date. Upon such payment in
full and payment of any other amounts then due hereunder (including costs or
expenses of the Owner Participant in connection with such purchase, any
installments of Basic Rent due prior to such date and, if Basic Rent is payable
in arrears on such date as indicated on Exhibit B, on such date (but not any
installment of Basic Rent due on such date if Basic Rent is payable in advance
on such date), and all unpaid Supplemental Rent due on or prior to such date),
Lessor will transfer to Lessee, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens), all of Lessor's
right, title and interest in and to the Aircraft and under the Trust Indenture
and, unless there shall be any Secured Certificates outstanding after such
payment, exercise such rights as it has to cause the Aircraft to be released
from the Lien of the Trust Indenture.
(e) In order to exercise any right pursuant to Sections
19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than
270 days prior to the expiration of the Basic Term or any Renewal Term, as the
case may be, deliver to Lessor a notice in writing stating that it intends to
exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any
such notice shall be revocable until the date that is 270 days prior to the
expiration of the Basic Term or such Renewal Term, as the case may be. Failure
to revoke any such notice prior to such 270th day prior to the end of the Basic
Term or such Renewal Term, as the case may be, shall constitute a binding and
irrevocable election by Lessee to exercise one of the options set forth in
Sections 19(a) or 19(b) hereof. In the event that any such notice has so been
provided to Lessor, Lessee shall, no earlier than the 270th day and no later
than the 90th day prior to the expiration of the Basic Term or such Renewal
Term, as the case may be, specify which of the options in Sections 19(a) or
19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and
acknowledge that Lessee may not specify which of the options in Sections 19(a)
or 19(b) it intends to elect prior to the date that is 270 days earlier than the
expiration of the Basic Term or such Renewal Term, as the case may be.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF
SECURED CERTIFICATES. In order to secure the indebtedness evidenced by the
Secured Certificates, Lessor has agreed in the Trust Indenture, among other
things, to assign to the Indenture Trustee this
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<PAGE> 63
Lease, the Lease Supplements and any amendments to this Lease and to mortgage
its interest in the Aircraft in favor of the Indenture Trustee, subject to the
reservations and conditions therein set forth. To the extent, if any, that this
Lease, the Lease Supplements and any amendments to this Lease constitute 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, the Lease
Supplements and any amendments to this Lease may be created through the transfer
or possession of any counterpart other than the original counterpart, which
shall be identified as the counterpart containing the receipt therefor executed
by the Indenture Trustee on the signature page thereof. Lessee hereby accepts
and consents to the assignment of all Lessor's right, title and interest in and
to this Lease pursuant to the terms of the Trust Indenture. Subject to Section
3(f) hereof, Lessee agrees to pay directly to the Indenture Trustee (or, after
receipt by Lessee of notice from the Indenture Trustee of the discharge of the
Trust Indenture, to Lessor), all amounts of Rent due or to become due hereunder
and assigned to the Indenture Trustee and Lessee agrees that the Indenture
Trustee's right to such payments hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
the circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, then (but in
each case, except in the case of failure to pay Rent or in the case of failure
to maintain insurance as required hereunder, no earlier than the fifteenth day
after the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) Lessor may itself make such payment or perform or
comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR
LIMITED. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's or AA or better by
S&P and having a final maturity of ninety (90) days or less from date of
purchase thereof; and (iii) commercial paper
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<PAGE> 64
of any holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America or
any state thereof having a rating assigned to such commercial paper of A1 by S&P
or P1 by Moody's and having a final maturity of ninety (90) days or less from
the date of purchase thereof; provided, however, that the aggregate amount at
any one time so invested in certificates of deposit issued by any one bank shall
not be in excess of 5% of such bank's capital and surplus. There shall be
promptly remitted to Lessee or its order (but no more frequently than monthly)
any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Default of the type referred to in
Section 14(a) or 14(e) or an Event of Default shall have occurred and be
continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an
Event of Default shall have occurred and be continuing, Lessor, or if the Trust
Indenture shall not have been discharged, the Indenture Trustee as assignee of
Lessor, shall hold any such gain as security for the obligations of Lessee under
this Lease and apply it against such obligations as and when due, and once all
such Defaults and Events of Default have been remedied, any gain not so applied
shall be remitted to Lessee. Lessee shall be responsible for any net loss
realized as a result of any such investment and shall reimburse Lessor (or the
Indenture Trustee, as the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by Lessor, Lessee and any assignee
of Lessor's rights hereunder. This Lease shall constitute an agreement of lease,
and nothing contained herein shall be construed as conveying to Lessee any
right, title or interest in the Aircraft except as a lessee only. Neither Lessee
nor any affiliate of Lessee will file any tax returns in a manner inconsistent
with the
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<PAGE> 65
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease 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.
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case
of the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event
of Default shall have occurred and be continuing and notwithstanding any default
by Lessor, the Owner Participant or the Indenture Trustee under the
Participation Agreement, the Trust Agreement or the Trust Indenture, Lessor
shall not interfere with Lessee's continued possession, use and operation of,
and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and
obligations pursuant to the Overall Transaction during the Term of this Lease,
and this Lease shall not be terminated except as expressly provided herein.
SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail
to return the Aircraft in accordance with Section 5 hereof at the scheduled
expiration of the Term, then, unless such failure shall occur as a result of (x)
the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the
Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or
(y) above, Lessee shall have made all payments required to be made pursuant to
such Sections, Lessee shall pay to Lessor, for each such day beyond the
scheduled expiration of the Term during which the Aircraft is not returned to
Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A)
the daily fair market rental value of the Aircraft during such period, computed
in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent
payable by Lessee during the Term.
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<PAGE> 66
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Lessor
BY: ______________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
BY: ______________________________________
Title: Senior Vice President-Finance
and Treasurer
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of __________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY: ______________________________________
Title:
- Signature Page -
<PAGE> 67
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1996 F]
LEASE SUPPLEMENT NO.
[NW 1996 F]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee under the Trust Agreement [NW 1996 F], dated as of May
14, 1996, between [ ], as Owner Participant, and such Owner Trustee
(such Owner Trustee, in its capacity as such Owner Trustee, being herein called
"LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain
Lease Agreement [NW 1996 F], dated as of May 14, 1996, relating to one Boeing
757-251 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 from time to time of Lease Supplements 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.
(1)The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease is attached hereto, and made a part
hereof, and this Lease Supplement, together with such attachment, is being filed
for recordation on the date hereof with the Federal Aviation Administration as
one document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. 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 757-251 aircraft (the "AIRCRAFT"), which Aircraft as
of the date hereof consists of the following components:
- ------------------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE> 68
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
(ii) Engines: two (2) Pratt & Whitney Model PW2037 engines
bearing, respectively, manufacturer's serial nos. P______ and
P______ (each of which engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on January 2, 2019.
3. Lessee hereby confirms its agreement to pay Lessor
Basic Rent for the Aircraft throughout the Term therefor in accordance with
Section 3 of the Lease.
4. Lessee hereby confirms to Lessor that Lessee has
accepted the Aircraft for all purposes hereof and of the Lease as being
airworthy, in good working order and repair and without defect or inherent vice
in title, condition, design, operation or fitness for use; provided, however,
that nothing contained herein or in the Lease shall in any way diminish or
otherwise affect any right Lessee or Lessor may have with respect to the
Aircraft against The Boeing Company, or any subcontractor or supplier of The
Boeing Company, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement 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. 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 jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page hereof.
EXHIBIT A - PAGE 2
<PAGE> 69
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By
------------------------------------
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By
------------------------------------
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
------------------------------------
Title:
- ------------------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE> 70
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1996 F]
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Interim Rent, Basic Rent and Excess Amount:
Excess Amount
Transition (Percentage of
Date Lessor's Cost)
---- --------------
Interim Rent
Commencement (Percentage of
Date Lessor's Cost)
---- --------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
<PAGE> 71
INTERIM RENT, BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent
(Percentage of
Lease Period Date Lessor's Cost)
----------------- --------------
* Denotes payment in arrears from preceding Lease Period Date (or
Commencement Date in the case of the first Lease Period) to specified Lease
Period Date.
** Denotes payment in advance from specified Lease Period Date to
succeeding Lease Period Date.
EXHIBIT B - PAGE 2
<PAGE> 72
Lessor's Cost for the Aircraft:
Special Purchase Price:
Transition Date:
EXHIBIT B - PAGE 3
<PAGE> 73
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1996 F]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<PAGE> 74
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1996 F]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
---- ----------
<PAGE> 75
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1996 F]
RENT RECALCULATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
1. Any recalculation of Basic Rent, Excess Amount, Special
Purchase Price, Stipulated Loss Value percentages and Termination Value
percentages pursuant to the Lease shall be determined by the Owner Participant,
and shall maintain the Owner Participant's Net Economic Return except as
assumptions have been modified pursuant to Section 3 of the Lease or pursuant to
the Tax Indemnity Agreement or the Participation Agreement, as the case may be;
provided, however, that Lessee may request (A) Lessee's independent public
accountants to verify such calculations but without any requirement that the
Owner Participant disclose to such persons the methodology and assumptions and
(B) if Lessee believes that such calculations by the Owner Participant are in
error then a nationally recognized firm of accountants mutually acceptable to
Lessee and the Owner Participant shall be permitted to verify such calculations
and the Owner Participant will make available to such firm (subject to the
execution by such firm of a confidentiality agreement reasonably acceptable to
the Owner Participant) the methodology and assumptions and any changes made
therein pursuant to Section 3 of the Lease. In the event of a verification under
clause (B) of the first sentence of this paragraph 1 the determination by such
firm of accountants shall be final. Lessee will pay the reasonable costs and
expenses of the verification under clause (B) of the first sentence of this
paragraph 1, unless an error adverse to Lessee is established by such firm and
if as a result of such verification process the Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by 15 or more basis
points (in which event the Owner Participant shall pay the reasonable costs and
expenses of such verification process). Such recalculated Basic Rent, Excess
Amount, Special Purchase Price, Stipulated Loss Value percentages and
Termination Value percentages shall be set forth in a Lease Supplement or an
amendment to the Lease.
2. "Net Economic Return" means the Owner Participant's net
after-tax book yield and aggregate after-tax cash flow utilizing the multiple
investment sinking fund method of analysis, computed on the basis of the same
methodology, constraints and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Special Purchase Price, Stipulated Loss
Value and Termination Value percentages as of the Delivery Date and maintaining
periodic FASB 13 earnings at a level not less than 95% in any calendar year of
the periodic FASB 13 earnings which were originally calculated in connection
with the Basic Rent, Special Purchase Price, Stipulated Loss Value and
Termination Value percentages as of the Delivery Date subject, however, to
Section 3(d)(vi) of the Lease; provided that the periodic
<PAGE> 76
FASB 13 earnings constraint shall be not less than 94% for calendar year 1997
with respect to the first refinancing pursuant to Section 17 of the
Participation Agreement.
EXHIBIT E - PAGE 2
<PAGE> 1
FIRST AMENDMENT TO LEASE AGREEMENT
[NW 1996 F]
This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 F], dated as of June
3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (in such
capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and
existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain
Lease Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL LEASE"),
between Lessee and Lessor (the Original Lease, as supplemented by Lease
Supplement No. 1 [NW 1996 F] ("LEASE SUPPLEMENT NO. 1") between Lessor and
Lessee, dated May 14, 1996, herein called the "LEASE");
Except as otherwise defined in this Amendment, the terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease;
WITNESSETH:
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the
Aircraft, which consists of the following components: (i) Airframe: FAA
Registration No. N542US; manufacturer's serial No. 26489; and (ii) Engines: two
(2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's
serial nos. P727174 and P727175;
WHEREAS, Section 17 of the Participation Agreement [NW 1996 F], dated
as of May 14, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [
] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan
Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank
and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured
Certificates issued by the Owner Trustee under the Trust Indenture and Security
Agreement [NW 1996 F], dated as of May 14, 1996, between Lessor (not in its
individual capacity except as expressly provided therein but as trustee) and the
Indenture Trustee may be refinanced under certain circumstances;
WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW
1996 F], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State
Street Bank and Trust Company, as Pass Through Trustee under the Pass Through
Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of
Connecticut, National Association, as Subordination Agent (the "SUBORDINATION
AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines
Corporation (the "GUARANTOR");
WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts,
Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Special Purchase Price in order to reflect, among other things, the interest
rate of the refinanced Secured Certificates;
<PAGE> 2
WHEREAS, in connection with the recalculation of the Excess Amounts,
Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Special Purchase Price, Lessor and Lessee desire to amend the Lease;
WHEREAS, a counterpart of the Original Lease, to which were attached
and made a part thereof counterparts of Lease Supplement No. 1, the Trust
Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, and the
Trust Agreement and Indenture Supplement [NW 1996 F], dated May 14, 1996, was
recorded by the Federal Aviation Administration (the "FAA") on May 16, 1996, and
assigned Conveyance No. I56072;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.
(a) The definitions of "Business Day", "Excess Amount", "Indemnitee",
"Loan Participant", "Operative Documents", "Stipulated Loss Value",
"Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of
the Lease are hereby amended applicable on and after the Closing Date to read as
follows:
"BUSINESS DAY" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
the City of New York, New York; Boston, Massachusetts; or Minneapolis,
Minnesota.
"EXCESS AMOUNT" for the Closing Date or the Commencement Date means
an amount equal to the amount determined by multiplying Lessor's Cost
by the percentage set forth in Exhibit B hereto under the heading
"Excess Amount" opposite the Closing Date or the Commencement Date.
"INDEMNITEE" means (i) the Owner Trustee, in its individual
capacity and as trustee under the Trust Agreement, (ii) the Indenture
Trustee, (iii) the Owner Participant, (iv) the Trust Estate, (v) Loan
Participants and each other Certificate Holder, (vi) the Subordination
Agent, (vii) the Liquidity Provider, (viii) the Pass Through Trustees,
(ix) each Affiliate of the Persons described in clauses (i) through
(iv), inclusive, (x) each Affiliate of the Persons described in clauses
(vi), (vii) and (viii), (xi) the respective directors, officers,
employees, agents and servants of each of the Persons described in
clauses (i) through (viii), inclusive, (xii) the successors and
permitted assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of the
Persons described in clauses (v), (vi), (vii) and (viii).
"LOAN PARTICIPANT" means for any period prior to the Closing, the
Original Loan Participants and their successors and assigns, and from
and after the Closing, the Purchasers and their successors and
registered assigns, including any Certificate Holder.
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<PAGE> 3
"OPERATIVE DOCUMENTS" means each of the Participation Agreement,
the documents referred to in Section 4(a)(v) of the Participation
Agreement (including any amendments, modifications or supplements
thereto), the Refunding Agreement, the Trust Indenture Amendment and
the Refinancing Secured Certificates, collectively, and "Operative
Document" shall mean each of the Operative Documents, individually.
"STIPULATED LOSS VALUE" with respect to the Aircraft as of any date
through and including January 2, 2019, means, but subject always to the
provisions of Section 3(d)(v) hereof, the amount determined by
multiplying Lessor's Cost by the percentage specified in Exhibit C
hereto opposite the Stipulated Loss Value Date with respect to which
the amount is determined (as such Exhibit C may be adjusted from time
to time as provided in Section 3(d) hereof and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after
January 2, 2019 shall be the amount determined as provided in Section
19(a) hereof.
"SUPPLEMENTAL RENT" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Interim Rent or
Basic Rent) which Lessee assumes or agrees to pay under any Lessee
Document to or on behalf of Lessor or any other Person, (b) amounts
payable by Lessor pursuant to clause (b) of the third paragraph of
Section 2.02 of the Trust Indenture, (c) Lessor's pro rata share of all
compensation and reimbursement of expenses, disbursements and advances
payable by Lessee under the Pass Through Trust Agreements and the Other
Pass Through Trust Agreement, and (d) Lessor's pro rata share of all
compensation and reimbursement of expenses and disbursements payable to
the Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the Subordination
Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata share"
means as of any time a fraction, the numerator of which is the
principal balance then outstanding of Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"TAX INDEMNITEE" means (i) the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate and the Indenture Trustee, (ii) the
respective Affiliates, successors and permitted assigns of each of the
entities described in the preceding clause (i), and (iii) the Trust
Indenture Estate.
"TERMINATION VALUE" with respect to the Aircraft as of any date
through and including January 2, 2019, means, but subject always to the
provisions of Section 3(d)(v), the amount determined by multiplying
Lessor's Cost by the percentage specified in Exhibit D hereto opposite
the Termination Date with
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<PAGE> 4
respect to which the amount is determined (as such Exhibit D may be
adjusted from time to time as provided in Section 3(d) hereof and in
Section 7 of the Tax Indemnity Agreement).
(b) The following definitions are hereby inserted in Section 1 of
the Lease in alphabetical order to be applicable on and after the
Closing Date:
"CLOSING" means the consummation of the refinancing operation
contemplated by Section 1 of the Refunding Agreement.
"CLOSING DATE" means the date on which the Closing shall occur.
"INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider and
the Subordination Agent.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
between the Subordination Agent, as borrower, and the Liquidity
Provider, and any replacement thereof, in each case as the same may be
amended, modified or supplemented.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank Girozentrale,
acting through its New York branch, as Class A Liquidity Provider,
Class B Liquidity Provider and Class C Liquidity Provider under the
Liquidity Facilities, or any successor thereto.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the
Trust Indenture.
"ORIGINAL LOAN PARTICIPANTS" means each institution executing the
Participation Agreement as a Loan Participant.
"ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security
Agreement [NW 1996 F], dated as of May 14, 1996, between the Owner
Trustee and State Street Bank and Trust Company, as amended, modified
and supplemented prior to the Closing Date.
"OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust
agreement and supplement pursuant to which the Class D pass through
trust certificates are issued.
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<PAGE> 5
"PASS THROUGH CERTIFICATES" means the pass through certificates to
be issued by the Pass Through Trustee in connection with the
Refinancing Transaction.
"PASS THROUGH TRUST AGREEMENT" means the pass through trust
agreement and each of the three separate pass through trust supplements
referred to on Schedule I to the Refunding Agreement to be entered into
by and between Lessee and the Pass Through Trustee in connection with
the Refinancing Transaction.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass
Through Trust Agreement, and each other person that may from time to
time be acting as successor trustee under any such Pass Through Trust
Agreement.
"PURCHASERS" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"REFINANCING CERTIFICATE" means a certificate of an authorized
representative of the Owner Participant delivered pursuant to Section
17(a)(1) of the Participation Agreement, setting forth, among other
things, the Refinancing Date, the principal amount of debt to be issued
by the Owner Trustee on the Refinancing Date, and the proposed revised
schedules of Excess Amount, Basic Rent, Stipulated Loss Value and
Termination Value percentages, and the proposed Amortization Schedules.
"REFINANCING DATE" means the proposed date on which the outstanding
Secured Certificates will be redeemed and refinanced pursuant to
Section 17 of the Participation Agreement.
"REFINANCING EXPENSES" means the costs, fees, commissions and other
expenses payable by the Owner Participant pursuant to Section 11(a) of
the Refunding Agreement.
"REFINANCING SECURED CERTIFICATES" means the Secured Certificates
to be issued by Lessor to the Purchasers pursuant to the Trust
Indenture Amendment and the Refunding Agreement on the Closing Date.
"REFINANCING TRANSACTION" means a refinancing transaction pursuant
to Section 17 of the Participation Agreement involving, among other
things, (i) the redemption of the Secured Certificates issued on the
Refinancing Date and the concurrent issuance and sale of the
Refinancing Secured Certificates to the Pass Through Trustees (or their
designee) and (ii) the issuance and sale of the Pass Through
Certificates by the Pass Through Trustees.
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<PAGE> 6
"REFUNDING AGREEMENT" means that certain Refunding Agreement [NW
1996 F], dated as of June 3, 1996, among Lessor, Lessee, the Owner
Participant, the Purchasers, the Indenture Trustee, the Subordination
Agent, and the Guarantor, as the same may from time to time be
supplemented or amended, or the terms thereof waived or modified, to
the extent permitted by, and in accordance with, the terms thereof.
"SUBORDINATION AGENT" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor
thereto.
"TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust
Indenture and Security Agreement [NW 1996 F], dated as of the Closing
Date, 1996, between Lessor and State Street Bank and Trust Company, as
Indenture Trustee.
"TRUST INDENTURE ESTATE" has the meaning assigned to that term in
the Trust Indenture.
(c) The definitions of "Administrative Agent", "Assumed Interest Rate",
"Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount",
"Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1
of the Lease are hereby deleted on and after the Closing Date.
SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE.
(a) Section 3(b) of the Lease is hereby amended by deleting on and
after the Closing Date the second paragraph thereof.
(b) Section 3(c) of the Lease is hereby amended by deleting on and
after the Closing Date the second paragraph thereof.
(c) Section 3(d)(i) of the Lease is hereby amended to read in its
entirety on and after the Closing Date as follows:
(i) In the event that (A) the Closing Date occurs other than on
June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to
Section 16 of the Participation Agreement are determined to be other
than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor
or the Owner Participant pursuant to Section 11(a) of the Refunding
Agreement are determined to be other than 1.3281% of Lessor's Cost,
then in each case, the Basic Rent percentages set forth in Exhibit B
and the Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D and the Special
Purchase Price shall be recalculated by the Owner Participant, on or
prior to November 15, 1996 using the same methods and assumptions used
to
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<PAGE> 7
calculate original Basic Rent, Stipulated Loss Value and Termination
Value percentages and the Special Purchase Price, in order to: (1)
maintain the Owner Participant's Net Economic Return and (2) minimize
the Net Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof. In such recalculation there will be
no change in the amortization of the Secured Certificates.
(d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on
and after the Closing Date "(A)" at the beginning thereof, (ii) on and after the
Closing Date deleting the word "and" at the end of clause (A) thereof and
substituting a period therefor, and (iii) deleting on and after the Closing Date
clause (B) thereof in its entirety.
(e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and
after the Closing Date the second sentence thereof.
(f) The second sentence of Section 3(e) of the Lease is hereby amended
to read in its entirety on and after the Closing Date as follows:
"Lessee shall pay, on behalf of Lessor, as Supplemental Rent the
Make-Whole Amount, if any, due pursuant to Section 2.10(b) or Section
2.11 of the Trust Indenture in connection with a prepayment of the
Secured Certificates upon redemption of such Secured Certificates in
accordance with such Section 2.10(b) or Section 2.11."
(g) Section 3(f) of the Lease is hereby amended by deleting on and
after the Closing Date the numbers and punctuation "124-000-12" in the first
sentence thereof and substituting therefor the numbers and punctuation
"124-0000-12".
(h) Section 3(g) of the Lease is hereby amended to read in its entirety
on and after the Closing Date as follows:
(g) Prepayment of Certain Rent Payments. To the extent, if any,
that there shall not have been received by the Indenture Trustee to its
account and in funds of the type specified in Section 3(f) hereof by
10:30 A.M., New York time, on the Commencement Date from Lessor an
amount equal to the Excess Amount for such date, Lessee shall, on the
Commencement Date, prepay on the Commencement Date a portion of Basic
Rent equal to the Excess Amount not so paid (the amount of such Basic
Rent to be prepaid by Lessee being herein called "PREPAID RENT");
provided, that Lessee will also pay to the Indenture Trustee, on
demand, as Supplemental Rent, to the extent permitted by applicable
law, interest at the Past Due Rate in effect from time to time on any
part of any Prepaid Rent not paid when due for any period for which the
same shall be overdue. Lessor agrees to reimburse Lessee in the manner
provided in the following sentence for (x) the Prepaid Rent so paid by
Lessee, plus (y) any Supplemental Rent paid with respect to Prepaid
Rent by Lessee pursuant to this Section 3(g), plus (z) accrued interest
on the unreimbursed portion thereof at a
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<PAGE> 8
rate per annum equal to the Base Rate as in effect from time to time
plus 5% per annum from the date such amount is paid by Lessee to but
not including the date of each such reimbursement (such amounts to be
reimbursed being herein called the "REIMBURSEMENT AMOUNT"). Lessor
shall pay to Lessee, in funds of the type specified in Section 3(f)
hereof, within five days after Lessor, the Owner Participant and the
Indenture Trustee shall have received written notice from Lessee
demanding payment, the Reimbursement Amount. In addition, if, for any
reason, Lessor shall fail to pay to Lessee the Reimbursement Amount as
above provided, Lessee shall be entitled to offsets (without
duplication) against each succeeding payment (other than as limited by
the proviso to this sentence) due from Lessee to Persons other than the
Loan Participants, the Indenture Trustee and the Owner Trustee in its
individual capacity (including, without limitation, Basic Rent,
payments due under Section 9, 10, 15 and 19 hereof, payments due under
the Tax Indemnity Agreement and payments due to Persons other than the
Loan Participants, the Indenture Trustee and Lessor in its individual
capacity under Section 7 of the Participation Agreement), until Lessee
has been fully reimbursed for the Reimbursement Amount; provided,
however, that in the case of any payment due from Lessee which is
distributable under the terms of the Trust Indenture, Lessee's right to
offset shall be limited to amounts distributable to Lessor thereunder.
No such offset or aggregate combined effect of separate offsets shall
reduce the amount of any installment of Interim Rent or Basic Rent to
an amount insufficient, together with the Excess Amount and all other
amounts payable simultaneously by Lessee, to pay in full the payments
then required to be made on account of the principal of and interest on
(and Make-Whole Amount, if any, due with respect to) the Secured
Certificates then outstanding.
(i) The following new Section 3(h) shall be added to the end of Section
3 of the Lease to be applicable on and after the Closing Date:
(h) In the event that Lessee exercises its option to satisfy any
indemnity obligation under the Tax Indemnity Agreement pursuant to
Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in
addition to any other payments due hereunder, (i) on each Lease Period
Date, the portion of the Indemnity Adjusted Payments then due and
payable on such date as set forth in an appropriate schedule to the Tax
Indemnity Agreement and (ii) on the date that Stipulated Loss Value,
Termination Value or the Special Purchase Price becomes due and
payable, as the case may be, the Indemnity Adjusted Payment then due
and payable by reference to the date as of which such Stipulated Loss
Value, Termination Value or Special Purchase Price is payable as set
forth in an appropriate schedule to the Tax Indemnity Agreement.
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<PAGE> 9
SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE.
Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on
and after the Closing Date the words "the Owner Participant and the Indenture
Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and
after the Closing Date the word "their" and substituting therefor the word
"its".
SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE.
Section 9(c) of the Lease is hereby amended by deleting on and after
the Closing Date the word "premium" each time it appears therein and
substituting therefor the words "Make-Whole Amount" and by deleting on and after
the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount"
each time such words and such words and punctuation appear.
SECTION 5. AMENDMENT OF SECTION 10(a) OF THE LEASE.
Section 10(a) of the Lease is hereby amended by (i) deleting on and
after the Closing Date the words "the third Business Day following the receipt
of insurance proceeds in respect of such occurrence (but not earlier that thirty
(30) days after such occurrence)" in clause (i)(y) thereof and substituting
therefor the words "an earlier Business Day irrevocably specified fifteen days
in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii)
inserting on and after the Closing Date the words and punctuation ", which
appraisal shall be from a firm of independent aircraft appraisers satisfactory
to the Owner Participant," after the words "the certificate or the appraisal" in
the third parenthetical phrase of clause (A) of the third paragraph thereof.
SECTION 6. AMENDMENT OF SECTION 14(d) OF THE LEASE.
Section 14(d) of the Lease is hereby amended by (i) adding on and after
the Closing Date the words and punctuation ", the Refunding Agreement" after the
words "Participation Agreement" and (ii) adding on and after the Closing Date
the words "and except for representations or warranties contained in the Pass
Through Trust Agreement or the Underwriting Agreement (as defined in the
Refunding Agreement) or any document or instrument furnished pursuant to either
thereof" after the word "Agreement" at the end of the first parenthetical phrase
therein.
SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the
Lease is hereby amended to read in its entirety on and after the Closing Date as
follows:
"Section 17. Notices. All notices required under the terms and
provisions hereof shall be by telecopier or other telecommunication
means (with such telecopy or other telecommunication means to be
confirmed in writing), or if such notice is impracticable by
registered, first-class airmail, with postage prepaid, or by personal
delivery of written notice and any such notice shall become effective
when received, addressed:
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<PAGE> 10
(i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010),
St. Paul, Minnesota 55111-3034, and for overnight courier at
2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121,
Attention: Senior Vice President - Finance and Treasurer,
(Telecopy No. (612) 726-0665), or to such other address,
telex number or telecopy number as Lessee shall from time to
time designate in writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), or to such other address or telecopy number
as Lessor shall from time to time designate in writing to
Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the Owner
Participant, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at such address
or telecopy number as such Loan Participant, the Indenture
Trustee or the Owner Participant shall have furnished by
notice to Lessor and to Lessee, and, until an address is so
furnished, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at its address or telecopy
number set forth on the signature pages of the Refunding
Agreement."
SECTION 8. AMENDMENT OF SECTION 19(d) OF THE LEASE.
The second sentence of Section 19(d) of the Lease is hereby amended to
read in its entirety on and after the Closing Date as follows:
In addition, if on such date there shall be any Secured
Certificates outstanding, Lessee shall have the option to assume,
pursuant to Section 8(x) of the Participation Agreement and Section
2.13 of the Trust Indenture, all of the obligations of Lessor under
the Trust Indenture.
SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the
Lease is hereby amended by (i) deleting on and after the Closing Date the word
"or" between the words "Trust Agreement" and the words "the Trust Indenture" and
substituting a comma therefor and (ii) inserting on and after the Closing Date
the words "or the Refunding Agreement" after the words "Trust Indenture".
SECTION 10. AMENDMENT OF EXHIBITS.
(a) Exhibits B, C and D to the Lease attached hereto are applicable on
and after the Closing Date. Exhibits B, C and D to the Lease are applicable
until the Closing Date.
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<PAGE> 11
(b) The parties hereto agree that Exhibits B, C and D attached hereto
reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value
and Termination Value percentages and the Special Purchase Price to take into
account the interest rates borne by the Secured Certificates as of the Closing
Date.
SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease
set forth in Sections 1 through 10 hereof shall be effective as of the date
hereof.
SECTION 12. RATIFICATION. Except as amended hereby, the Lease as
heretofore supplemented continues and shall remain in full force and effect in
all respects.
SECTION 13. MISCELLANEOUS. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Amendment may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by Lessor, Lessee and any assignee of
Lessor's rights hereunder. Nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee. The section and paragraph headings in this Amendment and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof and all references herein
to numbered sections, unless otherwise indicated, are to sections of this
Amendment. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Amendment 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 Amendment may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee as mortgagee under the Trust
Indenture on the signature page thereof.
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<PAGE> 12
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment
to be duly executed on the day and year first above written.
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner
Trustee,
Lessor
By: ____________________________________
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: ____________________________________
Title:
(1) Receipt of this original counterpart of the foregoing Amendment is
hereby acknowledged this _____ day of ______________, 1996.
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By: ____________________________________
Title:
____________
(1) This language contained in the original counterpart only.
<PAGE> 1
GUARANTEE
[NW 1996 F]
This GUARANTEE [NW 1996 F], dated as of May 14, 1996 (as
amended, modified or supplemented from time to time, this "GUARANTEE"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "GUARANTOR"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "PARTIES", and, individually, a "PARTY").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
(the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to
enter into a Lease Agreement [NW 1996 F], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "LEASE"), between the
Lessee and First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (as defined therein), except as
expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing
757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a
Participation Agreement [NW 1996 F], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"),
among the Lessee and the Parties; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and
Security Agreement [NW 1996 F], dated as of the date hereof, between the Lessor
and the Indenture Trustee (as amended, modified or supplemented from time to
time, the "TRUST INDENTURE"), as security for the obligations of the Lessor
referred to therein; and
WHEREAS, the capitalized terms used herein that are not
defined herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into
the Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. GUARANTEE.
(a) The Guarantor does hereby acknowledge that it is fully
aware of the terms and conditions of the Lease, the Participation Agreement and
the other Operative
<PAGE> 2
Documents and the transactions and the other documents contemplated thereby, and
does hereby irrevocably and fully and unconditionally guarantee, as primary
obligor and not as surety merely, to the Parties, as their respective interests
may appear, the payment by the Lessee of all payment obligations when due under
the Lease (including, without limitation, Basic Rent and Supplemental Rent), the
Participation Agreement, the Tax Indemnity Agreement and the other Operative
Documents to which the Lessee is a party (such obligations of the Lessee
guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL
OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance
with the terms of the Operative Documents, and the timely performance of all
other obligations of the Lessee thereunder (individually, a "NONFINANCIAL
OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively
with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby
agree that in the event that the Lessee fails to pay any Financial Obligation
when due for any reason (including, without limitation, the liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceedings affecting the status, existence, assets or obligations of,
the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the
Operative Documents to which the Lessee is a party in any such proceeding)
within five days after the date on which such Financial Obligation became due
and payable and the applicable grace period has expired, the Guarantor shall pay
or cause to be paid forthwith, upon the receipt of notice from any Party (such
notice to be sent to the Lessee (to the extent such Party is not stayed or
prevented from doing so by operation of law) and the Guarantor) stating that
such Financial Obligation was not paid when due and for five days after the
applicable grace period has expired, the amount of such Financial Obligation.
The Guarantor hereby agrees that in the event the Lessee fails to perform any
Nonfinancial Obligation for any reason (including, without limitation, the
liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the status, existence,
assets or obligations of, the Lessee, or the disaffirmance with respect to the
Lessee of the Lease or the Operative Documents to which the Lessee is a party in
any such proceeding) within 10 Business Days after the date on which such
Nonfinancial Obligation is required to be performed (for avoidance of doubt, to
include any applicable grace period), the Guarantor shall cause such
Nonfinancial Obligation to be performed within 10 Business Days following the
receipt of notice from any Party (such notice to be sent to the Lessee (to the
extent such Party is not stayed or prevented from doing so by operation of law)
and the Guarantor) stating that such Nonfinancial Obligation was not performed
when so required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not
be, to the fullest extent permitted by law, affected by: the genuineness,
validity, regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
in writing shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is
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<PAGE> 3
undertaken in accordance with the terms of the Operative Documents) without the
consent of the Guarantor, or by any priority or preference to which any other
obligations of the Lessee may be entitled over the Lessee's obligations under
the Lease and the other Operative Documents to which the Lessee is a party, or
by any other circumstance that might otherwise constitute a legal or equitable
defense to or discharge of the obligations of a surety or guarantor including,
without limitation, any defense arising out of any laws of the United States of
America or any State thereof which would excuse, discharge, exempt, modify or
delay the due or punctual payment and performance of the obligations of the
Guarantor hereunder. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not, to the
fullest extent permitted by law, affect the liability of the Guarantor
hereunder: (a) the extension of the time for or waiver of, at any time or from
time to time, without notice to the Guarantor, the Lessee's performance of or
compliance with any of its obligations under the Operative Documents (except
that such extension or waiver in writing shall be given effect in determining
the obligations of the Guarantor hereunder)), (b) any assignment, transfer,
sublease or other arrangement by which the Lessee transfers possession or loses
control of the use of the Aircraft, (c) any defect in the title, condition,
design, operation or fitness for use of, or damage to or loss or destruction of,
the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or
consolidation of the Lessee or the Guarantor into or with any other Person, or
any sale, transfer, lease or disposal of any of its assets or (e) any change in
the ownership of any shares of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing
guaranty of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any unpaid
amounts due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim for
personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate (as such
term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain
or assert a claim for personal judgment against any other Person liable for the
Obligations, or make any effort at collection of the Obligations from any such
other Person, or exercise or assert any other right or remedy to which any Party
is or may be entitled in connection with the Obligations or any security or
other guaranty therefor, or (v) assert or file any claim against the assets of
the Lessee or any other guarantor or other Person liable for the Obligations, or
any part thereof, before or as a condition of enforcing the liability of the
Guarantor under this Guarantee or requiring payment of said Obligations by the
Guarantor hereunder, or at any time thereafter.
(d) The Guarantor agrees, to the fullest extent permitted
by law, that, without limiting the generality of this Guarantee, if an Event of
Default shall have occurred and be continuing and the Lessor (or any assignee
thereof including, without limitation, the Indenture Trustee) shall be prevented
by applicable law from exercising its remedies (or any of
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<PAGE> 4
them) under Section 15 of the Lease, the Lessor (or any assignee thereof,
including, without limitation, the Indenture Trustee) shall be, nevertheless,
entitled to receive hereunder from the Guarantor, upon demand therefor the sums
that would otherwise have been due from the Lessee under the Lease had such
remedies been able to be exercised. The Guarantor hereby unconditionally waives,
to the fullest extent permitted by law, any requirement that, as a condition
precedent to the enforcement of the obligations of the Guarantor hereunder, the
Lessee or all or any one or more of any other guarantors of any of the
Obligations be joined as parties to any proceedings for the enforcement of any
provision of this Guarantee.
2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee
shall not be deemed to create any right in any Person except a Party and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any other Person.
3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The
Guarantor waives notice of the acceptance of this Guarantee and of the
performance or nonperformance by the Lessee, demand for payment from the Lessee
or any other Person, notice of nonpayment or failure to perform on the part of
the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent
permitted by law, all other demands or notices whatsoever, other than the
request for payment hereunder and notice provided for in Section 1 hereof. The
obligations of the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until satisfaction of all Obligations hereunder
and, without limiting the generality of the foregoing, to the extent not
prohibited by applicable law, shall not be released, discharged or otherwise
affected by the existence of any claims, set-off, defense or other rights that
the Guarantor may have at any time and from time to time against any Party,
whether in connection herewith or any unrelated transactions. This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Financial Obligation is rescinded or must otherwise be
returned by any Party upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to the Lessee or otherwise, all as though such payment
had not been made. The Guarantor, by virtue of any payment or performance
hereunder to a Party, shall be subrogated to such Party's claim against the
Lessee or any other Person relating thereto; provided, however, that the
Guarantor shall not be entitled to receive payment from the Lessee in respect of
any claim against the Lessee arising from a payment by the Guarantor:
(a) while an Event of Default shall have occurred and be
continuing, in which case no such payment in respect of such a claim by
the Guarantor may be made by the Lessee; or
(b) in the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings relating to
the Lessee, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Lessee, whether or
not involving insolvency or bankruptcy proceedings, in which case the
Obligations shall be paid and performed in full before any payment in
respect of a claim by the Guarantor shall be made by or on behalf of
the Lessee.
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<PAGE> 5
4. AMENDMENTS, ETC. No amendment of or supplement to this
Guarantee, or waiver or modification of, or consent under, the terms hereof,
shall be effective unless evidenced by an instrument in writing signed by the
Guarantor and each Party against whom such amendment, supplement, waiver,
modification or consent is to be enforced.
5. PAYMENTS. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in Dollars and otherwise as provided in
the Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder directly
to the Indenture Trustee until such time as the Indenture Trustee shall give
notice to the Guarantor that the Lien of the Trust Indenture has been fully
discharged and thereafter to the Owner Trustee; provided, further, that the
Guarantor shall pay directly to the Lessor, in its individual capacity, or to
the Owner Participant or another Party, as the case may be, any amount owing to
such Person as Supplemental Rent for indemnities provided in Section 7 of the
Participation Agreement or the Tax Indemnity Agreement or otherwise not
constituting part of the Trust Indenture Estate (as such term is defined in the
Trust Indenture).
6. ASSIGNMENT OF GUARANTEE. As and to the extent provided
in the Trust Indenture, the Lessor will assign, and create a security interest
in, certain of its rights hereunder to and for the benefit of the Indenture
Trustee. From and after the execution and delivery of the Trust Indenture, and
until receipt by the Guarantor of a written notice from the Indenture Trustee to
the effect that the Trust Indenture has been fully satisfied and discharged, no
remedy or election hereunder may be exercised by the Lessor or consent given by
the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Parties as follows:
(a) It is a corporation duly organized and validly existing
in good standing pursuant to the laws of the State of Delaware. It has
all requisite corporate power and authority to own and operate its
properties, to carry on its business as presently conducted and to
enter into and perform its obligations under this Guarantee.
(b) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal,
state, municipal or other governmental department, bureau, agency or
instrumentality, and no filing, recording, publication or registration
in any public office or any other place, is now, or under existing law
in the future will be, required or necessary on its behalf to authorize
the execution, delivery and performance (other than as contemplated by
the Operative Documents in the case of the
- 5 -
<PAGE> 6
performance of the Non-Financial Obligations) by it of this Guarantee,
or for the legality, validity, binding effect or enforceability hereof.
(c) Neither the execution and delivery of this Guarantee,
the performance of its obligations hereunder, nor its consummation of
the transactions contemplated hereby, will conflict with or result in
any breach of, or constitute a default under, or result in any creation
or imposition of any Lien upon any of its property or assets under, any
applicable laws or any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it may be
bound or to which any of its property or assets may be subject, or its
Articles of Incorporation or by-laws.
(d) The execution, delivery and performance by it of this
Guarantee have been duly authorized by all necessary corporate action.
This Guarantee has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
8. JURISDICTIONAL MATTERS. The Guarantor (a) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Guarantee brought by any party, and (b) hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor in
New York City as from time to time may be designated by the Guarantor in writing
to the Parties.
9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS;
HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Guarantor and the Parties, with respect to the subject matter hereof, (b) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument, and (c)
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of, and shall be enforceable by, each of the Parties to the
fullest extent permitted by applicable laws. The headings in this Guarantee are
for purposes of reference only, and shall not limit or otherwise affect the
meanings hereof.
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<PAGE> 7
10. NOTICES. All requests, notices or other communications
hereunder shall be in writing, addressed as follows:
If to the Guarantor:
Northwest Airlines Corporation
for U.S. Mail: 5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
for Overnight courier:
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attention: Senior Vice President -- Finance and
Treasurer
Telecopy No.: (612) 726-0665
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
11. NO WAIVERS. No failure on the part of any Party to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder or under the Lease, the Participation Agreement or the
other Operative Documents, and any other agreement or instrument relating
thereto will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise
of such right or remedy or the exercise of any other right or remedy or under
the Lease, the Participation Agreement or the other Operative Documents, and any
other agreement or instrument relating thereto.
12. SURVIVAL. All representations and warranties contained
herein or made in writing by the Guarantor in connection herewith shall survive
the execution and delivery of this Guarantee regardless of any investigation
made by any Party or any other Person.
13. SEVERABILITY. To the fullest extent permitted by
applicable law, any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or any provision in any other Operative Document,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
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<PAGE> 8
14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND
SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to
any Party any and all reasonable costs and expenses (including reasonable legal
fees and expenses) incurred by such Party in enforcing, or collecting under,
this Guarantee.
16. TERMINATION. Subject to the provisions of Section 3
hereof, this Guarantee shall terminate upon the indefeasible payment and
performance in full of all of the Obligations.
17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee
relates only to the Obligations described in Section 1 and nothing in this
Guarantee shall be deemed to constitute a guarantee of payment of any of the
Secured Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
------------------------------------
Name: Joseph E. Francht, Jr.
Title: Senior Vice President-Finance
and Treasurer
Accepted as of the above date:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:
--------------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:
--------------------------------
Name:
Title:
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<PAGE> 10
SCHEDULE I
TO GUARANTEE
[NW 1996 F]
PARTIES
First Security Bank of Utah, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
[Bridge Lenders]
<PAGE> 1
PARTICIPATION AGREEMENT
[NW 1996 F]
THIS PARTICIPATION AGREEMENT [NW 1996 F] dated as of May 14,
1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to
the laws of the State of Minnesota (herein called "LESSEE"), (ii) the
institution listed on Schedule I hereto and identified therein as the "OWNER
PARTICIPANT" which executes and delivers a counterpart of this Agreement and of
the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date
referred to below, (iii) the institutions listed on Schedule I and identified
therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (herein, in such latter capacity, together with any successor
owner trustee, called the "OWNER TRUSTEE"), and (v) State Street Bank and Trust
Company, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein,
in such latter capacity together with any successor indenture trustee, called
the "INDENTURE TRUSTEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other
things, certain Boeing 757-251 aircraft, including the Aircraft which has been
delivered by the Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a
Purchase Agreement Assignment [NW 1996 F], dated as of the date hereof
(herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee
assigns to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and
Agreement [NW 1996 F] (herein called the "CONSENT AND AGREEMENT"),
substantially in the form attached to the Purchase Agreement
Assignment (herein called the "CONSENT AND AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996
F], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the
<PAGE> 2
Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE")
for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture and Security Agreement [NW 1996 F], dated as of the
date hereof (said Trust Indenture and Security Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
INDENTURE", such term to include, unless the context otherwise requires, the
Trust Supplement referred to below) pursuant to which the Owner Trustee issues
to each of the Loan Participants one or more secured certificates (herein
called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED
CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan
Participants arising from the Loan Participants' making secured loans to the
Owner Trustee to finance a portion of the Owner Trustee's purchase of the
Aircraft, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"TRUST SUPPLEMENT") covering the Aircraft, supplementing the Trust Agreement
and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1996 F], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "LEASE", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of a
Lease Supplement covering the Aircraft;
WHEREAS, certain terms are used herein as defined in Section
13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE
AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and
conditions of this Agreement, each Loan Participant agrees to finance, in part,
the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a
secured loan to the Owner Trustee (herein called a "LOAN") in the amount set
forth on Schedule II opposite the name of such Loan Participant. Each Loan
Participant shall make such Loan to the Owner Trustee on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not
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<PAGE> 3
later than 9:30 a.m., New York City time, on the Delivery Date in immediately
available funds in Dollars, the amount set forth opposite such Loan
Participant's name in Schedule II hereto.
Upon the occurrence of the above transfers by the Loan
Participants to the Owner Trustee, to evidence the obligation of the Owner
Trustee to repay the Loans together with interest thereon, the Owner Trustee
shall issue and the Indenture Trustee shall authenticate Secured Certificates
which shall be delivered simultaneously to the Loan Participants under the
Trust Indenture to evidence the obligation of the Owner Trustee to repay the
Loans together with interest thereon. The Owner Trustee agrees to pay the
Secured Certificates in installments in the amounts and on the dates provided
in the Trust Indenture together with interest thereon and all other amounts
payable with respect thereto, all as more fully provided in the Trust
Indenture.
(b) Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, by transferring to the account of the
Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789,
ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the
Delivery Date in immediately available funds in Dollars, the amount set forth
opposite the Owner Participant's name in Schedule II hereto.
(c) General Provisions. The amount of the participation
of each of the Loan Participants and the Owner Participant to be made as
provided above in the payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "COMMITMENT" for the Aircraft. In case any of the Loan
Participants or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee from the
amounts so furnished it by the Participants, the Lessor's Cost.
(d) Determination of Interest Period. The length of each
Interest Period shall be determined by Lessee on behalf of the Owner Trustee in
accordance with Section 2.02 of the Trust Indenture.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee
agrees to give each Participant, the Owner Trustee and the Indenture Trustee at
least two Business Days' telecopy
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<PAGE> 4
or other written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day, which notice shall specify the amount of Lessor's
Cost and the amount of each Participant's Commitment for the Aircraft. As to
each Participant, the making of its Commitment for the Aircraft available in
the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner
Participant agrees that its releasing the amount of its Commitment for the
Aircraft to the account of the Owner Trustee in accordance with the terms of
Section 1 shall constitute, subject to satisfaction or waiver of the conditions
set forth in Section 4(a), without further act, authorization and direction by
the Owner Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA
Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Loan Participants to finance a
portion of the Lessor's Cost for the Aircraft and to issue to the Loan
Participants Secured Certificates in aggregate principal amount equal
to the amount borrowed, pursuant hereto and to the Trust Indenture;
and
(vi) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any
Operative Document.
SECTION 4. CONDITIONS. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of
the Loan Participants and the Owner Participant to participate in the payment
of Lessor's Cost and to make available the amount of its respective Commitment
are subject to the satisfaction prior to or on the Delivery Date of the
following conditions precedent, except that paragraphs (iii), (v)(5), (x)
(insofar as it relates to representations and warranties only contained in the
Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan
Participants), (xxvi) and (xxvii) shall not be a condition precedent to the
obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it
relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a
condition precedent to the obligations of the Owner Participant:
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<PAGE> 5
(i) The Loan Participants and the Owner Participant shall
have received due notice with respect to such participation pursuant
to Section 2 hereof (or shall have waived such notice either in
writing or as provided in Section 2).
(ii) No applicable law or regulations or guidelines or
interpretations thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of such Loan Participant or the Owner
Participant, as the case may be, or their respective counsel, would
make it a violation of law or regulations or guidelines for such Loan
Participant or the Owner Participant to make its Commitment available
in accordance with Section 1 hereof or, in the case of such Loan
Participant, to acquire a Secured Certificate or to realize the
benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Loan
Participants shall have made available the amount of their Commitments
for the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner
Participant shall have made available the amount of its Commitment for
the Aircraft in accordance with Section 1 hereof.
(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 the
Documentation Agent and the Owner Participant and shall be in full
force and effect and executed counterparts shall have been delivered
to the Loan Participants and the Owner Participant, or their
respective counsel, provided that only each Loan Participant shall
receive an executed original of its respective Secured Certificate and
provided, further, that an excerpted copy of the Purchase Agreement
shall only be delivered to and retained by the Owner Trustee and the
Owner Participant (but the Indenture Trustee shall also retain an
excerpted copy of the Purchase Agreement which may be inspected by the
Documentation Agent and its counsel before the Delivery Date and
subsequent to the Delivery Date may be inspected and reviewed by the
Indenture Trustee, any Loan Participant and their respective counsel
if and only if there shall occur and be continuing an Event of
Default), the chattel paper counterpart of the Lease and the Lease
Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement
shall only be delivered to Lessee and the Owner Participant and their
respective counsel:
(1) an excerpted copy of the Purchase Agreement
(insofar as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
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<PAGE> 6
(4) a Lease Supplement covering the Aircraft
dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft
dated the Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the
Aircraft in the form agreed to by the Documentation Agent, the
Owner Participant and Lessee (herein called the "ACCEPTANCE
CERTIFICATE") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the Owner Participant Guaranty.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "OPERATIVE
DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT".
(vi) A Uniform Commercial Code financing statement or
statements covering all the security interests created by or pursuant
to the Granting Clause of the Trust Indenture that are not covered by
the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Owner Trustee, and such
financing statement or statements shall have been duly filed in all
places necessary or advisable, and any additional Uniform Commercial
Code financing statements deemed advisable by the Owner Participant or
the Documentation Agent shall have been executed and delivered by
Lessee or the Owner Trustee and duly filed.
(vii) The Loan Participants and the Owner Participant shall
have received the following, in each case in form and substance
satisfactory to the Documentation Agent and the Owner Participant:
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<PAGE> 7
(1) a certified copy of the Certificate of
Incorporation and By-Laws of Lessee and a copy of resolutions
of the board of directors of Lessee, certified by a Vice
President, the Secretary or an Assistant Secretary of Lessee,
duly authorizing the sale of the Aircraft and the lease by
Lessee of the Aircraft under the Lease and the execution,
delivery and performance by Lessee of this Agreement, the Bill
of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement
covering the Aircraft, the Purchase Agreement Assignment, the
Tax Indemnity Agreement and each other document required to be
executed and delivered by Lessee on or before the Delivery
Date in accordance with the provisions hereof and thereof, and
a certified copy of the Certificate of Incorporation and
By-Laws of the Guarantor and a copy of resolutions of the
Board of Directors of the Guarantor, certified by a Vice
President, the Secretary or an Assistant Secretary of the
Guarantor, duly authorizing the execution, delivery and
performance by the Guarantor of the Guarantee;
(2) such other documents and evidence with
respect to Lessee, the Guarantor, the Manufacturer, the Owner
Trustee, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, and the Loan Participants as
the Loan Participants or the Owner Participant, or the
respective counsel for the Loan Participants or the Owner
Participant, may reasonably request in order to establish the
authority of such parties to consummate the transactions
contemplated by this Agreement and the taking of all corporate
proceedings in connection therewith; and
(3) a certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the
Purchase Agreement Assignment, the Lease, the Lease Supplement
covering the Aircraft and any other documents to be executed
on behalf of Lessee in connection with the transactions
contemplated hereby and as to the signatures of such person or
persons, and a certificate of the Guarantor as to the person
or persons authorized to execute and deliver the Guarantee and
as to the signatures of such person or persons.
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the
Delivery Date.
(ix) On the Delivery Date the following statements shall
be true, and the Documentation Agent and the Owner Participant shall
have received evidence satisfactory to it to the effect that:
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<PAGE> 8
(1) the Owner Trustee has good title (subject to
filing and recording the FAA Bill of Sale with the Federal
Aviation Administration) to the Aircraft on such Delivery
Date, free and clear of Liens other than the rights of Lessee
under the Lease and Lease Supplement covering the Aircraft,
the mortgage and security interests created by the Trust
Indenture, the rights of the Owner Participant under the Trust
Agreement and the Trust Supplement, and Liens permitted by
clause (v) of Section 6 of the Lease;
(2) the Aircraft has been duly certified by the
Federal Aviation Administration (or there shall have been
received adequate assurances from the Federal Aviation
Administration that the certification will be issued as soon
as the registration of the Aircraft is complete) as to type
and airworthiness in accordance with the terms of the Lease;
(3) the FAA Bill of Sale, the Lease, the Lease
Supplement, the Trust Indenture and the Trust Supplement
covering the Aircraft shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Federal Aviation Administration, and
the Trust Agreement shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation
Administration; and
(4) application for registration of the Aircraft
in the name of the Owner Trustee has been duly made with the
Federal Aviation Administration.
(x) On the Delivery Date, (A) the representations and
warranties of Lessee, the Owner Participant and the Owner Trustee
contained in Sections 7 and 8 of this Agreement and in the Tax
Indemnity Agreement shall be true and accurate as though made on and
as of such date except to the extent that such representations and
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, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) an Event of Default.
(xi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant and the Owner Trustee,
and reasonably satisfactory as to scope and substance to the
Documentation Agent and the Owner Participant, from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, as to
New York and certain federal law matters, and Lessee's and the
Guarantor's in-house or other counsel, as to Minnesota and certain
federal law matters and the Delaware General Corporation Law, to the
collective effect that:
(1) Lessee is a corporation duly organized and
validly existing pursuant to the laws of the State of
Minnesota and has the corporate power and authority to carry
on its business as now conducted and to enter into and
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<PAGE> 9
perform its obligations under the Lessee Documents. Lessee is
a Certificated Air Carrier. The Guarantor is a corporation
duly organized and validly existing pursuant to the laws of
the State of Delaware and has the corporate power and
authority to enter into and perform its obligations under the
Guarantee;
(2) the execution, delivery and performance of
the Lessee Documents by Lessee and of the Guarantee by the
Guarantor have been duly authorized by all necessary corporate
action on the part of Lessee and the Guarantor, as the case
may be, do not require any approval of stockholders of Lessee
or the Guarantor, as the case may be, or, to the knowledge of
such counsel after due inquiry, any approval or consent of any
trustee or holders of any indebtedness or obligations of
Lessee or the Guarantor, as the case may be (or that any such
approval or consent as is required has been obtained), and
neither the execution and delivery of any thereof by Lessee or
the Guarantor, as the case may be, nor the performance by
Lessee or the Guarantor, as the case may be, of its respective
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on
Lessee or the Guarantor, as the case may be, or (B) to the
knowledge of such counsel after due inquiry, contravenes or
results in any breach of, or constitutes any default under, or
results in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee or the Guarantor, as the
case may be, under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, or any other agreement or instrument, corporate
charter, by-law or permit issued by any Minnesota or United
States governmental authority to which Lessee or the
Guarantor, as the case may be, is a party or by which Lessee
or the Guarantor, as the case may be, or its properties may be
bound or affected;
(3) neither the execution and delivery by Lessee
of the Lessee Documents or by the Guarantor of the Guarantee
nor the performance by Lessee or the Guarantor of their
respective obligations thereunder requires the consent or
approval of, or the giving of notice to, or the registration
with, or the taking of any other action in respect of, any
Federal or state governmental authority in the United States,
except for (A) the registration of the Aircraft (including the
placement on board of the owner's copy of the application for
registration of the Aircraft and, if necessary, a flying time
wire), recordations and other actions referred to in paragraph
5 below and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the
Lessee Documents or the Guarantee after the Delivery Date;
(4) the Guarantee has been duly entered into and
delivered by the Guarantor, the Purchase Agreement (insofar as
it relates to the Aircraft) has been duly entered into and
delivered by Lessee, and each of the other Lessee Documents
has been duly entered into and delivered by Lessee and each of
such
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<PAGE> 10
other Lessee Documents and the Guarantee constitutes the
legal, valid and binding obligations of Lessee or the
Guarantor, as the case may be, enforceable against Lessee or
the Guarantor, as the case may be, in accordance with its
respective terms, except as limited by (A) general principles
of equity, (B) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors or lessors generally, (C)
applicable laws which may affect the remedies provided in the
Lease, which laws, however, do not in the opinion of such
counsel make the remedies provided in the Lease inadequate for
the practical realization of the benefits provided thereby,
but no opinion is expressed as to the amount or priority of
any recovery under any particular circumstances and, in
particular, no opinion is expressed as to the effect on such
remedies of Section 1-201(37) of the Uniform Commercial Code,
as in effect in any jurisdiction, and (D) in the case of
indemnity provisions contained in such documents, as limited
by public policy considerations;
(5) subject to the registration of the Aircraft
with the Federal Aviation Administration in the name of the
Owner Trustee, and assuming the due and timely filing for
recordation in accordance with the provisions of the Federal
Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with
the Lease Supplement covering the Aircraft, the Trust
Indenture and the Trust Supplement attached thereto and made a
part thereof and (C) the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof, with
respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the
United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document
(including any financing statement with respect to the Lease
under Article 9 of the Uniform Commercial Code of Minnesota or
Utah), is necessary in any applicable jurisdiction within the
United States in order (x) to establish the Owner Trustee's
title to such portion of the Aircraft as against Lessee or any
third parties or (y) to create and perfect the Indenture
Trustee's security interest in such portion of the Aircraft as
against the Owner Trustee or any third parties. With respect
to such portion of the Aircraft, if any, as may not be deemed
to constitute an "aircraft" or "aircraft engine" as defined in
the Federal Aviation Act, except for the filing of financing
statements in appropriate filing offices in the States of
Minnesota and Utah and such other states as may be specified
in such counsel's opinion, and for the filings of periodic
continuation statements with respect to such filings as and
when required, (x) under the federal laws of the United States
and the laws of the State of New York no filing or recording of
any document (including any financing statement) is necessary
under Article 9 of the Uniform Commercial Code in order to
establish the Owner Trustee's title to such portion of the
Aircraft as against Lessee and any third parties in any
applicable jurisdiction within the United States, and (y)
under the federal laws of the United States and
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<PAGE> 11
the laws of the State of New York no filing or recording of
any document (including any financing statement) is necessary
or advisable under Article 9 of the Uniform Commercial Code
in order to create or perfect the Indenture Trustee's security
interest in such portion of the Aircraft as against the Owner
Trustee and any third parties in any applicable jurisdiction
within the United States; and
(6) there are no legal or governmental
proceedings pending or, to the best knowledge of such in-house
counsel, threatened to which Lessee or Guarantor or any of
their respective subsidiaries is a party or to which any of
the properties of Lessee or Guarantor or any of their
respective subsidiaries is subject other than those
proceedings summarized in the Guarantor's publicly filed
annual, quarterly and other reports filed with the Securities
and Exchange Commission, and proceedings which such in-house
counsel believes would not reasonably be expected to have a
material adverse effect on Lessee and its subsidiaries, taken
as a whole, or on the power or ability of Lessee to perform
its obligations under the Lessee Documents.
The opinion contemplated by this paragraph (xi) shall be to such
further effect with respect to such other matters as the Documentation
Agent or the Owner Participant may reasonably request. Such opinion
with respect to the matters specified in this paragraph (xi) may rely
exclusively (A) upon the opinion of special counsel in Oklahoma City,
Oklahoma, referred to in paragraph (xv) of this Section 4(a) with
respect to the matters stated therein, and (B) upon the opinion of
Ray, Quinney & Nebeker with respect to the opinion in paragraph (5)
above insofar as it relates to the laws of the State of Utah and (C)
upon the representations and warranties set forth herein, including,
without limitation, in Section 8 hereof, with respect to matters of
fact, and may state that no opinion is expressed as to laws other than
laws of the State of New York (in the case of such special counsel's
opinion), the State of Minnesota and the Delaware General Corporation
Law (in the case of Lessee's in-house or other counsel's opinion) and
the Federal laws of the United States. Such counsel may assume that,
except for the filings and recordations contemplated herein, there are
no filings or recordations with respect to the Aircraft, the Lease,
the Lease Supplement covering the Aircraft, the Trust Agreement, the
Trust Supplement or the Trust Indenture with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of Minnesota, the Secretary of State of Utah or in
any other filing office in the States of Minnesota or Utah, or in such
other filing offices in such other jurisdictions as shall be
identified in such counsel's opinion.
(xii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from a counsel to the Manufacturer, with
respect to the
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<PAGE> 12
Manufacturer Documents and such other matters as such parties may
reasonably request.
(xiii) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel
for the Owner Trustee, to the effect that:
(1) First Security Bank of Utah, National
Association is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States, is a Citizen of the United States and has under
the laws of the State of Utah and federal banking law the
power, authority and legal right to execute, deliver and carry
out in its capacity as Owner Trustee or in its individual
capacity, as the case may be, the terms of the Owner Trustee
Documents, including the Secured Certificates;
(2) each of the Owner Trustee Documents has been
duly authorized, executed and delivered by First Security Bank
of Utah, National Association, in its individual capacity, as
Owner Trustee, or both, as the case may be, and each of the
Owner Trustee Documents constitutes the legal, valid and
binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, enforceable against First Security
Bank of Utah, National Association, in its individual
capacity, as Owner Trustee, or both, as the case may be, in
accordance with its respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations, and except that certain of the remedial
provisions in the Lease and the Trust Indenture may be limited
or rendered unenforceable by applicable laws, which laws,
however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(3) the execution, delivery and performance by
the Owner Trustee and by First Security Bank of Utah, National
Association, in its individual capacity, or both, as the case
may be, of the Owner Trustee Documents and the consummation of
the transactions by the Owner Trustee and by First Security
Bank of Utah, National Association in its individual capacity
contemplated thereby are not and will not be in violation of
the articles of association or By-Laws of First Security Bank
of Utah, National Association or of any indenture, mortgage,
credit agreement, license or other agreement or instrument
known to
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<PAGE> 13
such counsel after due inquiry to which First Security Bank of
Utah, National Association in its individual capacity or as
the Owner Trustee is a party or by which it is bound, or of
any Federal or Utah law, governmental rule or regulation
applicable to First Security Bank of Utah, National
Association in its individual capacity or as the Owner Trustee
or any judgment or order applicable to it and known to such
counsel after due inquiry;
(4) neither the execution and delivery by the
Owner Trustee and, where appropriate, by First Security Bank
of Utah, National Association in its individual capacity, or
both, as the case may be, of the Owner Trustee's Documents nor
the consummation of any of the transactions by the Owner
Trustee, by First Security Bank of Utah, National Association
in its individual capacity, or both, as the case may be,
contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking
of any other action with respect to, any governmental
authority or agency under any existing Federal law governing
the banking and trust powers of First Security Bank of Utah,
National Association or Utah law (except for filings pursuant
to the Uniform Commercial Code, and except for compliance with
requirements of the Federal Aviation Act as to which such
counsel may express no opinion);
(5) the Trust Agreement, as supplemented by the
Trust Supplement, duly creates for the benefit of the Owner
Participant the trust interest in the Trust Estate which the
Trust Agreement by its terms purports to create;
(6) assuming that Utah law were to govern the
perfection of the security interests in the Trust Indenture
Estate under the Trust Indenture, except for (i) the Indenture
Trustee's taking of possession of the original counterparts of
the Lease and the Lease Supplement covering the Aircraft
(insofar as the Lease and the Lease Supplement covering the
Aircraft may constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in Utah)) and all
monies and securities (including instruments) required to be
deposited with the Indenture Trustee, and (ii) the filing of
Uniform Commercial Code financing statements with the office
of the Division of Corporations and Commercial Code of the
State of Utah with respect to the security interests created
in the Trust Indenture Estate under the Trust Indenture,
naming the Owner Trustee as debtor and the Indenture Trustee
as secured party, which filing has been duly effected, no
other filing or recording or refiling or rerecording is
necessary in the State of Utah to create, perfect or maintain
the perfected status of such security interest (except for the
timely filing of continuation statements in respect of such
financing statements);
(7) assuming that the Operative Documents were
negotiated to a substantial degree in the State of New York
and that the closing of a substantial portion of the
transactions contemplated by the Operative Documents occurred
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<PAGE> 14
in the State of New York, the choice of New York law to govern
the Participation Agreement, the Lease, and each other
Operative Document (other than the Trust Agreement) to which
the Owner Trustee or First Security Bank of Utah, National
Association in its individual capacity, or both, is a party
is, under the laws of the State of Utah, a valid choice of law
and should, in a properly presented case, be honored by the
courts of the State of Utah;
(8) the Owner Trustee has received from Lessee
such title to the Aircraft as Lessee had immediately prior to
the conveyance to the Owner Trustee, subject to the rights of
the Owner Trustee and Lessee under the Lease and the security
interest created pursuant to the Trust Indenture and the Trust
Supplement;
(9) no taxes, fees or other charges, except taxes
imposed on fees payable to the Owner Trustee, will be imposed
by Salt Lake City or the State of Utah or any political
subdivision or taxing authority thereof on or with respect to
the execution, delivery or performance of any of the Operative
Documents and the trust created pursuant to the Trust
Agreement will not be subject to any such taxes, fees or other
charges on, based on or measured by the net income of the
Trust Estate (as distinguished from the net income of the
Owner Participant) solely by reason of the Owner Trustee's
location in Salt Lake City or the State of Utah (assuming for
purposes of this opinion that the Owner Participant, the Owner
Trustee and the Trust Estate would not be subject to any such
tax, fee or other charge if the Owner Trustee performed its
duties under the Trust Agreement and the Trust Indenture from
an office located outside Utah); and
(10) there are no pending or, to the knowledge of
such counsel after due inquiry, threatened proceedings against
or affecting the Owner Trustee before any court or
administrative agency, individually or in the aggregate,
which, if determined adversely to it, would materially
adversely affect the power or ability of the Owner Trustee to
perform its obligations under the Owner Trustee Documents.
Such opinion shall be to such further effect with respect to such
other matters incident to the matters covered thereby as the
Documentation Agent, the Owner Participant, the Indenture Trustee or
Lessee may reasonably request. Such opinion may state that (A) no
opinion is expressed as to laws other than the laws of the State of
Utah, the Federal laws of the United States governing the banking and
trust powers of First Security Bank of Utah, National Association, and
the Federal Aviation Act as it relates to paragraph (1) and (B) no
opinion is expressed as to the priority of security interests or as to
title to any part of the Trust Estate. Such opinion may assume (M)
the due authentication of the Secured Certificates by the Indenture
Trustee, (N) that the Operative Documents (other than the Trust
Agreement) are legal, valid and binding under the laws of the State of
New York and (O) the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and of the other Operative
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<PAGE> 15
Documents by each of the parties thereto other than First Security
Bank of Utah, National Association in its individual capacity and as
the Owner Trustee.
(xiv) The Loan Participants shall have received a favorable
opinion addressed to the Loan Participants, the Indenture Trustee, the
Owner Trustee and Lessee, and reasonably satisfactory as to scope and
substance to the Documentation Agent, the Indenture Trustee, the Owner
Trustee and Lessee, from Dewey Ballantine, special counsel for the
Owner Participant and the Owner Participant Guarantor, and the Owner
Participant's in-house counsel, to the collective effect that:
(1) the Owner Participant is a duly incorporated
and validly existing corporation in good standing under the
laws of the State of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms of the
Owner Participant Documents; the Owner Participant Guarantor
is a duly incorporated and validly existing corporation in
good standing under the laws of the State of Delaware and has
the corporate power and authority to execute, deliver and
carry out the terms of the Owner Participant Guaranty;
(2) the Owner Participant Documents have been
duly authorized, executed and delivered by the Owner
Participant and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute
legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with
their respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and, in the case of indemnity
provisions contained herein and therein, as limited by public
policy considerations; the Owner Participant Guaranty has been
duly authorized, executed and delivered by the Owner
Participant Guarantor and constitutes the legal, valid and
binding obligation of the Owner Participant Guarantor,
enforceable against the Owner Participant Guarantor in
accordance with its terms, except as limited by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws
affecting the rights of creditors generally;
(3) neither the execution and delivery by the
Owner Participant of the Owner Participant Documents or by the
Owner Participant Guarantor of the Owner Participant Guaranty
nor the consummation of any of the transactions by the Owner
Participant or the Owner Participant Guarantor contemplated
thereby requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any
other action with respect to, any governmental authority or
agency of the United States, the State of Delaware or the
State in
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which the principal office of the Owner Participant or the
Owner Participant Guarantor is located (or any governmental
subdivision of any thereof) (except as shall have been duly
obtained or given, specifying the same);
(4) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the other parties,
if any, thereto (other than the Owner Participant in the case
of this Agreement), and the due authentication of the Secured
Certificates by the Indenture Trustee, the Owner Trustee
Documents (other than the Trust Agreement) constitute legal,
valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
respective terms, except as limited by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and except that certain of the
remedial provisions in the Lease and the Trust Indenture may
be limited or rendered unenforceable by applicable laws, which
laws, however, do not in the opinion of such counsel make the
remedies provided in such document inadequate for the
practical realization of the benefits provided thereby;
(5) assuming the due authorization, execution and
delivery thereof by the Owner Trustee and the Indenture
Trustee as aforesaid, the Trust Indenture duly creates for the
benefit of the Indenture Trustee the security interests which
the Trust Indenture purports to create and the Indenture
Trustee is entitled to the benefits and security afforded by
the Trust Indenture;
(6) the execution, delivery and performance of
the Owner Participant Documents by the Owner Participant does
not require any approval of stockholders of the Owner
Participant, or, to the knowledge of such counsel after due
inquiry, any approval or consent of any trustee or holders of
any indebtedness or obligations of the Owner Participant (or
that any such approval or consent as is required has been
obtained), and neither the execution and delivery of the Owner
Participant Documents by the Owner Participant nor the
performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or
regulation or, to the knowledge of such counsel after due
inquiry, judgment or order applicable to or binding on the
Owner Participant or (B) to the knowledge of such counsel
after due inquiry, contravenes or results in any breach of, or
constitutes any default under, or results in the creation of
any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, or
any other agreement or instrument, corporate charter or by-law
or permit issued by any New York, Delaware or United States
governmental authority to which the Owner Participant is a
party or by which it or its properties may be bound or
affected; the execution,
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<PAGE> 17
delivery and performance of the Owner Participant Guaranty by
the Owner Participant Guarantor does not require any approval
of stockholders of the Owner Participant Guarantor, or, to the
knowledge of such counsel after due inquiry, any approval or
consent of any trustee or holders of any indebtedness or
obligations of the Owner Participant Guarantor (or that any
such approval or consent as is required has been obtained),
and neither the execution and delivery of the Owner
Participant Guaranty by the Owner Participant Guarantor, nor
the performance by the Owner Participant Guarantor of its
obligations thereunder (A) contravenes any law, governmental
rule or regulation or, to the knowledge of such counsel after
due inquiry, judgment or order applicable to or binding on the
Owner Participant Guarantor or (B) to the knowledge of such
counsel after due inquiry, contravenes or results in any
breach of, or constitutes any default under, or results in the
creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner
Participant Guarantor under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other agreement or instrument,
corporate charter or by-law or permit issued by any New York,
Delaware or United States governmental authority to which the
Owner Participant Guarantor is a party or by which it or its
properties may be bound or affected; and
(7) there are no pending or, to the best
knowledge of such counsel, threatened actions or proceedings
against or affecting the Owner Participant before any court or
administrative agency individually or in the aggregate which,
if determined adversely to the Owner Participant, would have a
material adverse effect on the Owner Participant or the
ability of the Owner Participant to perform its obligations
under the Owner Participant Documents; there are no pending
or, to the best knowledge of such counsel, threatened actions
or proceedings against or affecting the Owner Participant
Guarantor before any court or administrative agency
individually or in the aggregate which, if determined
adversely to the Owner Participant Guarantor, would have a
material adverse effect on the Owner Participant Guarantor or
the ability of the Owner Participant Guarantor to perform its
obligations under the Owner Participant Guaranty;
and to such further effect with respect to such other matters or
documents relating to the Owner Participant's or the Owner Participant
Guarantor's obligations in connection with this Agreement as the
Documentation Agent, the Indenture Trustee, the Owner Trustee or
Lessee may reasonably request. Such opinion may rely upon the
representations and warranties set forth herein, including, without
limitation, in Section 8 hereof, as to matters of fact. Such opinion
may state that (M) no opinion is expressed as to laws other than the
General Corporation Law of the State of Delaware, the laws of the
State of New York and the Federal laws of the United States, and (N)
no opinion is expressed as to the priority of security interests or as
to title to any part of the Trust Estate.
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<PAGE> 18
(xv) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Indenture Trustee, the Owner Participant, the Owner Trustee and
Lessee, and reasonably satisfactory as to scope and substance to the
Documentation Agent, the Indenture Trustee, the Owner Participant, the
Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel
in Oklahoma City, Oklahoma, to the effect that:
(1) the FAA Bill of Sale, the Lease with the
Lease Supplement covering the Aircraft, the Trust Indenture
and the Trust Supplement attached thereto and the Trust
Indenture with the Trust Supplement attached thereto are in
due form for recording by and have been duly filed for
recordation with the Federal Aviation Administration in
accordance with the provisions of Section 44107 of Title 49 of
the United States Code;
(2) proper application for registration of the
Aircraft in the name of the Owner Trustee together with the
affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations and the Trust Agreement have been duly
filed with the Federal Aviation Administration in accordance
with the Federal Aviation Act, and such counsel is of the
opinion that the Federal Aviation Administration will issue a
Certificate of Aircraft Registration (AC Form 8050-3) in
response to said application;
(3) the Owner Trustee is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of
all Liens, except the security interests created by the Trust
Indenture and such other Liens as are permitted by the Lease
or this Agreement;
(4) the Aircraft is eligible for registration in
the name of the Owner Trustee and will be duly registered in
due course in the name of the Owner Trustee pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(5) the Trust Indenture as supplemented by the
Trust Supplement creates a duly and validly perfected first
priority security interest in the Aircraft and a duly
perfected assignment of all the right, title and interest of
the Owner Trustee in, to and under the Lease as supplemented
by the Lease Supplement (insofar as such security interest
affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), subject
only to the Lease and to Liens permitted by the Lease and the
Trust Indenture, it being understood that no opinion need be
expressed as to the validity or enforceability of such
security interest under local law or as against third parties
in respect of the Aircraft when the same is outside the United
States;
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<PAGE> 19
(6) none of the Trust Indenture, the Trust
Agreement, the Trust Supplement, the Lease or the Lease
Supplement is required to be filed or recorded in any other
place within the United States in order to perfect the
security interest in the Aircraft and the Lease as
supplemented by the Lease Supplement (insofar as such security
interest affects an interest covered by the recording system
established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code), under
the applicable laws of any jurisdiction within the United
States;
(7) no authorization, approval, consent, license
or order of, or registration with, or giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected; and
(8) no other registration of the Aircraft and no
filings or recordings (other than the filings and recordings
with the FAA referred to above) are necessary to provide
constructive notice to third parties in any jurisdiction
within the United States of the Owner Trustee's title to the
Aircraft or the beneficial interest of the Owner Participant
in the Aircraft.
Such opinion may state that no opinion is expressed as to laws other
than the Federal laws of the United States. Said opinion may also
contain a statement to the effect that such opinion is limited to the
records maintained by the Federal Aviation Administration Aircraft
Registry and does not cover liens that are perfected without the
filing of notice thereof with the Federal Aviation Administration,
such as Federal tax liens, liens arising under Section 1368(a) of
Title 29 of the United States Code and possessory artisans' liens, and
is subject to the accuracy of FAA personnel in the filing, indexing
and recording of instruments filed with the FAA and in the search for
encumbrance cross-reference index cards for the Engines. Said opinion
may also rely on the opinion obtained by such counsel from counsel for
the Aeronautical Center of the FAA, satisfactory in form and scope to
such counsel, and on past practice of the FAA which is consistent with
such Aeronautical Center counsel's opinion.
(xvi) The Loan Participants and the Owner Participant shall
have received a favorable opinion addressed to the Loan Participants,
the Owner Participant, the Owner Trustee and Lessee, and reasonably
satisfactory as to scope and substance to the Documentation Agent, the
Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee, to the effect
that:
(1) State Street Bank and Trust Company is a
Massachusetts trust company, duly organized and validly
existing in good standing under the laws of the Commonwealth
of Massachusetts and has the full corporate power,
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<PAGE> 20
authority and legal right to enter into and perform its
obligations under the Indenture Trustee Documents and, in its
capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(2) the execution, delivery and performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby and compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with the terms thereof including,
without limitation, the authentication of the Secured
Certificates to be delivered on the Delivery Date, have been
duly authorized by all necessary corporate action on the part
of State Street Bank and Trust Company, and neither the
execution and delivery thereof nor the consummation by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, as the case may be, of the transactions
contemplated thereby nor compliance by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, with any of the terms and
provisions thereof (i) does or will contravene any law or
governmental rule or regulation of the United States governing
the banking or trust powers of State Street Bank and Trust
Company or the Commonwealth of Massachusetts or any order or
judgment known to such counsel and applicable to or binding on
State Street Bank and Trust Company, or (ii) does or will
contravene or result in any breach of, or constitute any
default under, the charter documents or By-Laws of State
Street Bank and Trust Company or the provisions of any
indenture, mortgage, contract or other agreement, in each case
known to such counsel, to which State Street Bank and Trust
Company is a party or by which it or any of its properties is
or may be bound or affected;
(3) neither the execution and delivery by State
Street Bank and Trust Company, in its individual capacity or
as Indenture Trustee, of the Indenture Trustee Documents or
the certificates of authentication on the Secured Certificates
to be delivered on the Delivery Date, nor the performance by
State Street Bank and Trust Company, in its individual
capacity or as Indenture Trustee, as the case may be, of any
of the transactions contemplated thereby requires or required
the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document
with, or the taking of any other action in respect of, any
Federal or Massachusetts governmental authority or agency
governing the banking or trust powers of State Street Bank and
Trust Company or under any Massachusetts law;
(4) each of the Indenture Trustee Documents has
been duly executed and delivered by State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, and, assuming that each
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<PAGE> 21
such agreement is the legal, valid and binding obligation of
each other party thereto, is the legal, valid and binding
obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street Bank and Trust Company,
in its individual capacity or as Indenture Trustee, in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the
enforcement of creditors' rights;
(5) the Secured Certificates to be issued and
dated the Delivery Date have been duly authenticated and
delivered by the Indenture Trustee pursuant to the terms of
the Indenture Trustee Documents;
(6) to the best knowledge of such counsel, there
are no pending or threatened actions or proceedings against or
affecting State Street Bank and Trust Company before any court
or administrative agency or arbitration board or tribunal
which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability
of State Street Bank and Trust Company to perform its
obligations under the Indenture Trustee Documents; and
(7) there are no taxes, fees or other
governmental charges ("TAXES") payable under the laws of the
Commonwealth of Massachusetts with respect to the execution of
and delivery by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may
be, of any of the Indenture Trustee Documents (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would not have been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts. Neither State Street Bank and
Trust Company, in its individual capacity or as Indenture
Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trust created by the Trust Agreement will, as
a result of the transactions contemplated thereby, be subject
to any taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for
taxes on any fees payable to State Street Bank and Trust
Company in its individual capacity) which would have not been
imposed if State Street Bank and Trust Company did not have
its principal place of business in Massachusetts or did not
perform its administrative duties under the Indenture Trustee
Documents in Massachusetts, and there are no taxes under the
laws of the Commonwealth of Massachusetts or any political
subdivision thereof (except for taxes on any fees payable to
State Street Bank and Trust Company in its individual
capacity) upon or with respect to the Aircraft or any Engine
or any part of any interest therein, or the purchase,
ownership, delivery, lease, sublease, possession, presence,
use, operation, condition, storage, maintenance,
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<PAGE> 22
modification, alteration, repair, sale, return, transfer or
other disposition of the Aircraft or any Engine which would
not have been imposed if State Street Bank and Trust Company
did not have its principal place of business in Massachusetts
or did not perform its administrative duties under the
Indenture Trustee Documents in Massachusetts;
and to such further effect with respect to such other matters incident
to the matters covered thereby as the Documentation Agent, the Owner
Participant, the Owner Trustee and Lessee may reasonably request.
Such opinion may state that no opinion is expressed as to laws other
than the internal substantive laws of the Commonwealth of
Massachusetts and the Federal laws of the United States. Such opinion
may further state that with respect to paragraph (4) in connection
with the opinion relating to legality, validity and binding effect of
the documents there referred to, such counsel has assumed that the
laws of the jurisdictions whose laws govern such documents are not
materially different from the internal substantive laws of the
Commonwealth of Massachusetts.
(xvii) The Loan Participants shall have received from
Vedder, Price, Kaufman & Kammholz, special counsel for the Loan
Participants, a favorable opinion satisfactory in substance and form
to the Documentation Agent, as to such matters incident to the
transactions contemplated hereby as the Documentation Agent may
reasonably request.
(xviii) The Loan Participants and the Owner Participant shall
have received a certificate signed by the President, any Executive
Vice President, any Senior Vice President or any Vice President of
Lessee, dated the Delivery Date, addressed to the Loan Participants
and the Owner Participant and certifying as to the matters stated in
paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and
(xxii) of this Section 4(a). Copies of the orders, permits, waivers,
authorizations, exemptions and approvals referred to in Section
4(a)(viii) shall have been furnished to the Loan Participants and the
Owner Participant.
(xix) The Owner Participant and the Loan Participants
shall, by making their Commitments available as provided in Section
1(b) of this Agreement, be deemed to have reaffirmed the
representations and warranties made by them in Section 8 of this
Agreement.
(xx) The Owner Participant shall have received an opinion,
in form and substance satisfactory to the Owner Participant, from
Aeroeconomics, Inc., independent aircraft appraisers, or such other
recognized aircraft appraiser, to the effect, among other relevant
matters, that (A) the Aircraft will have, at the end of the third
Fixed Renewal Term, (i) at least 20% of its original economic life
remaining and (ii) a fair market value of at least 20% of Lessor's
Cost (without taking into account any increase or decrease for
inflation or deflation during the Interim Term, the Basic Term and the
Fixed Renewal Terms or the terms of any purchase option provided in
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<PAGE> 23
the Lease) and taking into account any costs to the Owner Trustee or
the Owner Participant of removal and delivery of the Aircraft to the
Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair
market value of the Aircraft on the Delivery Date is equal to Lessor's
Cost; and (C) it will be commercially feasible for a third party to
utilize the Aircraft at the end of the third Fixed Renewal Term.
(xxi) The Loan Participants and Owner Participant shall
have received an independent insurance broker's report, in form and
substance satisfactory to the Documentation Agent and the Owner
Participant, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date it shall be true that no Event
of Loss (or event which with the passage of time would become an Event
of Loss) with respect to the Airframe or any Engine has occurred.
(xxiii) Lessor's Cost for the Aircraft shall be $50,000,000.
(xxiv) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxv) The representations and warranties of the Indenture
Trustee and the Loan Participants contained in Section 8 shall be true
and accurate as of the Delivery Date as though made on and as of such
date except to the extent that such representations and warranties
relate solely to an earlier date (in which event such representations
and warranties shall have been true and accurate on and as of such
earlier date) and each Participant shall have received a certificate
signed by the Chairman of the Board, the President, any Vice President
or any Assistant Vice President of the Indenture Trustee addressed to
such Participant and certifying as to the foregoing matters with
respect to the Indenture Trustee.
(xxvi) The Owner Participant shall have received from Dewey
Ballantine, special counsel to the Owner Participant, a favorable
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxvii) In the opinion of the Owner Participant and its
special counsel, there shall have been, since the date hereof, no
amendment, modification, addition, or change in or to the provisions
of the Internal Revenue Code of 1986, as amended through the date
hereof, and the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States, all as in effect on the date
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<PAGE> 24
hereof, the effect of which might preclude the Owner Participant from
obtaining any of the income tax benefits and consequences assumed to
be available to the Owner Participant as set forth in Section 2 of the
Tax Indemnity Agreement.
(xxviii) The Loan Participants and the Owner Participant
shall have received a favorable opinion addressed to the Loan
Participants and the Owner Participant, and reasonably satisfactory as
to scope and substance to the Documentation Agent and the Owner
Participant, from Cadwalader, Wickersham & Taft, special counsel for
Lessee, which opinion shall state (with customary assumptions and
qualifications) that the Owner Trustee, as lessor under the Lease, and
the Indenture Trustee, as assignee of the Owner Trustee's rights under
the Lease pursuant to the Trust Indenture, would be entitled to the
benefits of 11 U.S.C. Section 1110 with respect to the Aircraft.
(xxix) The Loan Participants shall have received an
opinion, in form and substance reasonably satisfactory to the
Documentation Agent, from BK Associates, Inc., independent aircraft
appraisers, to the effect that the fair market value of the Aircraft
on the Delivery Date is equal to Lessor's Cost.
(xxx) Lessee shall have executed and delivered to the
Owner Participant a letter from the Owner Participant to Lessee
relating to Lessee's weighted average cost of capital.
Promptly upon the registration of the Aircraft and the
recording of the Trust Indenture, the Lease, the Lease Supplement covering the
Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to
the due and valid registration of the Aircraft in the name of the Owner
Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such
Lease Supplement, such Trust Supplement, the Lease and the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee.
It is agreed that the obligations of Lessee (A) to sell the Aircraft to the
Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are
all subject to the fulfillment to the satisfaction of Lessee prior to or on the
Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken
on or prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers,
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<PAGE> 25
exemptions, authorizations and approvals shall be in full force and
effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii),
4(a)(iii) and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall
have been duly authorized, executed and delivered by the respective
party or parties thereto (other than Lessee and the Guarantor) in the
manner specified in Section 4(a)(v), shall each be satisfactory in
form and substance to Lessee, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof (other than
the Secured Certificates) shall have been delivered to Lessee or its
special counsel.
(iv) Lessee shall have received a copy of the resolutions
or other instruments satisfactory to Lessee of the Board of Directors
of the Owner Participant, or other evidence of authority satisfactory
to Lessee, certified as of the Delivery Date by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing or
evidencing authority for the execution, delivery and performance by
the Owner Participant of all of the Owner Participant Documents, a
copy of the resolutions or other instruments satisfactory to Lessee of
the Board of Directors of the Owner Participant Guarantor, certified
as of the Delivery Date by the Secretary or Assistant Secretary of the
Owner Participant Guarantor, duly authorizing the execution, delivery
and performance by the Owner Participant Guarantor of the Owner
Participant Guaranty, and a copy of the general authorizing
resolutions of the boards of directors of the Indenture Trustee and
the Owner Trustee, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Indenture Trustee and the Owner
Trustee, respectively, which authorize the execution, delivery and
performance by the Indenture Trustee of the Indenture Trustee
Documents and the Secured Certificates and by the Owner Trustee of the
Owner Trustee Documents, together with such other documents and
evidence with respect to the Indenture Trustee, the Owner Participant,
the Owner Participant Guarantor and the Owner Trustee as Lessee or its
special counsel may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the
taking of all corporate proceedings in connection therewith and
compliance with the conditions herein set forth.
(v) The representations and warranties of the Loan
Participants, the Indenture Trustee, the Owner Participant and the
Owner Trustee, contained in Section 8 hereof shall be true and
accurate as of the Delivery Date as though made on and as of such date
except to the extent that such representations and warranties relate
solely to an earlier date (in which event such representations and
warranties shall have been true and accurate on and as of such earlier
date) and Lessee shall have received a certificate signed by the
Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Indenture Trustee, the Owner Participant and the Owner Trustee,
respectively, addressed to Lessee and
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certifying as to the foregoing matters with respect to the Indenture
Trustee, the Owner Participant and the Owner Trustee, respectively.
(vi) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in
each case addressed to Lessee and dated the Delivery Date and in each
case in scope and substance reasonably satisfactory to Lessee and
Lessee's special counsel.
(vii) 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 to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(viii) No applicable law or regulations or guidelines or
interpretations by appropriate regulatory authorities shall be in
effect which, in the opinion of Lessee or its special counsel, would
make it a violation of law or regulations or guidelines for Lessee to
enter into any transaction contemplated by the Operative Documents.
(ix) In the opinion of Lessee and its special counsel,
there shall have been, since the date hereof, no amendment,
modification, addition or change in or to the Internal Revenue Code of
1986, as amended through the date hereof, the regulations promulgated
under the Code (including temporary regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(x) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. PUBLICITY. Each party hereto agrees that it
will use its best efforts not to disclose, or permit any of its employees or
agents to disclose, the identity of the Owner Participant or the terms of the
Operative Documents in connection with the issuance or release for external
publication of any article or advertising or publicity matter relating to the
terms and conditions of any of the Operative Documents or the transactions
contemplated thereby without the prior written consent of the Owner Participant
and Lessee, provided that nothing in this Section 5 shall prevent the Loan
Participants from publishing a tombstone which may include the initial
principal amount of the Secured Certificates, provided, further, that no such
tombstone shall disclose the identity of the Owner Participant without the
prior written consent of the Owner Participant.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS.
No Certificate Holder (as defined in the Trust Indenture) shall have any
further interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the principal of and
interest on all Secured Certificates held by such holder and all other sums
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payable to such holder hereunder, under the Trust Indenture and under such
Secured Certificates shall have been paid in full. Each of the Loan
Participants and, by its acceptance of a Secured Certificate, each Certificate
Holder agrees that it will look solely to the income and proceeds from the
Trust Indenture Estate to the extent available for distribution to such
Certificate Holder as provided in Article III of the Trust Indenture and that
neither the Owner Participant nor the Owner Trustee shall be personally liable
to the Loan Participants or any Certificate Holder for any amounts payable
under the Secured Certificates, the Trust Indenture or hereunder, except as
expressly provided in the Operative Documents.
SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND
INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to
each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and
the Owner Participant that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly
existing pursuant to the laws of the State of Minnesota; is duly
qualified to do business as a foreign corporation in each jurisdiction
in which its operations or the nature of its business requires, other
than failures to qualify which would not have a material adverse
effect on the consolidated business, assets, properties or condition
(financial or otherwise) of Lessee and its subsidiaries taken as a
whole or on the ability of Lessee to perform its obligations under the
Lessee Documents; is a Certificated Air Carrier; has its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code) located at Eagan, Minnesota; holds all licenses,
certificates, permits and franchises from the appropriate agencies of
the United States and/or all other governmental authorities having
jurisdiction necessary to authorize Lessee to engage in air transport
and to carry on scheduled passenger service as presently conducted
(other than those licenses, certificates, permits and franchises
which, if not obtained, would not have a material adverse effect on
the consolidated business assets, properties or condition (financial
or otherwise) of Lessee and its subsidiaries taken as a whole or on
the ability of Lessee to perform its obligations under the Lessee
Documents); and has the corporate power and authority to own or hold
under lease its properties wherever located or used and to enter into
and perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of
the Lessee Documents will, on the Delivery Date, have been duly
authorized by all necessary corporate action on the part of Lessee, do
not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of Lessee except
such as have been duly obtained or by the Delivery Date will have been
duly obtained, and none of such agreements contravenes any law,
judgment, government rule, regulation or order binding on Lessee or
the certificate of incorporation or By-Laws of Lessee or contravenes
the provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
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(iii) neither the execution and delivery by Lessee of the
Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in
respect of, any Federal, State or foreign government authority or
agency, except for (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to
be obtained on or prior to the Delivery Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly
obtained and are, or will on the Delivery Date be, in full force and
effect (other than a flying time wire, all steps to obtain the
issuance of which will have been, on the Delivery Date, taken or
caused to be taken by Lessee), (B) the registration of the Aircraft
referred to in Section 4(a)(ix)(4) and (C) such consents, approvals,
notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only
after the Delivery Date;
(iv) on the Delivery Date the Lessee Documents will each
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof (subject to the
qualifications set forth in clause (4) of the form of opinion of
counsel to Lessee in Section 4(a)(xi));
(v) there are no pending or, to the best of Lessee's
knowledge, threatened actions, suits or proceedings before any court
or administrative agency which might materially adversely affect the
business, condition (financial or otherwise), operations or properties
of Lessee and its subsidiaries taken as a whole or Lessee's ability to
perform its obligations under the Operative Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Lease with the Lease Supplement covering
the Aircraft, the Trust Indenture and the Trust Supplement attached
thereto and made a part thereof, the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof and the FAA Bill
of Sale, (C) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security and
other interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified
in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D)
the taking of possession by the Indenture Trustee of the original
counterpart of each of the Lease and the Lease Supplement covering the
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
Owner Trustee's title to and the Indenture Trustee's security interest
in the Aircraft as against Lessee and any third parties in any
applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes an
Event of Default under the Lease (or any event which with the giving
of notice or the passage of time or
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both would constitute an Event of Default under the Lease) which is
presently continuing;
(viii) Lessee is solvent and will not be rendered insolvent
by the sale of the Aircraft; after the sale of the Aircraft the
capital of Lessee will not be unreasonably small for the conduct of
the business in which Lessee is engaged or is about to engage; Lessee
has no intention or belief that it is about to incur debts beyond its
ability to pay as they mature; and Lessee's sale of the Aircraft is
made without any intent to hinder, delay or defraud either present or
future creditors;
(ix)(a) The consolidated balance sheets of the Guarantor and
its consolidated subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common
stockholders' equity of the Guarantor and its consolidated
subsidiaries for the year then ended, which have been audited by
independent certified public accountants, copies of which have been
furnished to the Owner Participant and each Loan Participant, fairly
present the consolidated financial condition of the Guarantor and its
consolidated subsidiaries as at such date and the results of
operations and cash flow of the Guarantor and its consolidated
subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied and
since December 31, 1995 there has been no material adverse change in
the consolidated financial condition, cash flow or results of
operations of the Guarantor and its consolidated subsidiaries;
(x) on the Delivery Date, the Owner Trustee will receive
good title to the Aircraft free and clear of all Liens, except Liens
permitted by clause (v) of Section 6 of the Lease, the rights of
Lessee under the Lease and the Lease Supplement covering the Aircraft,
the Lien of the Trust Indenture and the beneficial interest of the
Owner Participant in the Aircraft;
(xi) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation G or U of the Board of Governors of
the Federal Reserve System;
(xii) Lessee is not in default in the performance of any
term or condition of the Purchase Agreement which materially adversely
impairs the transactions contemplated hereby;
(xiii) On the Delivery Date, all sales or use tax then due
and for which Lessee is responsible pursuant to Section 7(b)(i) hereof
shall have been paid, other than such taxes which are being contested
by Lessee in good faith and by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture
or loss of the Aircraft or any interest therein;
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<PAGE> 30
(xiv) On the Delivery Date, the Aircraft will be duly
certified by the FAA as to type and airworthiness, will be insured by
Lessee in accordance with the terms of the Lease and will be in the
condition and state of repair required under the terms of the Lease;
and
(xv) neither Lessee nor any subsidiary of Lessee is an
"investment company" or a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(b) General Tax Indemnity. [Reserved]
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(c) General Indemnity. [Reserved]
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<PAGE> 32
(d) Income Tax. For purposes of this Section 7, the term
"INCOME TAX" means any Tax based on or measured by gross or net income or
receipts (other than taxes in the nature of sales, use, license, property or
value added Taxes (except value added taxes in the nature of any income,
franchise, capital, doing business, excess profits or net worth tax)
(including, without limitation, capital gains taxes, minimum taxes, income
taxes collected by withholding and taxes on tax preference items), and Taxes
which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Owner Participant represents that it is acquiring its interest in the
Trust Estate for investment and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Secured Certificates
or any similar securities for sale to, or solicited any offer to acquire any of
the same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended, or the securities laws, rules and
regulations of any state.
(b) Lessee represents and warrants that neither Lessee
nor anyone acting on behalf of Lessee has directly or indirectly offered any
interest in the Trust Estate or any Secured Certificates for sale to, or
solicited any offer to acquire any of the same from, anyone in a manner which
would result in a violation of the Securities Act of 1933, as amended, or the
securities laws, rules and regulations of any state.
(c) Each of the Owner Participant and First Security Bank
of Utah, National Association, in its individual capacity, represents and
warrants to the other parties to this Agreement that it is, and on the Delivery
Date will be, a Citizen of the United States without making use of any voting
trust, voting powers agreement or similar arrangement. The Owner Participant
agrees, solely for the benefit of Lessee and the Loan Participants, that if (i)
it shall
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cease to be, or believes itself likely to cease to be, a Citizen of the United
States and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act
and regulations then applicable thereunder, then the Owner Participant shall
(at its own expense and without any reimbursement or indemnification from
Lessee) promptly effect a voting trust, voting powers agreement or other
similar arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee
and the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole
expense of the Owner Participant, to cooperate with the Owner Participant in
complying with its obligations under the provisions of the second sentence of
this Section 8(c). First Security Bank of Utah, National Association, in its
individual capacity, agrees that if at any time an officer or responsible
employee of the Corporate Trust Department of First Security Bank of Utah,
National Association, shall obtain actual knowledge that First Security Bank of
Utah, National Association, has ceased to be a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
Lessee or the Owner Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the
Owner Participant or First Security Bank of Utah, National Association, in its
individual capacity, does not comply with the requirements of this Section
8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby
agree that an Event of Default (or an event which would constitute an Event of
Default but for lapse of time or the giving of notice or both) shall not have
occurred and be continuing under the Lease due to non-compliance by Lessee with
the registration requirements in the Lease.
(d) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that both the principal place
of business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank of
Utah, National Association, in its individual capacity, agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to all parties. First Security Bank of
Utah, National Association, in its individual capacity, further represents and
warrants that (A) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee, and (B) the
Trust Agreement, and, assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the other Owner Trustee Documents,
when executed and
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delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank of Utah, National Association, in its
individual capacity, represents that it has not offered any interest in the
Trust Estate or any Secured Certificates or any similar securities for sale to,
or solicited any offer to acquire the same from, anyone, and that no officer or
responsible employee of the Corporate Trust Department of First Security Bank
of Utah, National Association, has knowledge of any such offer or solicitation
by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that
neither it nor anyone acting in its behalf has offered any Secured Certificates
or any similar securities related to the Aircraft for sale to, or solicited any
offer to buy any Secured Certificate from, any person or entity other than in a
manner in compliance with, and which does not require registration under, the
Securities Act of 1933, as amended, or the rules and regulations thereunder or
the securities laws, rules and regulations of any state.
(f) The Owner Participant and each of the Loan
Participants agree that, at any time after the Depreciation Period, as long as
no Event of Default or a Default of the type referred to in Section 14(a) or
14(e) of the Lease shall have occurred and be continuing, Lessee may elect to
effect a change in registration of the Aircraft, at Lessee's cost and expense,
so long as (a) the country of registry of the Aircraft is a country listed on
Exhibit A hereto (or such other country as the Owner Participant approves) and
(b) the following conditions are met: (i) unless the country of registry is
Taiwan, the United States maintains normal diplomatic relations with the
country of registry of the Aircraft, and if the country of registry is Taiwan,
the United States maintains diplomatic relations at least as good as those in
effect on the Delivery Date; and (ii) the Owner Trustee and the Indenture
Trustee shall have received favorable opinions (subject to customary
exceptions) addressed to each such party, from counsel qualified in the laws of
the relevant jurisdiction and reasonably satisfactory to the Owner Participant,
to the effect that:
(A) the Owner Trustee's ownership interest in the
Aircraft shall be recognized under the laws of such jurisdiction, (B)
the obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under
the laws of such jurisdiction (or the laws of the jurisdiction to
which the laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's
right, title and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the
opinion shall detail what filing,
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recording or other action is necessary and (2) the Owner Trustee and
the Indenture Trustee shall have received a certificate from Lessee
that all possible preparations to accomplish such filing, recording
and other action shall have been done, and such filing, recording and
other action shall be accomplished and a supplemental opinion to that
effect shall be delivered to the Owner Trustee and the Indenture
Trustee on or prior to the effective date of such change in
registration), (D) none of the Owner Trustee, the Owner Participant or
the Indenture Trustee will be required to register to do business in
the country in which the Aircraft is to be registered as a result of
such reregistration, after (1) taking into account any other contacts
of the Owner Trustee and the Owner Participant with such jurisdiction
(provided, that upon request by Lessee (such request having been
acknowledged by the Owner Participant's general counsel), the Owner
Trustee and the Owner Participant must respond within fourteen (14)
Business Days after receipt of such request describing its contacts in
the jurisdiction of reregistration, or else such party shall be deemed
for purposes of this clause (D) to have no such contacts) and (2)
assuming that the Indenture Trustee has no other contacts with such
jurisdiction, (E) there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee
shall have agreed to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such change in
registration after giving effect to such change in registration and that the
new country of registry imposes aircraft maintenance standards not materially
different from those of the United States, France, Germany, Japan, the
Netherlands or the United Kingdom and (b) the Owner Participant shall have
received assurances satisfactory to it that (i) the original indemnities in
favor of it under this Agreement afford it substantially the same protection as
provided prior to such change in registry, and (ii) such change will not result
in the risk of, or the imposition of, or increase the amount of, any Tax for
which Lessee is not required to indemnify under the Operative Documents, or is
not then willing to enter into a binding agreement to indemnify in a manner
satisfactory in form and substance, which may include consideration of the
creditworthiness of Lessee, to the Owner Participant; provided, however, that
if (A) Lessee (or, so long as the Guarantee remains in full force and effect,
the Guarantor) has outstanding publicly issued or privately placed unsecured
indebtedness (excluding any short-term commercial paper) with a rating of "BBB"
or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides
the Owner Participant with cash collateral or a letter of credit reasonably
satisfactory in form and substance to Lessor, the amount of which is sufficient
(as determined by the Owner Participant in its reasonable judgment) to cover
any anticipated adverse tax consequences for which the Owner Participant has
been indemnified by Lessee under the Operative Documents in addition to any
additional
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adverse tax consequences resulting from such reregistration or (C) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to
Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(i) the Owner Participant is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of organization, and has the corporate power and
authority to carry on its business as now conducted, to own or hold
under lease its properties and to enter into and perform its
obligations under the Owner Participant Documents;
(ii) the Owner Participant Documents have been duly
authorized by all necessary corporate action on the part of the Owner
Participant, do not require any approval not already obtained of
stockholders of the Owner Participant or any approval or consent not
already obtained of any trustee or holders of any indebtedness or
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and, subject to and in reliance
upon the representations made by the Loan Participants and Lessee in
Section 8(q) hereof, neither the execution and delivery thereof, nor
the consummation of the transactions contemplated thereby, nor
compliance by the Owner Participant with any of the terms and
provisions thereof will contravene any United States Federal or state
law, judgment, governmental rule, regulation or order applicable to or
binding on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to financing or the citizenship requirements of the Owner
Participant under applicable aviation law) or contravene or result in
any breach of or constitute any default under, or result in the
creation of any Lien (other than Liens provided for in the Operative
Documents) upon any property of the Owner Participant under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter,
by-law or other agreement or instrument to which the Owner Participant
is a party or by which it or its properties may be bound or affected
provided, that no representation or warranty as to ERISA (as
hereinafter defined) is made by the Owner Participant except as set
forth in Section 8(q)(A);
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant
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in accordance with the terms thereof (subject to the qualifications
set forth in clause (2) of the opinion of counsel to the Owner
Participant in Section 4(a)(xiv));
(iv) there are no pending or, to the knowledge of the
Owner Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to the Owner Participant, would materially
adversely affect the financial condition of the Owner Participant or
the ability of the Owner Participant to perform its obligations under
the Owner Participant Documents;
(v) upon the execution and delivery of the Trust
Indenture, the Trust Indenture Estate will be free and clear of Lessor
Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant;
(vi) neither the execution and delivery of the Owner
Participant Documents nor the performance by the Owner Participant of
its obligations thereunder require the consent or approval of, the
giving of notice to, or the registration with, or the taking of any
other action in respect of any Federal, state or foreign government
authority or agency except for those exceptions referred to in Section
7(a)(iii) which may be applicable to the Owner Participant and the
Owner Participant Documents (it being understood that no
representation or warranty is made with respect to the laws, rules or
regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to the citizenship requirements of the Owner Participant
under applicable aviation law); and
(vii) the Owner Participant is not an "investment company"
or a company "controlled by an investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(h) Each of First Security Bank of Utah, National
Association, in its individual capacity, and the Owner Participant covenants
and agrees that it shall not cause or permit to exist a Lessor Lien
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate. Each of First Security Bank of Utah, National Association, in
its individual capacity, and the Owner Participant agrees that it will
promptly, at its own expense, take such action as may be necessary duly to
discharge such Lessor Lien attributable to it. Each of First Security Bank of
Utah, National Association, in its individual capacity, and the Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
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(i) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Lien, arising as a result of (A) claims against the Indenture Trustee
not related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitutes gross negligence or willful misconduct,
(C) claims against the Indenture Trustee relating to Taxes or Expenses which
are excluded from the indemnification provided by Section 7 pursuant to said
Section 7, or (D) claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its interest in the
Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative
Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19
of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant
to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the
Lease while an Event of Default is continuing and prior to the time that the
Indenture Trustee has received all amounts due pursuant to the Trust Indenture.
(j) Each Loan Participant represents, warrants, covenants
and agrees as to itself: (i) that this Agreement has been duly authorized,
executed and delivered by such Loan Participant and this Agreement constitutes
a legal, valid and binding obligation of such Loan Participant enforceable
against such Loan Participant in accordance with its terms except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (ii) that
such Loan Participant is duly organized and validly existing under the laws of
its jurisdiction of organization; and (iii) that such Loan Participant has
full power, authority and legal right to execute, deliver and carry out the
terms of this Agreement.
(k) Each Loan Participant represents and warrants that
the Secured Certificate to be issued to it pursuant to the Trust Indenture is
being acquired by it for investment and not with a view to resale or
distribution (it being understood that such Loan Participant may pledge or
assign as security its interest in each Secured Certificate issued to it),
provided that the disposition of its property shall at all times be and remain
within its control, except that the Loan Participants may sell, transfer or
otherwise dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended, and which is
consistent with the applicable provisions of the Credit Agreement and subject
to the provisions hereof.
(l) The Indenture Trustee, and by acceptance of the
Secured Certificates the Certificate Holders, hereby (i) agree that for
purposes of the application of Section 1111(b) of Title 11 of the United States
Code or any successor provision or any comparable provisions that the "debtor"
in any bankruptcy proceeding involving the assets held or administered pursuant
to the Trust Agreement shall be strictly limited to the Trust Estate (excluding
the Excluded Payments) and (ii) make (and hereby agree to make), with respect
to the Trust Indenture Estate, the election provided for in Section 1111(b)(2)
of Title 11 of the United
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States Code. It is hereby agreed by the Indenture Trustee, and by the
acceptance of the Secured Certificates the Certificate Holders hereby agree,
that if (i) all or any part of the Trust Estate becomes the property of, or the
Owner Participant becomes, a debtor subject to the reorganization provisions of
the Bankruptcy Reform Act of 1978 or any successor provision or any comparable
proceeding, (ii) pursuant to such reorganization provisions the Owner Trustee
(in its individual capacity) or the Owner Participant is required, by reason of
the Owner Trustee (in its individual capacity) or the Owner Participant being
held to have recourse liability to the holder(s) of the Secured Certificates or
to the Indenture Trustee, directly or indirectly (other than the recourse
liability of the Owner Participant under this Participation Agreement), to make
payment on account of any amount payable as principal or interest on the
Secured Certificates and (iii) any holder(s) of the Secured Certificates or the
Indenture Trustee actually receives any Excess Payment (as hereinafter defined)
which reflects any payment by the Owner Trustee (in its individual capacity) or
the Owner Participant on account of (ii) above, then such holder(s) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(l), "EXCESS PAYMENT" means the
amount by which such payment exceeds the amount which would have been received
by the holder(s) of the Secured Certificates or the Indenture Trustee if the
Owner Trustee (in its individual capacity) or the Owner Participant had not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 8(l) shall prevent the holder of a Secured
Certificate or the Indenture Trustee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of the Owner Trustee (in its
individual capacity) under this Agreement or the Trust Indenture (and any
exhibits or annexes thereto) or the Owner Participant under this Agreement.
(m) State Street Bank and Trust Company represents and
warrants, in its individual capacity, to Lessee, the Owner Trustee and each
Participant as follows:
(i) it is a Citizen of the United States without making
use of any voting trust, voting powers trust agreement or other
similar arrangement, will notify promptly all parties to this
Agreement if in its reasonable opinion its status as a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement, is likely to change and
that it will resign as Indenture Trustee as provided in Section 8.02
of the Trust Indenture if it should cease to be a Citizen of the
United States without making use of any voting trust, voting powers
trust agreement or other similar arrangement;
(ii) it is a Massachusetts trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate power
and authority to enter into and perform its obligations under the
Trust Indenture and this Agreement and to authenticate the Secured
Certificates to be delivered on the Delivery Date;
(iii) the Indenture Trustee Documents and the
authentication of the Secured Certificates to be delivered on the
Delivery Date have been duly authorized by all
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necessary corporate action on its part, and neither the execution and
delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or state law or
governmental rule or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any
default under its charter or By-Laws or the provisions of any
indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and
binding obligation of State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be,
enforceable against State Street Bank and Trust Company, in its
individual capacity or as Indenture Trustee, as the case may be, in
accordance with its terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors'
rights.
(n) So long as the Aircraft shall be subject to the Lease
and at all times prior to the release of the Lien of the Trust Indenture, the
Owner Participant will not, directly or indirectly, sell, assign, convey or
otherwise transfer any of its right, title or interest in and to the Aircraft,
this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust
Agreement or any proceeds therefrom to any person or entity, unless the
proposed transferee is a "Transferee" (as defined below), and such sale,
assignment, conveyance or transfer is with respect to all, but not less than
all, of such Transferee's right, title and interest to a single entity (except
that the Owner Participant may transfer to one or more Transferees all or any
portion of its interest, if any, in the residual value of the Aircraft (which
interest shall not include any of the Owner Participant's right, title or
interest in any of the Operative Documents); provided that such transfer of
residual value shall result in no increase, decrease or change in any of
Lessee's, any Loan Participant's, or the Indenture Trustee's obligations,
rights or responsibilities under the Operative Documents and that such
Transferee or Transferees of residual value shall have no right to consent or
object to any matter or decision under, or relating to, the Aircraft or any of
the Operative Documents and provided, further, that no Lien shall result from
such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial
institution or insurance company with a combined capital, surplus and undivided
profits of at least $50,000,000 or a corporation whose tangible net worth is at
least $50,000,000, exclusive of goodwill, in either case as of the proposed
date of such transfer, as determined in accordance with generally accepted
accounting principles, or (B) any subsidiary of such a bank, financial
institution, insurance company, or corporation, provided that such bank,
financial institution, insurance company, or corporation furnishes to the Owner
Trustee, the Loan Participants, the Indenture Trustee and Lessee a guaranty
with respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Loan Participants,
the Indenture Trustee and Lessee, the Owner Participant's obligations
hereunder, including but not limited to, under Section 8(c) and Section 8(h)
hereof, in the form attached as Exhibit D hereto; provided, however, that any
Transferee shall not be
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(i) an airline, a commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or (ii) other similar person
or a corporation or other entity controlling, controlled by or under common
control with such an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or
other similar person (unless such entity is General Electric Company,
International Lease Finance Corporation, any similar entity or any of their
respective Affiliates, provided, that (I) such entity is not included within
the immediately preceding clause (i) of this subsection (n) and (II) no such
entity has, through ownership of common or preferred stock, effective voting
control of an entity described in such immediately preceding clause (I)). Each
such transfer to a Transferee shall be subject to the conditions that (M) upon
giving effect to such transfer, the Transferee is a Citizen of the United
States (or has effected a voting trust agreement, voting powers agreement or
other similar arrangement so as not to affect the then continued (if
applicable) United States registration of the Aircraft), and has full power and
authority to enter into the transactions contemplated hereby, (N) the
Transferee has the requisite power and authority to enter into and carry out
the transactions contemplated hereby and such Transferee shall have delivered
to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants
an opinion of counsel in the form attached as Exhibit E hereto, (O) the
Transferee enters into (i) an agreement in the form attached as Exhibit B
hereto or (ii) such other form approved by Lessee and the Indenture Trustee
whereby the Transferee confirms that it shall be deemed a party to this
Agreement and a party to the Trust Agreement and each other Operative Document
to which the Owner Participant is a party and agrees to be bound by all the
terms of, and to undertake all of the obligations of the transferor Owner
Participant contained in, the Owner Participant Documents and makes the
representations and warranties comparable to those made by the Owner
Participant thereunder provided that with respect to ERISA, the Transferee
makes the representations and warranties contained in Section 7(h) of the
agreement in the form attached as Exhibit B hereto, (P) such transfer does not
affect registration of the Aircraft under the Federal Aviation Act, or any
rules or regulations promulgated thereunder or create a relationship which
would be in violation thereof or violate any provision of the Securities Act of
1933, as amended, or any other applicable Federal or state law (provided that
the term "applicable Federal law" shall not include ERISA), (Q) the transferor
Owner Participant assumes the risk of any loss of Interest Deductions,
Amortization Deductions and MACRS Deductions and the risk of any Inclusion
Event (each as defined in the Tax Indemnity Agreement) resulting from such
transfer, (R) the transferor Owner Participant pays all of the costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
in connection with such transfer, including the costs and expenses of the Owner
Trustee, the Indenture Trustee, Lessee and the Loan Participants in connection
therewith unless such transfer is effected in connection with the exercise of
remedies as a result of and during the continuance of an Event of Default in
which case any expenses incurred by Lessee in connection with such transfer
shall not be reimbursed, and (S) the terms of the Operative Documents and the
Overall Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations
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of the transferor Owner Participant under the Owner Participant Documents
arising after the date of such transfer except to the extent fully attributable
to or arising out of acts or events occurring prior thereto and not assumed by
the Transferee (in each case, to the extent of the participation so
transferred). If the Owner Participant intends to transfer any of its
interests hereunder, it shall give 20 days' prior written notice thereof to the
Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee.
Upon any such transfer, Lessee shall, at the Transferee's
expense, use its reasonable efforts promptly to cause to be obtained new
insurance certificates (consistent with the provisions of Section 11 of the
Lease) that reflect the interest of the Transferee in the Aircraft.
(o) Notwithstanding the provisions of Section 8(x)
hereof, unless waived by the Loan Participants, Lessee shall not be entitled to
assume the Secured Certificates on the date for purchase of the Aircraft
pursuant to Section 19(d) of the Lease if on such date an Event of Default
shall have occurred and be continuing or any condition or event shall exist
which, with the passage of time or giving of notice or both, would become such
an Event of Default.
(p) First Security Bank of Utah, National Association,
and State Street Bank and Trust Company, each in its individual capacity,
agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
(q)(A) Each Participant represents and warrants that it is
not acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1)
of the Code or of any entity the assets of which constitute "plan" assets under
ERISA. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section
2.14 of the Trust Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer as set forth in
the preceding sentence and a covenant as set forth in this sentence.
(B) Lessee represents and warrants that: none of (i) the
execution and delivery of this Agreement and the other Operative Documents,
(ii) the initial purchase by the Loan Participants of the Secured Certificates,
and (iii) the initial acquisition by the Owner Participant of its beneficial
interest in the Trust Estate will involve any non-exempt prohibited transaction
within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through
(D) of the Code (such representation being made in reliance upon and subject to
the accuracy of the representations contained in subparagraph (A) of this
Section 8(q)).
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(r) Each Participant, the Owner Trustee and the Indenture
Trustee agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential to
the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, or (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so much
of the Purchase Agreement as has been assigned to the Owner Trustee under the
Purchase Agreement Assignment and not specifically reserved to Lessee under
Section 1 thereof, to bona fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant
severally, not jointly, represent and warrant that none of the funds made
available by the Loan Participants pursuant to Section 1 hereof will be used
for the purpose of purchasing or carrying any "margin security" as defined in
Regulation G of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning of Regulation X of the Board of Governors of the
Federal Reserve System, assuming that the proceeds were and are applied as
contemplated by the provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it
shall not cause or permit to exist a Loan Participant Lien attributable to it
with respect to the Aircraft or any other portion of the Trust Estate. Each
Loan Participant agrees that it will promptly, at its own expense, take such
other action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it. Each Loan
Participant agrees that Lessee may, on behalf of the Owner Trustee and upon
notice to the affected Certificate Holder, arrange for another institution
(which may be a Certificate Holder) to purchase the Secured Certificates of the
affected Certificate Holder by paying the affected Certificate Holder an amount
equal to the unpaid principal amount of the Secured Certificates held by the
affected Certificate Holder plus accrued but unpaid interest thereon to the
date of payment of such principal amount plus all other amounts owed to such
affected Certificate Holder under the Operative Documents (including any
Funding Loss Amount payable as a result of the applicable purchase occurring on
a day other than the last day of an Interest Period). For purposes of this
Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder
which has asserted claims
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against the Owner Trustee or Lessee under or sought rights or remedies provided
by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture.
(u) State Street Bank and Trust Company, in its
individual capacity, covenants and agrees that it shall not cause or permit to
exist any Indenture Trustee's Liens with respect to the Trust Indenture Estate
or the Trust Estate. State Street Bank and Trust Company, in its individual
capacity, agrees that it will promptly, at its own expense, take such action as
may be necessary duly to discharge such Indenture Trustee's Liens. State
Street Bank and Trust Company, in its individual capacity, agrees to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Indenture Estate or the Trust Estate resulting from such Indenture
Trustee's Liens.
(v) First Security Bank of Utah, National Association, in
its individual capacity, represents and warrants that:
(i) the Trust Agreement and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, each of the other Owner Trustee Documents has been duly
executed and delivered by one of its officers who is duly authorized
to execute and deliver such instruments on behalf of First Security
Bank of Utah, National Association or the Owner Trustee, as the case
may be;
(ii) the Trust Estate is free and clear of Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to First
Security Bank of Utah, National Association, in its individual
capacity, and there are no Liens affecting the title of the Owner
Trustee to the Aircraft or any part of the Trust Estate or the Trust
Indenture Estate resulting from any act or claim against First
Security Bank of Utah, National Association, in its individual
capacity, arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the Operative
Documents, including any such Lien resulting from the nonpayment by
First Security Bank of Utah, National Association, in its individual
capacity, of any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes
(or to the best of its knowledge would, with the passage of time or
the giving of notice or both, constitute) an Event of Default as
defined in the Trust Indenture which has been caused by or relates to
First Security Bank of Utah, National Association, in its individual
capacity, and which is presently continuing;
(iv) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the full corporate power, authority and legal right to
enter into and perform its obligations under each of the Owner Trustee
Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof
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nor its performance of any of the terms and provisions thereof will
violate any Federal law governing the banking and trust powers of
First Security Bank of Utah, National Association, or Utah law or
regulation or contravene or result in any breach of the provisions of
its articles of association or By-Laws or any indenture, mortgage,
contract or other agreement to which it is a party or by which it or
its properties may be bound or affected;
(vi) each of the Owner Trustee Documents has been duly
executed and delivered by First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, each thereof is the legal,
valid and binding obligation of First Security Bank of Utah, National
Association, in its individual capacity, as Owner Trustee, or both, as
the case may be, enforceable against First Security Bank of Utah,
National Association, in its individual capacity, as Owner Trustee, or
both, as the case may be, in accordance with its respective terms
except as limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights; and
(vii) there are no Taxes payable by it (either in its
individual capacity or as Owner Trustee), the Trust Estate, the Owner
Participant, Lessee, the Indenture Trustee or the Loan Participants to
the State of Utah in connection with the execution, delivery and
performance of the Operative Documents solely because First Security
Bank of Utah, National Association is a national banking association
with its principal office in the State of Utah and will perform its
obligations under the Operative Documents in the State of Utah, other
than franchise or other taxes based on or measured by any fees or
compensation received or accrued by First Security Bank of Utah,
National Association for services rendered in connection with the
transactions contemplated by the Operative Documents.
(w) The Owner Participant covenants and agrees that if
(i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate
the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the
Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease,
given to Lessee written notice of Lessor's election to retain title to the
Aircraft and (iii) the Owner Trustee has failed to make, on or before the
Termination Date, any payment required to be made by the Owner Trustee pursuant
to Section 9(c) in connection with its retention of title to the Aircraft, the
Owner Participant will indemnify Lessee for any losses, damages, costs or
expenses of any kind (including any additional rents paid by Lessee and any
fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by the Owner Trustee. The Owner Participant
further covenants and agrees to pay those costs and expenses specified to be
paid by the Owner Participant pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, each Loan Participant and Lessee covenants and agrees that
if Lessee elects (a) to
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purchase the Aircraft pursuant to Section 19(b) of the Lease or (b) to
terminate the Lease and purchase the Aircraft pursuant to Section 19(d) of the
Lease, then each of the parties will execute and deliver appropriate
documentation transferring all right, title and interest in the Aircraft to
Lessee (including, without limitation, such bills of sale and other instruments
and documents as Lessee shall reasonably request to evidence (on the public
record or otherwise) such transfer and the vesting of all right, title and
interest in and to the Aircraft in Lessee), and if Lessee, in connection with
such purchase, elects to assume the obligations of the Owner Trustee pursuant
to the Trust Indenture and the Secured Certificates each of the parties will
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing the Owner
Participant and the Owner Trustee from all future obligations in respect of the
Secured Certificates, the Trust Indenture and all other Operative Documents and
all such other actions as are reasonably necessary to permit such assumption by
Lessee.
(y) (A) Lessee will not consolidate with or merge into
any other corporation or convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and each Participant an agreement in form and substance
reasonably satisfactory to such Participant containing an assumption
by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction,
no Default or Event of Default under the Lease shall have occurred and
be continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and each Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Participants, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned
in clause (ii) above comply with this subparagraph (A) of Section 8(y)
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and
(v) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee, shall
make such filings and recordings with the FAA pursuant
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<PAGE> 47
to the Federal Aviation Act, as shall be necessary or desirable to
evidence such consolidation, merger, conveyance, transfer or lease
with or to such entity.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Lessee under
this Agreement with the same effect as if such successor corporation or Person
had been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its
corporate existence except as permitted by subparagraph (A) of this Section
8(y).
(z) Lessee, at its expense, will take, or cause to be
taken, such action with respect to the recording, filing, re-recording and
refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust
Indenture, the Trust Supplement and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the interest of the Owner Trustee in the Aircraft or
will furnish to the Owner Trustee and the Indenture Trustee timely notice of
the necessity of such action, together with such instruments, in execution
form, and such other information as may be required to enable them to take such
action. Lessee will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief executive office
(as such term is used in Article 9 of the Uniform Commercial Code) promptly
after making such change or in any event within the period of time necessary
under applicable law to prevent the lapse of perfection (absent refiling) of
financing statements filed under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations
of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and
the Owner Participant hereby agrees to make such recalculations as and when
contemplated by the Lease and subject to all the terms and conditions of the
Lease and promptly to take such further actions as may be necessary or
desirable to give effect to and to cause the Owner Trustee to give effect to
the provisions of Section 3 of the Lease.
(bb) To the extent that any Excess Amount is due on the
Commencement Date, the Owner Participant shall have the right to prepay to the
Indenture Trustee all or a portion of such Excess Amount on the last Business
Day occurring in 1996, and the Indenture Trustee agrees that it shall invest
such amount in accordance with the terms set forth in the
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Trust Indenture. The Owner Participant hereby agrees with Lessee, and only
with Lessee, and not for the benefit of any other party to this Participation
Agreement, that it will pay in full to Lessee upon termination of the Lease the
Reimbursement Amount for which Lessee has not previously received an offset
pursuant to Section 3(g) of the Lease.
(cc) The Owner Participant hereby agrees to notify Lessee
or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York
time on the third Business Day prior to the day for which an Excess Amount is
indicated stating whether or not the Owner Participant intends to pay such
Excess Amount in full by 10:30 A.M. (New York time) on the due date.
(dd) [________________] agrees to act as Administrative
Agent hereunder. The Administrative Agent agrees to notify each of the
Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the
actual interest expected to accrue on the Secured Certificates during each
Interest Period promptly after the commencement of such Interest Period and
after the occurrence of any event that would cause such actual interest
expected to accrue during such Interest Period to change from the amount
previously notified. The Administrative Agent further agrees to perform all of
the functions that are required to be performed by the Administrative Agent
pursuant to the terms of the Trust Indenture.
(ee) The Owner Participant hereby agrees with Lessee that
it will pay, or cause to be paid, all costs and expenses that are for the
account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease.
The Owner Participant further agrees with Lessee that it will provide the
information contemplated to be provided by it pursuant to clause (VI) of
Section 7(b)(x) of the Lease within the time period contemplated therein.
(ff) Each Loan Participant hereby represents, warrants and
agrees that it shall not transfer any interest in any Secured Certificate
unless and until the transferee agrees in writing (copies of which shall be
provided by the Indenture Trustee to Lessee, the Owner Trustee and the Owner
Participant) to make the representations contemplated to be made by a Loan
Participant in this Agreement and to be bound by the terms of this Agreement
and the Trust Indenture (including, without limitation, the representations and
covenants set forth in Sections 8(e), 8(j), 8(k), 8(l), 8(q)(A), and 8(t)
hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust
Indenture).
(gg) [__________________] agrees to act as Documentation
Agent hereunder and to perform all of the functions that are required to be
performed by the Documentation Agent hereunder.
(hh) [__________________], [___________________] and
[_________________] each agrees to furnish to the Administrative Agent timely
information for the purpose of determining each Eurodollar Rate (as defined in
the Trust Indenture).
(ii) Lessee agrees and covenants that it shall not
purchase or guarantee or acquire any interest in any Secured Certificate or any
other certificate for which a Secured Certificate is security except as
provided in Section 8(x).
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SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN
PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of
an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner
Participant shall, pursuant to this Section 9 and in accordance with the
requirements of Section 3(d) of the Lease and Section 2.13 of the Trust
Indenture, reoptimize the debt payment structures. Within forty-five Business
Days after the need for an adjustment to Rent has been established pursuant to
Section 3 of the Lease, the Owner Participant shall deliver to Lessee a
certificate of an authorized representative of the Owner Participant (the
"REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of
debt amortization and Basic Rent, Excess Amounts, Special Purchase Price,
Stipulated Loss Value and Termination Value percentages. Within forty-five
days of its receipt of the Reoptimization Certificate, Lessee may demand a
verification, pursuant to Exhibit E of the Lease, of the information set forth
in the Reoptimization Certificate. Upon the acceptance by Lessee of the
accuracy of the information set forth in the Reoptimization Certificate or the
determination pursuant to such verification procedures of such information, the
Owner Participant will cause the Owner Trustee (M) to execute a Lease
Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special
Purchase Price, Stipulated Loss Value and Termination Value percentages, and
(N) to exchange new Secured Certificates containing reoptimized amortization
schedules for the Secured Certificates outstanding immediately prior to such
reoptimization.
(b) In connection with reoptimization adjustments of
Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to
this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will
agree to changes in the amortization schedule of the Secured Certificates, and
(N) each Loan Participant will exchange the Secured Certificates held by it
immediately prior to such reoptimization for new Secured Certificates
containing reoptimized amortization schedules; provided that such changes do
not (X) change the final maturity of any Secured Certificates to beyond twenty
years from the Delivery Date or (Y) increase the weighted average lives of the
Secured Certificates as of the Delivery Date to more than 15 years.
SECTION 10. OTHER DOCUMENTS. Each of the Owner
Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan
Participants and the Indenture Trustee not to amend, supplement or otherwise
modify any provision of the Trust Agreement in a manner adversely affecting
such party without the prior written consent of such party; and (B) agrees with
Lessee and the Loan Participants not to revoke the Trust Agreement without the
prior written consent of Lessee and the Loan Participants so long as the Lease
or the Lien of the Trust Indenture remain in effect. Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture Trustee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (i) amend or modify Article III or IX of the
Trust Indenture, (ii) make any amendment which will affect the stated principal
amount or interest on the Secured Certificates or (iii) amend or modify the
provisions of Sections 2.05 or 10.05 of the Trust Indenture. The Indenture
Trustee and the Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative Documents
to which Lessee is not a party. Notwithstanding anything to the contrary
contained herein, in the Trust Agreement or in any
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other Operative Document, the Owner Participant will not consent to or direct a
change in the situs of the Trust Estate without the prior written consent of
Lessee. Each Loan Participant agrees that it will not take any action in
respect of the Trust Indenture Estate except through the Indenture Trustee
pursuant to the Trust Indenture or as otherwise permitted by the Trust
Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee
covenants and agrees with each of the Loan Participants, the Owner Participant,
the Indenture Trustee and the Owner Trustee, in its capacity as such and in its
individual capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as
the Owner Trustee, the Indenture Trustee or the Owner Participant 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 Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements,
all amendments to the Lease, the Trust Indenture, all supplements and
amendments to the Trust Indenture and this Agreement 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. Upon the execution
and delivery of the FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Bill of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached, and third, the Trust Indenture, with the Trust Supplement attached.
(c) Lessee agrees that it will consummate, with Owner
Participant, on terms substantially identical to those set forth in the
Operative Documents, a leveraged lease transaction in respect of the next
Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to
the date of this Agreement.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee
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will be the lessee thereof, and each party hereto agrees to characterize the
Lease as a lease for Federal income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set
forth in the Trust Indenture. Unless the context otherwise requires, any
reference herein to any of the Operative Documents refers to such document as
it may be amended from time to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier (only if such communication is also given or made by an additional
method herein permitted), or by prepaid courier service, and shall be deemed to
be given for purposes of this Agreement on the day that such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 13(b). Unless otherwise specified in a notice sent
or delivered in accordance with the foregoing provisions of this Section 13(b),
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 telecopier numbers) as follows: (A) if to
Lessee, the Owner Trustee, the Loan Participants, the Administrative Agent, the
Documentation Agent, the Indenture Trustee or the Owner Participant, to the
respective addresses set forth below the signatures of such parties at the foot
of this Agreement, or (B) if to a subsequent Owner Participant, addressed to
such subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture, or (D) if to the Guarantor, addressed to
the Guarantor at such address as the Guarantor shall have furnished by notice
to the parties hereto.
(c) Each of the parties hereto (A) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of
any thereof or any of the transactions contemplated hereby or thereby may not
be enforced in or by such courts. Lessee hereby generally consents to service
of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New
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York 10038, Attention: Managing Attorney, or such office of Lessee in New York
City as from time to time may be designated by Lessee in writing to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner
Participant agrees that if, at any time, the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if,
as a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is then
located, the situs of the trust may be moved with the written consent of the
Owner Participant (which consent shall not be unreasonably withheld) and the
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification as the Owner Participant and the Loan Participants may
reasonably request in form and substance satisfactory to such parties, (B) the
rights and obligations under the Operative Documents of the Owner Participant
and the Loan Participants shall not be altered as a result of the taking of
such action, (C) the lien of the Trust Indenture on the Trust Indenture Estate
shall not be adversely affected by such action, and (D) the Owner Participant
and the Loan Participants shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Loan Participants), in scope,
form and substance satisfactory to the Owner Participant and the Loan
Participants to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount
of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Loan Participants, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement)
with respect to which Lessee is not required to indemnify the Owner Participant
pursuant to Section 4 of the Tax Indemnity Agreement (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence) and (V) if such removal involves the replacement of the Owner
Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to the Loan Participants and to the Owner
Participant covering the matters described in Section 4(a)(xiii) hereof and
such other matters as the Loan Participants and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner
Participant, the Indenture Trustee and the Loan Participants on an After-Tax
Basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred by the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Loan Participants in connection with such change of
situs.
SECTION 15. MISCELLANEOUS. (a) Each of the Loan
Participants and the Owner Participant covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner
Trustee, as Lessor, or the Indenture Trustee under the
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terms of the Lease which by its terms is not to be unreasonably withheld by the
Owner Trustee, as Lessor, or the Indenture Trustee.
(b) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture
Trustee, the Administrative Agent, the Documentation Agent and the Owner
Participant provided for in this Agreement, and Lessee's, the Owner Trustee's,
the Loan Participants', the Indenture Trustee's, the Administrative Agent's,
the Documentation Agent's and the Owner Participant's obligations under any and
all thereof, shall survive the making available of the respective Commitments
by the Loan Participants and the Owner Participant, the delivery or return of
the Aircraft, the transfer of any interest of the Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Loan Participant in any Secured Certificate or the Trust Indenture Estate
and the expiration or other termination of this Agreement or any other
Operative Document.
(c) 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 party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, and shall be enforceable by, Lessee
and its successors and assigns, each Loan Participant and its successors and
assigns, the Owner Participant and its successors and assigns, each Certificate
Holder and its successors and registered assigns, the Indenture Trustee and its
successors as Indenture Trustee under the Trust Indenture, the Owner Trustee
and its successors as Owner Trustee under the Trust Agreement, the
Administrative Agent and the Documentation Agent. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or
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any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Agreement or such
other agreements of rights and remedies against the Trust Estate. The
foregoing provisions of this Section 15(d) shall survive the termination of
this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the
Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as
assignee of such Owner Trustee's rights under the Lease pursuant to the Trust
Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the
event of any reorganization of Lessee under such Section.
SECTION 16. EXPENSES. Each of the Owner Trustee, the
Indenture Trustee, the Owner Participant, Lessee and the Loan Participants
shall promptly submit to the Owner Trustee and Lessee for their review copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than July 30, 1996). The Owner Participant agrees to transfer to the
Owner Trustee promptly but in any event no later than August 30, 1996 such
amount as shall be necessary in order to enable the Owner Trustee to pay
Transaction Expenses. To the extent of funds received by it, the Owner Trustee
agrees to pay all invoices of Transaction Expenses that have been approved by
it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to
the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its
sole option shall have the right to pay directly its special counsel fees and
the fee and reasonable disbursements of Babcock and Brown Financial
Corporation.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default or a Default of the
type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and
be continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates with Dollar denominated debt no more than
three times by giving written notice to the Owner Participant and the Owner
Trustee that there be effected a voluntary redemption of the Secured
Certificates by the Owner Trustee, whereupon the Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with Lessee as to the
terms of such refinancing (including the terms of any debt to be issued in
connection with such refinancing); provided that no such refinancing shall
subject the Owner Participant to any adverse, or the risk of any adverse, tax
consequence unless Lessee agrees to indemnify the Owner Participant for such
unindemnified adverse tax consequence (any such indemnity to be satisfactory in
form and substance, which may include consideration of the creditworthiness of
Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so
long as the Guarantee remains in full force and effect, the Guarantor) has
outstanding publicly issued or privately placed unsecured indebtedness
(excluding any short-term commercial paper) with a rating of "BBB" or better
from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner
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Participant with cash collateral or a letter of credit reasonably satisfactory
in form and substance to Lessor, the amount of which is sufficient (as
determined by the Owner Participant in its reasonable judgment) to cover any
anticipated adverse tax consequences for which the Owner Participant has been
indemnified by Lessee under the Operative Documents in addition to any
additional adverse tax consequences resulting from such refinancing or (3) the
anticipated indemnified amount (as determined by the Owner Participant in its
reasonable judgment) is less than $50,000, then, in determining whether the
indemnity to be provided by Lessee is satisfactory in form and substance to the
Owner Participant, the Owner Participant will not take into account the
creditworthiness of Lessee); provided further that (x) the Owner Participant
agrees that it will not be entitled to any indemnity from Lessee for any
failure of the debt in such refinancing to constitute "qualified nonrecourse
indebtedness" within the meaning of Treasury Regulation Section
1.861-10T(b) with respect to the first refinancing described in the next
paragraph, provided it is satisfactory to, or has no adverse tax consequences
for, the Owner Participant and (y) no offering material related to any public
refinancing shall disclose the identity of the Owner Participant.
The Owner Participant has been informed by Lessee that the
debt to be issued in connection with such refinancing may be issued in several
classes, each of which may have a different interest rate, final maturity date
and priority of payment. The Owner Participant acknowledges that it has been
informed that one or more of such classes may be entitled to the benefit of a
liquidity facility which shall not be provided by Lessee or a Person who is an
Affiliate of Lessee, and which will entitle the Indenture Trustee (or a
collateral agent therefor) to make drawings thereunder to pay interest on a
current basis on the enhanced classes of debt for up to three semi-annual
interest payments following a payment default with respect to such enhanced
classes. The Owner Participant acknowledges being informed that under such a
structure drawings of the entire amount available under the liquidity facility
for any class (and the deposit of the proceeds thereof into a cash collateral
account) will be required in the event of a ratings decline with respect to the
related liquidity provider or in the event that the liquidity facility is not
extended or replaced prior to its scheduled expiration and that amounts owed to
the liquidity facility provider for both drawings and interest thereon will
generally be senior to all Loan Participant claims. The Owner Participant
agrees that in any refinancing operation it will consider in good faith these
and any other conditions which do not impair the customary rights of an owner
participant in a leveraged lease transaction.
In the event that any such agreement is concluded:
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "REFINANCING
CERTIFICATE") setting forth the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on
the proposed date on which the outstanding Secured Certificates will be
redeemed (such date, the "REFINANCING DATE"), (C) the amount, if any, by which
the Owner Participant's aggregate investment in the beneficial interest in the
Aircraft is to be increased or decreased and (D) the proposed revised
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schedules of Basic Rent percentages, debt amortization, Stipulated Loss Value
percentages and Termination Value percentages. The Refinancing Certificate
shall not provide for a debt/equity ratio of more than 4:1. Within fourteen
days of its receipt of the Refinancing Certificate, Lessee may demand a
verification pursuant to Exhibit E to the Lease of the information set forth in
the Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of
the information set forth in the Refinancing Certificate (or the determination
pursuant to such verification procedures), as to the debt/equity ratio, the
principal amount of debt to be issued by the Owner Trustee on the Refinancing
Date and the revised Basic Rent percentages, debt amortization, Stipulated Loss
Value percentages and Termination Value percentages (such information, whether
as set forth or as so determined, the "REFINANCING INFORMATION") the
appropriate parties will take the actions specified in paragraphs (2) through
(5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale with the institution or institutions to be named therein providing
for (i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information (such debt
securities, the "NEW DEBT") except that the principal amount of New Debt may
exceed by no more than 105% the principal amount of all outstanding Secured
Certificates in connection with the first refinancing under this Section 17,
(ii) the application of the proceeds of the sale of the New Debt to the
redemption of all such Secured Certificates on the Refinancing Date and (iii)
the payment of the excess, if any, of such proceeds over the amounts necessary
to effect such redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to
provide for the securing thereunder of the New Debt in like manner as the
Secured Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses
of the first refinancing (including, but not limited to, the fees, expenses and
disbursements of counsel and any placement or underwriting fees) and such
expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the
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assumptions and constraints referred to in the definition of "Net Economic
Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions
and constraints are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A). All adjustments to Basic
Rent shall also be in compliance with the tests of Sections 4.02(5), 4.07 and
4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28
Section 4.08(1) shall be applied on a prospective basis from the date of such
adjustment) and Section 467 of the Code as then in effect as long as the
Schedule of Basic Rent was in compliance with Section 467 of the Code as in
effect on the Closing Date, it being understood that, to the extent that any
grandfather, effective date, or similar provisions in any regulations under
Section 467 or other administrative pronouncement interpreting Section 467
promulgated or issued after the Closing Date causes such regulations or
pronouncement not to be applicable to the Schedule of Basic Rent in effect on
the Closing Date, such Schedule shall be deemed to be in compliance with
Section 467 as in effect on the Closing Date.
(b) The final maturity and weighted average life of the
New Debt on an aggregate basis shall not exceed by more than six months those
of the Secured Certificates.
(c) The Secured Certificates shall not be subject to
voluntary redemption by the Owner Trustee without the consent of Lessee except
as set forth in Section 2.14 of the Trust Indenture.
(d) The Owner Participant, at the time of the closing of
the second or third refinancing pursuant to this Section 17, if any, shall be
paid a fee of $25,000 in respect of each such refinancing provided, that in the
event that a similar refinancing is concurrently being effected on identical
terms under any of the other transactions entered into in 1996 by the Owner
Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to
which a fee is payable pursuant to the corresponding provisions of the
applicable participation agreement, Lessee shall not be required to pay a
separate fee of $25,000 for each such refinancing, it being the intent of the
parties that a total fee of $50,000 shall be paid by Lessee for all such
concurrent refinancings on identical terms for which a fee is otherwise payable
pursuant to the corresponding provisions of the applicable participation
agreement.
SECTION 18. AGENTS.
(a) Each Loan Participant hereby appoints and authorizes
each of the Administrative Agent and the Documentation Agent (each, an "AGENT")
to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Operative Documents as are
delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. Each Agent shall
have no duties or responsibilities except those expressly set forth in the
Operative Documents. As to any matters not expressly provided for hereby or by
the Trust Indenture, each Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining
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from acting) upon the instructions of the Majority in Interest of Certificate
Holders (as defined in the Trust Indenture), and such instructions shall be
binding upon all Loan Participants and all Certificate Holders; provided,
however, that such Agent shall not be required to take any action that exposes
such Agent to personal liability or that is contrary to the Operative Documents
or applicable law. Each Agent agrees to give to each Loan Participant prompt
notice of each notice given to it by the Owner Trustee pursuant to the terms of
the Operative Documents with respect to which such Loan Participant has not
otherwise received such notice.
(b) No Agent nor such Agent's directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the Trust Indenture,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (i) may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Loan Participant and
shall not be responsible to any Loan Participant for any statements, warranties
or representations (whether written or oral) made in or in connection with the
Operative Documents; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Operative Documents on the part of any party thereto or to
inspect the property (including the books and records) of any such party; (iv)
shall not be responsible to any Loan Participant for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, the Operative Documents or
any other instrument or document furnished pursuant thereto; and (v) shall
incur no liability under or in respect of the Operative Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
(c) With respect to their Loans and any Secured
Certificates issued to them, [_________] and [__________] shall have the same
rights and powers under the Operative Documents as any other Loan Participant
and may exercise the same as though they were not Agents and the term "Loan
Participant" or "Certificate Holder" shall, unless otherwise expressly
indicated, include [__________] and [__________] in their individual capacity.
[__________] and its Affiliates and [__________] and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's
Subsidiaries and any Person who may do business with or own securities of any of
such Persons, all as if [__________] and [__________] were not Agents and
without any duty to account therefor to the Loan Participants.
(d) Each Loan Participant acknowledges that it has,
independently and without reliance upon the Agents or any other Loan
Participant and based on the financial statements referred to in Section
7(a)(ix) of this Agreement and such other documents and
-58-
<PAGE> 59
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Loan Participant also acknowledges
that it will, independently and without reliance upon the Agents or any other
Loan Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
(e) Subject to the appointment and acceptance of a
successor agent as provided below, any Agent may resign at any time by giving
written notice thereof to the Loan Participants, the Owner Trustee and Lessee
and may be removed at any time with or without cause by the Majority in
Interest of Certificate Holders (as defined in the Trust Indenture). Upon any
such resignation or removal, the Majority in Interest of Certificate Holders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority in Interest of Certificate Holders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent by the
Majority in Interest of Certificate Holders, then the retiring Agent may, on
behalf of the Loan Participants, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the Trust Indenture. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 18 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the Trust Indenture.
Notwithstanding anything contrary herein, the Administrative Agent and the
Documentation Agent hereunder and under the Trust Indenture shall be the same
institution, respectively, as the Administrative Agent and the Documentation
Agent under (and as defined in) the Credit Agreement.
-72-
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:
--------------------------------------------
Title: Sr. Vice President-Finance and Treasurer
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
[______________],
Owner Participant
By:
--------------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 61
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
--------------------------------------------
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
--------------------------------------------
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE> 62
by [Insert Bridge Lenders], as agent
Loan Participant and Documentation Agent
By:
--------------------------------------------
Title:
By:
--------------------------------------------
Title:
Address:
Attn:
Telecopy No.:
- Signature Page -
<PAGE> 63
SCHEDULE I
NAMES AND ADDRESSES
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant:
Payments made to the Owner Participant as provided
in Section 3.06 of the Trust Indenture shall be
made to:
<PAGE> 64
Indenture Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Wire Transfer
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. 9903-943-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1996 F
Owner Trustee: First Security Bank of Utah, National
Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
Payments made to the Owner Trustee as
provided in Section 3(f) of the Lease
shall be made to:
First Security Bank of Utah, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1996 F
SCHEDULE I - PAGE 2
<PAGE> 65
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Loan Participants: Lessor's Cost
----------------- -------------
<S> <C>
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
Owner Participant:
- -----------------
<S> <C>
------------
Total Commitments: 100%
</TABLE>
SCHEDULE II - PAGE 2
<PAGE> 67
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1996 F]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
<TABLE>
<S> <C>
Argentina Japan
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Brazil Netherlands
Canada New Zealand
Chile Norway
Denmark People's Republic of China
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Hungary South Korea
Iceland Spain
India Sweden
Indonesia Switzerland
Ireland Thailand
Italy United Kingdom
</TABLE>
<PAGE> 68
EXHIBIT B
TO PARTICIPATION
AGREEMENT
[NW 1996 F]
ASSIGNMENT AND ASSUMPTION AGREEMENT
[NW 1996 F]
ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 F], dated as of
__________, ____, between ____________________________________, a _____________
corporation (the "ASSIGNOR"), and __________________________, a __________
corporation (the "ASSIGNEE").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect (a) the transfer
by the Assignor to the Assignee of all of the right, title and interest of the
Assignor (except as reserved below) in, under and with respect to, among other
things, (i) the Participation Agreement [NW 1996 F], dated as of May 14, 1996,
among Northwest Airlines, Inc., the Assignor, each Loan Participant named
therein, First Security Bank of Utah, National Association, and State Street
Bank and Trust Company (as amended, modified or supplemented from time to time,
the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity
payments payable to the Assignee directly or indirectly thereunder, (ii) the
Trust Agreement identified in the Participation Agreement (the "TRUST
AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv)
the Tax Indemnity Agreement identified in the Participation Agreement, and (v)
the proceeds therefrom and (b) the assumption by the Assignee of the
obligations of the Assignor accruing from and after the Effective Time; and
WHEREAS, such documents permit such transfer upon satisfaction
of certain conditions heretofore or concurrently herewith being complied with;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto do hereby
agree as follows (capitalized terms used herein without definition having the
meaning ascribed thereto in the Participation Agreement):
1. ASSIGNMENT. The Assignor has sold, assigned,
conveyed, transferred and set over, and does hereby sell, assign, convey,
transfer and set over, unto the Assignee as of the date hereof all of its
present and future right, title and interest in, under and with respect to the
Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement,
the Tax Indemnity Agreement and all other Operative Documents to which the
Assignor is a party or any other contract, agreement, document or instrument
relating to the Trust Estate by which the Assignor is bound, and any proceeds
therefrom, together with all other documents and
<PAGE> 69
instruments evidencing any of such right, title and interest, except such
rights of the Assignor as have accrued to the Assignor prior to the Effective
Time (as subsequently defined) (including specifically, but without limitation,
the right to receive any amounts due or accrued to the Assignor under the Trust
Agreement prior to the Effective Time and the right to receive any indemnity
payment pursuant to the Participation Agreement or the Tax Indemnity Agreement
with respect to events occurring prior to the Effective Time).
2. ASSUMPTION. The Assignee hereby undertakes all of
the duties and obligations of the "Owner Participant" accruing on or subsequent
for the Effective Time (for the avoidance of doubt, excluding any duties,
obligations and liabilities of the Assignor required to be performed by it on
or prior to the date hereof under the Participation Agreement, the Trust
Agreement, any of the other Operative Documents to which the Assignor is a
party or by which it is bound or any other contract, agreement, document or
other instrument relating to the Trust Estate to which the Assignor is a party
or by which the Assignor is bound), pursuant to the Participation Agreement,
the Trust Agreement, and each other Operative Document to which the Assignor is
a party, each contract, agreement, document or instrument hereby assigned and
each other contract, agreement, document or instrument relating to the Trust
Estate by which the Assignor is bound, and hereby confirms that it shall be
deemed a party to the Participation Agreement, the Trust Agreement and each
other Operative Document to which the Assignor is a party or by which it is
bound and each such other contract, agreement, document and instrument, and
shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the Owner
Participant. The assignment and assumption contemplated hereby shall not
release the Assignor from its obligations under the Participation Agreement or
the Trust Agreement except to the extent expressly assumed by the Assignee
pursuant to this Section 2, provided, that Assignor's rights under Section 7 of
the Participation Agreement and under the Tax Indemnity Agreement to the extent
relating to acts, conditions or events occurring or existing prior to the date
hereof shall be retained in full by Assignor.
3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of
the within assignment, the Assignor hereby constitutes and appoints the
Assignee, and its successors and assigns, the true and lawful attorneys of the
Assignor, with full power of substitution, in the name of the Assignee or in
the name of the Assignor but on behalf of and for the benefit of and at the
expense of the Assignee, to collect for the account of the Assignee all items
sold, transferred or assigned to the Assignee pursuant hereto; to institute and
prosecute, in the name of the Assignor or otherwise, but at the expense of the
Assignee, all proceedings that the Assignee may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
items sold, transferred or assigned; to defend and compromise at the expense of
the Assignee any and all actions, suits or proceedings as to title to or
interest in any of the property acquired by the Assignee; and to do all such
acts and things in relation thereto at the expense of the Assignee as the
Assignee shall reasonably deem advisable. The Assignor hereby acknowledges
that this appointment is coupled with an interest and is irrevocable by the
Assignor in any manner or for any reason or by virtue of any dissolution of the
Assignor.
EXHIBIT B - PAGE 2
<PAGE> 70
4. PAYMENTS. The Assignor hereby covenants and agrees
to pay over to the Assignee, if and when received following the date hereof,
any amounts (including any sums payable as interest in respect thereof) paid to
or for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee, and the Assignee hereby covenants and agrees to pay over to the
Assignor, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignee that, under Section 1 hereof, belong to the Assignor.
5. FURTHER ASSURANCES. Each party hereto shall, at any
time and from time to time, upon the request of any other party hereto,
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the other party may reasonably
request to obtain the full benefits of this Assignment and of the right and
powers herein granted.
6. INVESTMENT PURPOSE. The Assignee hereby represents
that it is acquiring the trust and other interests hereby assigned to it for
its own account for the purpose of investment and not with a view to the
distribution or resale of either thereof.
7. REPRESENTATIONS AND WARRANTIES. The Assignee
represents and warrants that:
(a) it is duly organized and validly existing in
good standing under the laws of its jurisdiction of
organization, and has the power and authority to carry on its
business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations and
the obligations of the Owner Participant under the Operative
Documents to which it is or will be a party;
(b) this Assignment and Assumption Agreement has
been duly authorized by all necessary action on its part, does
not require any approval not already obtained of its
stockholders or any approval or consent not already obtained
of any trustee or holders of any of its indebtedness or
obligations, and has been duly executed and delivered by the
Assignee, and neither the execution and delivery thereof, nor
the consummation of the transactions contemplated hereby, nor
compliance by the Assignee with any of the terms and
provisions hereof or of any of the Operative Documents to
which it will become a party or by which it will be bound,
will contravene any United States Federal or state law,
judgment, governmental rule, regulation or order applicable to
or binding on the Assignee (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to ERISA (except as set forth in
subsection 7(h) below) or aviation or to the nature of the
equipment to be owned by the Owner Trustee, other than such
laws, rules, or regulations relating to lease transactions
generally or to the citizenship requirements of the Assignee
under the Federal Aviation Act) or contravene or result in any
breach of or constitute any default under, or result in the
creation of any Lien (other
EXHIBIT B - PAGE 3
<PAGE> 71
than Liens provided for in the Operative Documents) upon any
property of the Assignee or, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, corporate charter, by-law or other
agreement or instrument to which the Assignee is a party or by
which it or its properties may be bound or affected;
(c) each of the Operative Documents to which it
will become a party, assuming such document is the legal,
valid and binding obligation of each other party thereto, will
constitute the legal, valid and binding obligation of the
Assignee, enforceable in accordance with its terms;
(d) there are no pending or, to the knowledge of
the Assignee, threatened actions or proceedings against the
Assignee before any court or administrative agency which, if
determined adversely to the Assignee, would materially
adversely affect the ability of the Assignee to perform its
obligations under any Operative Document to which it will
become a party;
(e) upon the execution and delivery of this
Assignment and Assumption Agreement, the Trust Estate and the
Trust Indenture Estate will be free and clear of Lessor Liens
(including for the this purpose Liens that would be Lessor
Liens but for the proviso in the definition of Lessor Liens)
attributable to the Assignee;
(f) neither the execution and delivery by the
Assignee of this Assignment and Assumption Agreement, nor the
consummation by it of any of the transactions contemplated
hereby, requires the consent or approval of, the giving of
notice to, the registration with, the recording or filing of
any document with, or the taking of any other action in
respect of, any Federal or other governmental authority or
agency (it being understood that no representation or warranty
is made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee, other than such laws, rules or regulations relating
to lease transactions generally or to the citizenship
requirements of the Assignee under applicable aviation law);
(g) the Assignee is not an "investment company"
or a company controlled by an "investment company" required to
register as such under the Investment Company Act of 1940, as
amended;
(h) either (x) no part of the funds to be used by
it to acquire any right, title or interest in the Trust
Estate, or in this Agreement, the Trust Agreement, the Tax
Indemnity Agreement or any other of the Operative Documents to
which the Assignee is a party or by which the Owner
Participant is bound, directly or indirectly constitutes, or
may be deemed under the Code, ERISA or any applicable state
law or any rulings or regulations thereunder to be, the assets
of any "employee benefit plan" as defined in Section 3(3) of
EXHIBIT B - PAGE 4
<PAGE> 72
ERISA or of any "plan" within the meaning of Section
4975(e)(1) of the Code or of any entity the assets of which
constitute "plan" assets under ERISA, or
(y) the transfer to and ownership of such right,
title and interest by the Assignee is and will continue to be
covered by Prohibited Transaction Class Exemption 91-38 or
95-60.
(i) on the date hereof [it is a Citizen of the
United States (without use of a voting trust agreement or
voting powers agreement)] [it has entered into a voting powers
or voting trust agreement which has been approved by the FAA
(to the extent required by the Federal Aviation Act or the
FAA)];
(j) the transfer to it of all of the Assignor's
right, title and interest as Owner Participant will not
adversely affect the continued registration of the Aircraft in
the name of the Owner Trustee or violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or violate any provisions of the Securities Act of
1933, as amended, or any other applicable Federal or state law
(it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to
ERISA (except as set forth in subsection 7(h) above)); and
(k) [it is a "Transferee" satisfying the
conditions set forth in Section 8(n) of the Participation
Agreement] [alternatively, guaranty meeting the requirements
of Section 8(n) of the Participation Agreement to be
provided]; and
(1) such Transferee is not (i) an airline, a
commercial air carrier, an air freight forwarder, an entity
engaged in the business of parcel transport by air or (ii)
other similar person or a corporation or other entity
controlling, controlled by or under common control with such
an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel
transport by air or other similar person (unless such entity
is General Electric Company, International Lease Finance
Corporation, any similar entity or any of their respective
Affiliates, provided, that (I) such entity is not included
within the immediately preceding clause (i) of this subsection
(l) and (II) no such entity has, through ownership of common
or preferred stock, effective voting control of an entity
described in such immediately preceding clause (i).
8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor
represents and warrants that:
(a) it is a corporation duly organized and
validly existing in good standing under the laws of the State
of ____________ and has the requisite power, authority and
legal right to enter into and carry out the transactions
contemplated hereby;
EXHIBIT B - PAGE 5
<PAGE> 73
(b) this Agreement has been duly authorized,
executed and delivered by it and constitutes the legal, valid
and binding obligation of Assignor, enforceable against it in
accordance with its terms;
(c) no action or proceeding is pending, has been
instituted or, to the knowledge of Assignor, is threatened,
before any court or governmental agency, nor has any order,
judgment or decree been issued or, to the knowledge of
Assignor, is threatened, by any court or governmental agency
which would materially adversely affect the ability of
Assignor to complete and consummate its obligations
contemplated hereby;
(d) the Trust Estate is free of Lessor Liens
(including for this purpose Liens that would be Lessor Liens
but for the proviso in the definition of Lessor Liens)
attributable to it;
(e) it has fully performed all of its obligations
under the Participation Agreement and under each other
Operative Document to which it is a party or by which it is
bound, which obligations by their terms are required to be
satisfied or performed prior to the Effective Time or prior to
the consummation of the transactions contemplated hereby;
(f) neither the execution, delivery and
performance by it of this Agreement, nor compliance by it with
any of the provisions thereof requires or will require any
approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness obligations of it or
contravenes or will contravene any law or any order of any
court or governmental authority of agency applicable to or
binding on it (it being understood that no representation or
warranty is made with respect to laws, rules or regulations
relating to ERISA) or contravenes or will contravene the
provisions of, or constitute a default under, its [Certificate
of Incorporation] or [By-Laws] or any indenture, mortgage,
contract or any agreement or instrument to which it is a party
or by which it or any of its property may be bound or
affected;
(g) the transfer to Assignee of all of the
Assignor's right, title and interest as Owner Participant will
not violate, or affect registration of the Aircraft under, any
provision of the Federal Aviation Act (or any rules or
regulations promulgated thereunder), violate the Securities
Act of 1933, as amended (and no registration pursuant to such
Act or the rules and regulations thereunder shall be required
in connection with such transfer), or violate any other
applicable Federal or state law (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to ERISA); and
(h) Assignor has assumed the risk of any loss of
Interest Deductions, Amortization Deductions and MACRS
Deductions and the risk of any Inclusion
EXHIBIT B - PAGE 6
<PAGE> 74
Event (each as defined in the Tax Indemnity Agreement)
resulting from the transfer to Assignee pursuant to the
Assignment.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER STATE.
10. COUNTERPARTS. This Assignment may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
11. THIRD PARTY BENEFICIARIES. Each party hereto agrees,
for the benefit of the Owner Trustee, each Loan Participant, each Certificate
Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"),
that the representations, warranties and covenants of such party contained
herein are also intended to be for the benefit of each Beneficiary, and each
Beneficiary shall be deemed to be an express third party beneficiary with
respect thereto, entitled to enforce directly and in its own name any rights or
claims it may have against such party as such beneficiary.
12. EFFECTIVENESS. This Agreement shall be effective
upon its execution and delivery by each of Assignor and Assignee, the exact
time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing
signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the
Indenture Trustee.
EXHIBIT B - PAGE 7
<PAGE> 75
IN WITNESS WHEREOF, the parties hereto, through their
respective officers thereunto duly authorized, have duly executed this
Assignment as of the day and year first above written.
[ASSIGNOR]
By
------------------------------------
Title
[ASSIGNEE]
By
------------------------------------
Title
EXHIBIT B - PAGE 8
<PAGE> 76
EXHIBIT C
TO
PARTICIPATION
AGREEMENT
[NW 1996 F]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
** Argentina * Japan
* Australia * Luxembourg
* Austria ** Malaysia
* Belgium ** Mexico
** Brazil * Netherlands
* Canada * New Zealand
** Chile * Norway
* Denmark ** People's Republic of China
* Finland Portugal
* France ** Republic of China (Taiwan)***
* Germany Singapore
** Greece ** South Africa
** Hungary South Korea
* Iceland Spain
** India * Sweden
** Indonesia * Switzerland
* Ireland ** Thailand
* Italy * United Kingdom
- ---------------
* Designates "Specified Country".
** Designates "Restricted Country".
*** So long as on the date of entering into the proposed sublease such
country and the United States have diplomatic relations at least as good as
those in effect on the Delivery Date.
EXHIBIT C - PAGE 1
<PAGE> 77
EXHIBIT D TO
PARTICIPATION
AGREEMENT
FORM OF GUARANTY
[LETTERHEAD OF GUARANTOR]
PARENT GUARANTY
Dated as of ____________ ____, ______
[Lessee]
[Trust Company]
[Indenture Trustee]
[Loan Participants]
One Boeing Model 757-251 Aircraft Manufacturer's
Serial Number [ ]
Ladies and Gentlemen:
Reference is hereby made to the Participation Agreement [NW
1996 F] (as from time to time amended or supplemented, the "Participation
Agreement"), dated as of May 14, 1996, among Northwest Airlines, Inc.
("Lessee"), [_______________] (the "Owner Participant"), First Security Bank of
Utah, National Association, not in its individual capacity, except as expressly
provided therein, but solely as trustee (the "Owner Trustee" and "Lessor")
under the Trust Agreement, dated as of May 14, 1996, between the Trustee and
the Owner Participant (the "Trust Agreement"), State Street Bank and Trust
Company (the "Indenture Trustee") and the Loan Participants listed on Schedule
I thereto. Capitalized terms used herein without definition have the
respective meanings ascribed thereto in the Participation Agreement.
Pursuant to Section 8 of the Participation Agreement and in
connection with the transfer of the Interest (as defined in the Assignment and
Assumption Agreement dated as of the date hereof between [Transferor], a
____________ corporation ("Transferor") and [Transferee], a ____________
corporation ("Transferee") (the "Assumption Agreement'')) to be consummated as
of the date hereof from Transferor to Transferee, the wholly-owned subsidiary
of _________________________ ("Guarantor"), and the execution by Guarantor of
the guaranty of Transferee's obligations as contemplated by the Assumption
Agreement (this "Guaranty"), Guarantor represents and warrants to, and
covenants with, Lessee, First Security Bank of Utah, National Association, in
its individual capacity ("Trust Company"), Indenture Trustee and Loan
Participants, as follows:
EXHIBIT D - PAGE 1
<PAGE> 78
1. Ownership of Transferee. Guarantor directly or
indirectly owns and holds all of the issued and outstanding shares of capital
stock of Transferee.
2. Additional Representations and Warranties.
(i) Guarantor is a corporation duly organized and validly
existing pursuant to the laws of ___________________, and has the corporate
power and authority to enter into and perform this Guaranty.
(ii) The execution, delivery and performance by Guarantor
of this Guaranty has been duly authorized by all necessary corporate action on
the part of Guarantor, does not require any stockholder approval, or approval
or consent of any trustee or holders of any indebtedness or obligations of
Guarantor except such as have been duly obtained, and this Guaranty will not
contravene any applicable law or corporate charter or by-law, or contravene the
provisions of, or constitute a default under, or result in the creation of any
Lien upon the property of Guarantor under, any indenture, mortgage, contract or
other agreement to which Guarantor is a party or by which it may be bound or
affected.
(iii) Neither the execution and delivery by Guarantor of
this Guaranty, nor the consummation of the transactions by Guarantor
contemplated hereby, nor the performance of the obligations hereunder or under
any other documents contemplated hereby or thereby by Guarantor requires the
consent or approval of, the giving of notice to, or the registration with, or
the taking of any other action in respect of, United States Federal, state, or
foreign governmental authority or agency.
(iv) This Guaranty has been duly executed and validly
delivered by Guarantor and constitutes the legal, valid and binding obligation
of Guarantor enforceable against Guarantor in accordance with its terms except
as the enforcement of this Guaranty may be affected by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally.
(v) There are no pending or, to Guarantor's knowledge,
threatened actions or proceedings before any court or administrative agency
which might materially adversely affect the consolidated financial condition,
business or operations of Guarantor, or the ability of Guarantor to perform its
obligations under this Guaranty.
(vi) No broker's or finder's fees or commissions or
advisory fees are or may become payable in connection with this Guaranty or the
Assumption Agreement or, if any such fee is payable, such fee will be the
responsibility of Guarantor.
(vii) On the date hereof the Trust Estate will be free of
Lessor Liens (including for this purpose Liens that would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to Guarantor.
(viii) Guarantor is (A) a Citizen of the United States (or
has effected a voting trust agreement, voting powers agreement or other similar
arrangement) and (B) a bank,
EXHIBIT D - PAGE 2
<PAGE> 79
insurance company, financial institution or domestic corporation the net worth
of which is at least $50,000,000.
3. Guaranty. (a) Guarantor hereby unconditionally and
irrevocably guarantees, not merely as surety but as obligor:
(i) the due and punctual payment of any and all
sums which are payable by Transferee pursuant to any provision
of the Assumption Agreement (and in particular, Section 4
thereof) and the Participation Agreement, the Tax Indemnity
Agreement and any other Operative Document assumed by
Transferee pursuant to the Assumption Agreement (collectively,
the "Guaranteed Agreements"), and
(ii) the due and punctual performance of and
compliance with and observance of all other obligations,
covenants, warranties and undertakings of or conditions
contained in or arising under the Guaranteed Agreements
binding upon or made by Transferor and assumed by Transferee
under the Assumption Agreement,
in each case, whether or not Guarantor shall have contributed funds to Lessor
or Transferee, as the case may be, for such payment or performance by Lessor or
Transferee (such payments and other obligations guaranteed hereunder
hereinafter referred to as the "Obligations").
(b) Guarantor agrees that this Guaranty is an
unconditional and absolute guaranty of payment and performance (not merely
enforceability) and that its undertakings hereunder are not contingent upon
your bringing any action against Transferee or resorting to any security and
hereby expressly waives any claim that its undertakings hereunder are so
contingent.
(c) Guarantor hereby waives promptness, diligence, demand
and all notices whatsoever as to the obligations and covenants guaranteed
hereby and acceptance of this Guaranty, and waives any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
undersigned, and agrees that it shall not be required to consent to, or receive
any notice of, any amendment or modification of, or waiver, consent or
extension with respect to, the Guaranteed Agreements that may be made or given
as provided therein.
(d) Guarantor agrees to pay any costs and expenses
(including reasonable fees and disbursements of counsel) that may be paid or
incurred by the beneficiaries hereof in enforcing any rights with respect to,
or collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, Guarantor under this Guaranty.
(e) Guarantor understands and agrees that its obligations
hereunder shall be construed as continuing, absolute and unconditional without
regard to (i) the validity, regularity or enforceability of any Operative
Document, any of the Obligations or any collateral security therefor or
guaranty or right of offset with respect thereto at any time or
EXHIBIT D - PAGE 3
<PAGE> 80
from time to time held by any beneficiary hereof, (ii) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by Transferee against any beneficiary
hereof or (iii) any other circumstances whatsoever (with or without notice to
or knowledge of Transferee or Guarantor) that constitutes, or might be
construed to constitute, an equitable or legal discharge of Transferee for the
Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other
instance.
4. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, Guarantor will not permit Transferee or
Lessor to take or cause to be taken any action contrary to Lessee's rights
under the Lease, including, without limitation, Lessee's rights to possession
and use of the Aircraft.
5. No Discharge. The obligations of Guarantor hereunder
are absolute, unconditional and irrevocable and will not be discharged by, and
this Guaranty shall remain in full force and effect notwithstanding: (a) the
assignment, conveyance or other transfer by Guarantor of any or all of its
interest in or capital stock of Transferee, unless such assignment, conveyance
or transfer of all of its interest is to a transferee meeting the requirements
set forth in Section 8(n) of the Participation Agreement and otherwise complies
with the requirements for a transfer as set forth in Section 8(n) of the
Participation Agreement, in which event Guarantor shall be discharged from any
and all liabilities arising hereunder (to the extent such liabilities arise
after such transfer); (b) the assignment, conveyance or other transfer by
Transferee of any or all of its interest in the Trust Estate (as defined in the
Trust Agreement), unless such assignment, conveyance or transfer of all of its
interest is to a transferee meeting the requirements set forth in Section 8(n)
of the Participation Agreement and otherwise complies with the requirements for
a transfer as set forth in Section 8(n) of the Participation Agreement, in
which event Guarantor shall be discharged from any and all liabilities arising
hereunder (to the extent such liabilities arise after such transfer) unless
Guarantor guarantees the obligations of the transferee under Section 8(n) of
the Participation Agreement; (c) the assignment, conveyance or other transfer
by Lessor of any or all of its interest in the Aircraft; (d) any extension or
renewal with respect to any obligation of Transferee or Lessor under the
Guaranteed Agreements; (e) any modification of, or amendment or supplement to,
any of the Guaranteed Agreements; (f) any furnishing or acceptance of
additional security or any release of any security; (g) any waiver, consent or
other action or inaction or any exercise or non-exercise of any right, remedy
or power with respect to Transferee or Lessor, or any change in the structure
of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization,
arrangement, composition, liquidation, dissolution, or similar proceedings with
respect to the Trustee or Transferee; or any other occurrence whatsoever,
except payment in full of all amounts payable by Transferee under the
Guaranteed Agreements and performance in full of all Obligations of Transferee
in accordance with the terms and conditions of the Guaranteed Agreements.
6. Reinstatement. Guarantor agrees that this Guaranty
shall be automatically reinstated with respect to any payment made prior to any
termination of the Guaranty by or on behalf of Transferee pursuant to the
Participation Agreement or the other
EXHIBIT D - PAGE 4
<PAGE> 81
Operative Documents to which Transferee is a party if and to the extent that
such payment is rescinded or must be otherwise restored, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.
7. No Subrogation. Notwithstanding any payment or
payments made by Guarantor hereunder or any set-off or application of funds of
Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be
subrogated to any of the rights of any beneficiary hereof against Transferee or
any collateral, security or guarantee or right of set-off held by any
beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek
or be entitled to seek any reimbursement from Transferee in respect of payment
made by Guarantor hereunder, until all amounts and performance owing to the
beneficiaries hereof by Transferee on account of the Obligations are paid and
performed in full.
8. Severability. Any provision of this Guaranty
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
9. Miscellaneous. This Guaranty shall: (a) be binding
upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan
Participants, and their respective successors and assigns and each other holder
from time to time of any interest in the Aircraft or the Operative Documents,
but shall not, and is not intended to, create rights in any other third
parties; (c) not be waived, amended or modified without the written consent of
Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; and (e) subject to Section 6 hereof, remain in full force and effect
until, and shall be terminated upon (1) the payment in full of all sums payable
by Transferee, as the case may be, under the Guaranteed Agreements, and by
Guarantor hereunder, and performance in full of Transferee, in accordance with
the terms and provisions of the Guaranteed Agreements and Guarantor in
accordance with the terms of this Guaranty or (2) the date on which Transferee
shall meet the requirements set forth in Section 8 of the Participation
Agreement without benefit of this Guaranty; provided that Guarantor hereby
covenants and agrees that if Transferee shall at any time thereafter (while
Transferee shall be Owner Participant under the Participation Agreement) fail
to meet such requirements, Guarantor shall immediately reinstate this Guaranty
or execute and deliver to the addressees of this Guaranty a guaranty
substantially identical hereto. All notices to, or requests of, demands on and
other communications with Guarantor shall be made as set forth in the
Participation Agreement.
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EXHIBIT D - PAGE 5
<PAGE> 82
Very truly yours,
[GUARANTOR]
By:
----------------------------------
Name:
Title:
[SIGNATURE PAGE]
EXHIBIT D - PAGE 6
<PAGE> 83
EXHIBIT E TO
PARTICIPATION
AGREEMENT
FORM OF OPINION OF TRANSFEREE COUNSEL
_____________ ___, _______
To Each of the Persons Named on
Schedule A Attached Hereto
Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and
Operative Documents related to Acquisition Thereof on
__________ ____, ______
Ladies and Gentlemen:
We have acted as [special][internal] counsel to [Transferee],
a _____________ corporation (the "Transferee"), in connection with the transfer
by [Transferor], a __________________ corporation (the "Transferor") to
Transferee, of all of its right, title and interest in and to the Aircraft and
the Operative Documents to which the Transferor is a party or by which it is
bound (collectively, the "Transferee Documents") and the assumption by the
Transferee of the Transferor's obligations thereunder. The transfer is being
accomplished by an Assignment and Assumption Agreement, dated as of
____________ ____, _____ made by the Transferee and agreed to and acknowledged
by the Transferor (the "Assumption Agreement"). Capitalized terms used but not
otherwise defined herein are defined as set forth in or by reference in the
Participation Agreement referred to in the Assumption Agreement.
In connection with the opinions expressed herein, we have
examined executed counterparts of the Transferee Documents. We have also
examined and relied upon the accuracy of the originals or certified, conformed,
photocopied or telecopied copies of such corporate records, certificates,
instruments and other documents as we have deemed necessary or appropriate to
enable us to render the opinions expressed herein. In all such examinations,
we have assumed the genuineness of signatures (other than those of the
Transferee) on original documents and the conformity to such original documents
of all copies submitted to us as certified, conformed, photocopied or
telecopied copies, and as to certificates and telegraphic and telephonic
confirmations given by public officials, we have assumed the same to have been
properly given and to be accurate. As to all matters of fact material to our
opinions, we have, when relevant facts were not independently established,
relied upon representations and warranties contained in the Operative Documents
and upon the statements and certificates furnished to us.
Based upon and subject to the foregoing and the matters
hereinafter set forth, we are of the opinion that:
EXHIBIT E - PAGE 1
<PAGE> 